PURCHASE AND SALE AGREEMENT

DATED AS OF __________, 2001

BETWEEN

NORTHERN NATURAL GAS COMPANY

as Seller

AND

WILLIAMS FIELD SERVICES-GULF COAST COMPANY, LP

as Buyer

PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement ("Agreement"), is made and entered into this ______ day of _________, 2001, by and between NORTHERN NATURAL GAS COMPANY, a Delaware Corporation ("Seller"), and WILLIAMS FIELD SERVICES-GULF COAST COMPANY, LP, a Delaware limited partnership ("Buyer" and, together with Seller, individually a "Party" or, collectively, the "Parties").
For and in consideration of the premises and the mutual covenants and agreements set forth herein, the Parties agree as follows:
ARTICLE 1	

DEFINITIONS
1.1	Defined Terms.  As used herein, the terms below shall have the following meanings:
"Affiliate" shall mean with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person.  For purposes of the definition of "Affiliate," the term "control" (including the correlative terms "controlled by" and "under the common control of"), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, through the ownership of voting securities, by contract, or otherwise.
"Applicable Law" shall mean any statute, law, rule, regulation or policy, or any judgment, order, ordinance, writ, injunction, or decree of, any Governmental Authority to which the Assets or this Agreement are subject.  
"Baseline Contamination Assessment" shall mean a listing prepared in accordance with Section 11.2(a) of all known analytes found in specified locations on specified dates in specified media, in unit amounts and concentration levels.
"Claim" shall mean any and all actions, causes of action, demands, violations, proceedings and suits of every kind and character arising from or related in any way, in whole or in part, to the injury or death of a person, damage or destruction to property, violation of Applicable Law, or breach of this Agreement or any other related agreement, regardless whether any such Claim is known or unknown, liquidated or contingent and which results in a Loss.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" shall mean that certain confidentiality agreement dated ___________, between Buyer and Seller, as amended from time to time.
"Contracts" shall mean all contracts, leases, licenses, easements, indentures, agreements, purchase orders, commitments and all other legally binding arrangements, whether oral or written, express or implied, related primarily to, or included in, the Assets.
"Disposal" shall have the same meaning as that term is defined in RCRA.
"Disposed" shall have the same meaning as that term is defined in RCRA.
"Effective Time" shall mean 12:01 a.m. (Houston, Texas time) on the Closing Date.
"Environmental Compliance Deficiency" shall mean a Hazardous Substance existing at, on, or in the Assets which exists at levels in excess of action levels established by any applicable Governmental Authority on the date of the Baseline Contamination Assessment Report. 
"Environmental Laws" shall mean all laws, statutes, ordinances, rules, regulations, orders, directives or determinations of any Governmental Authority relating to pollution or protection of human health or the environment (located in any medium, including but not limited to ambient air, surface water, ground water, land surface or subsurface strata) including but not limited to the Clean Air Act, as amended; the Comprehensive Environmental Response Compensation and Liability Act ("CERCLA"), as amended; the Clean Water Act, as amended; the Resource Conservation and Recovery Act ("RCRA"), as amended; the Safe Drinking Water Act, as amended; the Hazardous Materials Transportation Act, as amended; the Toxic Substances Control Act, as amended; and any other laws relating to emissions, discharges, releases or threatened releases of any hazardous substance, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of any hazardous substance; in each case as in effect on the date of this Agreement.
"FERC" shall mean the Federal Energy Regulatory Commission.
"Governmental Authority" shall mean any federal, state, county, parish, city, local, or other government or public agency, instrumentality, commission, authority, board or body having statutory authority, including the judicial, legislative and executive divisions thereof.
"Hazardous Substance" shall mean any substance defined to be a hazardous substance under CERCLA, as well as any crude petroleum, petroleum product, or petroleum-related waste, including, without limitation, any oilfield or exploration and production wastes, regulated under or subject to cleanup requirements pursuant to any Environmental Law.
"Loss" shall mean any and all damages, assessments, fines, judgments, liabilities, obligations, penalties, fees, costs and/or expenses, including but not limited to, attorney, expert witness, and consultant fees and costs.
"Material Adverse Effect" shall mean any occurrences or conditions that individually or in the aggregate have a material adverse change or effect on the use, operation or ownership of the Assets, taking into account the nature and valuation of the Assets, or materially hinder or impede the consummation of the transactions contemplated by this Agreement.
"Material Contracts" shall mean all Contracts providing for annual payments of One Hundred Thousand Dollars ($100,000) or more.
"Permits" shall mean all licenses, permits, certificates and approvals issued by any Governmental Authority in connection with the ownership, lease, use, condition or operation of the Assets, in whole or in part.
"Person" shall mean any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, unincorporated organization, business, syndicate, sole proprietorship, association, organization, labor union, or other entity or Governmental Authority.
"Release" shall have the same meaning as that term is defined in CERCLA.
"Required Environmental Activities" shall mean assessments, monitoring, remediation or other activities required pursuant to Environmental Law.
1.2	Other Defined Terms.  In addition to the terms defined Section 1.1, the following terms shall have the meanings defined for such terms in the Sections set forth below:
Term	Section	
"Additional Payments"		3.1	
"Adjusted Closing Payment"		3.1	
"Agreement"		Preamble	
"Assets"		2.1	
"Assignment"		4.2(b)	
"Assumed Obligations"		13.1	
"Bill of Sale"		4.2(c)	
"Buyer"		Preamble	
"Buyer Indemnitees"		13.3	
"Buyer Party"		7.5	
"Claim Notice"		13.5(a)	
"Closing"		4.1	
"Closing Date"		4.1	
"Closing Payment"		3.1	
"Closing Payment Adjustments"		3.2(c)	
"Customary Post-Closing Consents"		5.3	
"Deed"		4.2(a)	
"Defensible Title"		10.2(b)	
"Environmental Audit"		11.2(a)	
"Environmental Audit Period"		11.2(a)	
"Final Statement"		3.4(a)	
["Holdback Amount"		3.1]	
"Indemnified Party"		13.6	
"Indemnifying Party"		13.6	
"Independent Arbitrator"		3.4(b)	
"Interim Services Agreement"		4.2(d)	
"Notice of Disagreement"		3.4(a)	
"Notice Period"		13.6	
"Partial Assignment"		4.2(b)	
"Party" or "Parties"		Preamble	
"Permitted Encumbrances"		10.2(c)	
"Platform Space Lease"		9.7	
"Purchase Price"		3.1	
"Records"		7.12	
"Seller"		Preamble	
"Seller Indemnitees"		13.2	
"Service Agreement"		4.2(e)	
"Statement"		3.3	
"Termination Event"		12.1	
"Title Defect"		10.2(a)	
"Title Examination Period"		10.1	
1.3	Interpretive Provisions.  
(a)	The words "hereof," "herein" and "hereunder" and words of similar impact when used in this Agreement 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 this Agreement unless otherwise specified.
(b)	The meaning of defined terms shall be equally applicable to the singular and plural forms of the defined terms. 
(c)	The terms "include" and "including" are not limiting and mean "including without limitation."
(d)	The terms "to the best of (a Party's) knowledge," "knowledge," "known" or any similar terms as applied to either Party shall be deemed to mean (i) the actual knowledge of the executive officers and key operational and management personnel of the respective Party or other authorized and affiliated agents of such Party (to the extent that such agents reviewed information or otherwise performed due diligence in connection with such Party's assessment and analysis of the transactions contemplated by this Agreement), and with respect to Seller, such key operational and management personnel includes the personnel listed on Schedule 1.3(d), or (ii) that a prudent and competent manager of such a business under prevailing circumstances would be expected to be in possession or otherwise become aware of such fact or other matter in the conduct of such Party's ordinary course of business.
ARTICLE 2	

PURCHASE AND SALE
2.1	Purchase and Sale.  Subject to the terms and conditions hereof, at the Closing, Seller will sell, assign, transfer and deliver to Buyer, and Buyer will purchase and acquire from Seller, the assets described on Schedule 2.1 attached hereto (referred to herein as the "Assets").
ARTICLE 3	

PURCHASE PRICE
3.1	Purchase Price.  Buyer agrees to pay an aggregate purchase price to Seller of (a) Thirteen Million Dollars ($13,000,000)[, of which Ten Million Five Hundred Thousand Dollars ($10,000,00010,500,000) shall be paid at Closing (the "Closing Payment") and ThreeTwo Million Five Hundred Thousand Dollars ($3,000,0002,500,000) shall be paid upon completion of the work pursuant to the Service Agreement (the "Holdback Amount")], plus (b) additional annual payments to Seller equal to three cents ($.03) per MMBtu for all volumes above thirty-five (35) Bcf per year delivered into and transported on the capacity related to the Assets purchased at Closing during each of the first five (5) years ending on the anniversary of the Closing Date (the "Additional Payments") (in the aggregate, the Closing Payment[, the Holdback Amount] and the Additional Payments shall be referred to as the "Purchase Price").  The Closing Payment shall be adjusted at Closing pursuant to Section 3.2 of this Agreement (the "Adjusted Closing Payment").  The Adjusted Closing Payment shall be paid by Buyer by means of a completed Federal Funds wire transfer of immediately available funds to an account designated by Seller.  As soon as reasonably possible, and in any event, within sixty (60) days after the anniversary of the Closing Date for each of the first five (5) years after Closing, Buyer shall pay to Seller the Additional Payment for that year as calculated according to clause (b) above.
3.2	Adjustments to the Closing Payment.  
(a)	The Closing Payment shall be increased by the following amounts:
(i)	all capital expenditures reasonably paid or incurred by Seller or its Affiliates that are attributable to the Assets and attributable to the period of time from and after 12:00 a.m., Houston, Texas time, on the date of this Agreement to the Effective Time (as hereinafter defined) except for the capital expenditures set forth on Schedule 3.2 and expenditures for Environmental Compliance Deficiencies corrected by Seller under Section 11.3(b)(ii); provided, that any individual non-emergency capital expenditure in excess of Fifty Thousand Dollars ($50,000) or aggregate non-emergency capital expenditures in excess of Two Hundred Thousand Dollars ($200,000) must have received the prior written approval of Buyer, which approval shall not be unreasonably withheld, in order for such capital expenditure to be included in such adjustment;
(ii)	the amount, if any, expended by Seller as the cost to cure any Title Defect up to the amount of the deductible provided for in Section 10.3(b), for which Buyer is responsible; and
(iii)	any other amount provided for in this Agreement or agreed upon in writing by Buyer and Seller.
(b)	The Closing Payment shall be decreased by the following amounts:
(i)	any amount agreed upon in writing by Buyer and Seller pursuant to Section 10.3(a)(i) as the cost to cure any Title Defect in excess of the deductible provided for in Section 10.3(b); 
(ii)	[any amount agreed upon in writing by Buyer and Seller pursuant to Section 11.3(b)(i) as the remaining cost of any incomplete or remaining corrective projects]; and
(iii)	any other amount provided for in this Agreement or agreed upon in writing by Buyer and Seller.
(c)	The adjustments described in Sections 3.2(a) and (b) are hereinafter referred to as the "Closing Payment Adjustments."
3.3	Statement.  Not later than two (2) business days prior to the Closing Date, Seller shall prepare and deliver to Buyer a statement (the "Statement") of the Closing Payment Adjustments and the Adjusted Closing Payment.  At Closing, Buyer shall pay the Adjusted Closing Payment.
3.4	Statement Objections.  
(a)	Buyer shall have twenty (20) business days following the Closing to review the Statement. During this twenty (20)-business day period, Buyer shall be permitted to review the working papers of Seller relating to, and shall be given access to the employee of Seller primarily responsible for the preparation of, the Statement.  The Statement shall become final and binding upon the parties on the twentieth (20th) business day following the Closing, unless Buyer gives written notice of its disagreement with the Statement (the "Notice of Disagreement") to Seller prior to such date. Any Notice of Disagreement shall specify in reasonable detail the nature of any disagreement so asserted.  If a Notice of Disagreement is received by Seller in a timely manner, then the Statement (as revised in accordance with clause (A) or (B) below) shall become final and binding upon the Parties upon the earlier of (A) the date the Parties resolve in writing any differences they have with respect to the matters specified in the Notice of Disagreement or (B) the date any disputed matters are finally resolved in writing by the Independent Arbitrator (as defined below). The Statement, upon becoming final and binding in accordance with this Section 3.4, and as the same may be revised in accordance with the preceding clause (A) or (B), is hereinafter referred to as the "Final Statement."
(b)	During the twenty (20)-business day period following the delivery of a Notice of Disagreement, Seller and Buyer shall seek in good faith to resolve in writing any differences which they may have with respect to the matters specified in the Notice of Disagreement. During such period, Seller shall have access to the working papers of Buyer prepared in connection with its certification of the Notice of Disagreement. At the end of such twenty (20)-business day period, Seller and Buyer shall submit to an independent arbitrator (the "Independent Arbitrator") for review and resolution of any and all matters which remain in dispute and which were properly included in the Notice of Disagreement, in the form of a written brief. The Independent Arbitrator shall be PricewaterhouseCoopers.  The Independent Arbitrator shall make a final and binding determination as to the submitted matters within forty-five (45) days after its appointment. The Independent Arbitrator's determination shall be in the form of an opinion as is appropriate under the circumstances and shall confirm that it was rendered in accordance with this Section 3.4(b). Seller and Buyer agree that judgment may be entered upon the determination of the Independent Arbitrator in any court having jurisdiction over the Party against which such determination is to be enforced. The fees and expenses of the Independent Arbitrator shall be borne equally by Seller and Buyer. Notwithstanding the foregoing, the fees and expenses of Seller incurred in connection with its preparation and certification of the Statement and its review of the Notice of Disagreement shall by borne by Seller, and the fees and expenses of Buyer incurred in connection with its review of the Statement and the preparation and certification of any Notice of Disagreement shall be borne by Buyer.
(c)	If the amounts indicated in the Final Statement are, in the aggregate, more than the Adjusted Closing Payment, Buyer shall, within ten (10) days after the Statement becomes final and binding pursuant to this Section 3.4 make payment to Seller by wire transfer in immediately available funds of the amount of such difference not otherwise paid by Buyer, together with interest thereon at a rate equal to the rate specified in Section 14.16, from and including the Effective Time to but excluding the date of payment. If the amounts indicated in the Final Statement are, in the aggregate, less than the Adjusted Closing Payment, Seller shall, within ten (10) days after the Statement becomes final and binding make payment to Buyer by wire transfer in immediately available funds of the amount of such difference overpaid by Buyer, together with interest thereof at a rate equal to the rate specified in Section 14.16, from and including the Effective Time to but excluding the date of payment.
ARTICLE 4	

CLOSING
4.1	Time and Place of Closing.  The consummation of the transactions contemplated by this Agreement (the "Closing") shall take place at 10:00 a.m. (Houston, Texas time) in the offices of Seller at 1400 Smith Street, Houston, Texas 77002, on the first day of the month following the month in which all conditions set forth in Articles 8 and 9 have been satisfied or waived by the appropriate Party (the "Closing Date") or as otherwise mutually agreed between the Parties, and shall be effective as of the Effective Time or as otherwise mutually agreed between the Parties.  Notwithstanding the foregoing, in the event that the conditions set forth in Articles 8 and 9 have been satisfied or waived by the appropriate Party during December 2001, the Parties shall agree to hold the Closing on or before December 31, 2001.
4.2	Deliveries by Seller at Closing.  At Closing, Seller shall execute and deliver, or cause to be executed and delivered, to Buyer:
(a)	special warranty deed conveying to Buyer all fee lands included in the Assets (the "Deed"), in substantially the form attached hereto as Exhibit "A";
(b)	assignment in recordable form assigning to Buyer all interests in real property included in the Assets (other than fee property) (the "Assignment" and the "Partial Assignment") in substantially the form attached hereto as Exhibits "B" and "C," respectively;
(c)	a conveyance, assignment and bill of sale assigning to Buyer all personal property (tangible and intangible) included in the Assets (the "Bill of Sale"), in substantially the form attached hereto as Exhibit "D";
(d)	an interim services agreement (the "Interim Services Agreement") as mutually agreed to by the Parties and providing for services as set forth on Schedule 4.2; 
(e)	a service agreement (the "Service Agreement") substantially in the form attached as Exhibit "E" hereto; and
(f)	any other agreements, documents, certificates or other instruments reasonably necessary to consummate the transactions contemplated by this Agreement.
4.3	Deliveries by Buyer at Closing.  At Closing, Buyer shall deliver to Seller the Adjusted Closing Payment as contemplated by Section 3.1, and Buyer shall execute and deliver or cause to be executed and delivered the following: 
(a)	Deed, Assignment, Partial Assignment, Bill of Sale and Interim Services Agreement; and
(b)	any other agreements, documents, certificates or other instruments reasonably necessary to consummate the transactions contemplated by this Agreement.
ARTICLE 5	

REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as of the date hereof and as of the Closing Date that:
5.1	Organization and Good Standing of Seller.  Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, with full corporate power, right and authority to own and lease the properties and assets it currently owns and leases and to carry on its business as such business is currently being conducted.  Seller is duly qualified to transact business as a foreign corporation and is in good standing under the laws of the State of Texas.
5.2	Condition of the Assets.  Taken as a whole, the tangible assets and properties that are part of the Assets are generally in good operating condition and repair, subject to normal wear and maintenance, and except for assets taken out of service, are generally usable in the regular and ordinary course of business. Additionally, except as set forth on Schedule 5.2, the pipelines included as part of the Assets, as currently operated, are (i) in compliance in all material respects with all federal and state safety, regulatory and operational requirements, (ii) are generally fit for the purposes and uses for which they are currently operated (except for assets taken out of service) and (iii) are not in need of maintenance or repairs except ordinary or routine maintenance and repairs that are not material.
5.3	Authorization of Agreement; No Violation; No Consents.  This Agreement has been duly executed and delivered by Seller.  Seller has the full corporate power and authority to enter into this Agreement, to make the representations, warranties, covenants and agreements made herein and to consummate the transactions contemplated hereby.  The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all requisite corporate action on the part of Seller and its Affiliates.  Except as set forth on Schedule 5.3, neither the execution and delivery of this Agreement by Seller nor the consummation by Seller of the transactions contemplated hereby (a) will conflict with, result in a breach, default or violation of, or require consent of any third party under (i) the terms, provisions or conditions of the Certificate of Incorporation or Bylaws of Seller or its Affiliates, (ii) any Contract, or (iii) to the knowledge of Seller, any judgment, decree, order, governmental permit, certificate, license, law, statute, rule or regulation to which either Seller or any such Affiliate is a party or is subject, or to which any of the Assets are subject, except for consents and approvals from Governmental Authorities that are customarily obtained after closing in connection with the transactions contemplated hereby (the "Customary Post-Closing Consents") or (b) will result in the creation of any lien, charge or other encumbrance on any of the Assets.
5.4	Governmental Consents.  Except as may be set forth herein or on an exhibit attached hereto, no consent, action, approval or authorization of, or registration, declaration or filing with any Governmental Authority is required to authorize, or is otherwise required in connection with, the execution and delivery of this Agreement by Seller or Seller's performance of the terms of this Agreement or the validity or enforceability hereof against Seller, except for (a) Customary Post-Closing Consents and (b) the matters discussed in Section 7.9 of this Agreement.
5.5	Preferential Purchase Rights.  Except as set forth on Schedule 5.5, the execution, delivery and performance of this Agreement, the consummation of the transactions contemplated hereby and the compliance by Seller with the provisions hereof will not, with or without the passage of time or the giving of notice or both, give rise to any preferential or other right of any third party to purchase the Assets.
5.6	Contracts.  Schedule 5.6 is a complete list of the Contracts in existence as of the date of this Agreement.  As a result of any supplements or amendments to Schedule 5.6 pursuant to Section 7.15, the Schedule 5.6 so amended or supplemented will reflect the Contracts in existence as of the Closing Date.  Seller has not received written notice that it is in default under the terms of any Contract, nor that any event has occurred which, with the passage of time or giving of notice, or both, would constitute such a default.  Except as provided for in Schedule 5.6, to the knowledge of Seller, no third party is in default under the terms of any Contract, nor has any event occurred which, with the passage of time or giving of notice, or both, would constitute such a default of a third party.  The Contracts are in full force and effect and are binding upon Seller and all other parties thereto in accordance with their terms.  None of the other parties to any Contract has notified Seller that it intends to terminate, not renew or alter the provisions thereof by reason of the transaction contemplated by this Agreement or otherwise.  Except as set forth on Schedule 5.6A, none of the counterparties to any of the Contracts is an Affiliate of Seller.
5.7	Enforceability.  This Agreement constitutes the legal, valid and binding obligation of Seller enforceable against Seller in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights generally and general principles of equity.
5.8	Brokers.  No broker or finder who acted on behalf of Seller or any Affiliate of Seller is entitled to any brokerage or finder's fee, or to any commission, based in any way on agreements, arrangements or understandings made by or on behalf of Seller or any Affiliate of Seller for which Buyer has or will have any liabilities or obligations (contingent or otherwise).
5.9	Suits.  Except as set forth herein, there is no legal, administrative or arbitration proceeding pending or, to the knowledge of Seller, threatened relating to the Assets or to which either Seller or one of its Affiliates is or would be a party in connection with the ownership or operation of the Assets, or that would prohibit or delay in any material respect the consummation of the transactions contemplated hereby.
5.10	Compliance With Laws.  To the knowledge of Seller, Seller is in compliance with each Applicable Law and related to the Assets, or by which the Assets are bound.  To the knowledge of Seller, Seller possesses all governmental licenses, permits, and certificates necessary for the current operation of the Assets, and Seller is in compliance with all material conditions and requirements of such licenses, permits and certificates as are necessary for the current operation of the Assets.  Nothing in this Section 5.10 shall be deemed or construed to constitute a representation or warranty with respect to Environmental Laws because such matters are covered solely by Article 11.
5.11	Assignments.  The Assets that will be assigned to Buyer pursuant to the Assignment constitute all of the Assets necessary to operate the Assets in substantially the manner that they have been operated prior to the date of this Agreement.
5.12	Tax Matters.  No ad valorem taxes assessed against the Assets are delinquent.  Seller or the previous Affiliate owners of the Assets have properly completed and filed or caused to be filed in a timely manner all material reports or returns required to be filed with respect to such ad valorem taxes relating to the Assets with any applicable taxing authority or, if not so timely filed, all appropriate penalties with respect to same have been assessed and paid or duly contested in good faith and adequately reserved against.  Seller has made no tax partnership elections with respect to the Assets[, and each tax partnership, interests of which are included in the Assets, has made, or shall be eligible to make, an election pursuant to Section 754 of the Code].  Seller has paid or will timely pay in full all taxes that relate to or affect the Assets and which are required to be paid by Seller through the Closing Date.  Seller has properly completed and timely filed, or will properly complete and timely file, with the applicable taxing authority all applicable federal, state, county and local returns, declarations and reports and information returns and statements required to be filed by Seller with respect to the Assets in respect of any taxes for any period ending on or before the Closing Date. There are no liens for taxes upon any of the Assets other than liens for taxes not yet due and payable and for which adequate reserves have been established.
5.13	Title Matters.  Seller has (i) Defensible Title to the fee interests, leasehold interests and major facilities included in the Assets and (ii) to the knowledge of Seller, valid and indefeasible title to the pipeline rights-of-way, easements, and similar rights, properties, and interests included in the Assets, free and clear of all liens, claims, security interests, and other encumbrances, other than Permitted Encumbrances.
5.14	Personal Property.  Seller has good and valid title to each item of personal property with a value of Five Thousand Dollars ($5,000) or greater included in the Assets, free and clear of all liens and other encumbrances, except:  (i) liens arising by operation of Applicable Law for amounts not yet due and payable; (ii) the rights of customers, suppliers, and subcontractors in the ordinary course of business under general principles of commercial law; and (iii) as described in Schedule 5.14.
5.15	Payments in Respect of the Contracts.  Schedule 5.15 contains a list of all Contracts requiring periodic payments by Seller to any third party in excess of Ten Thousand Dollars ($10,000) in the aggregate per year.
ARTICLE 6	

REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as of the date hereof and as of the Closing Date that:
6.1	Organization and Good Standing.  Buyer is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Delaware with full limited partnership power, right and authority to own and lease the properties and assets it currently owns and leases and to carry on its business as such business is currently being conducted.  
6.2	Authorization of Agreement; No Violation; No Consents.  This Agreement has been duly executed and delivered by Buyer.  Buyer has the full limited partnership power and authority to enter into this Agreement, to make the representations, warranties, covenants and agreements made herein and to consummate the transactions contemplated hereby.  The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all requisite corporate action on the part of Buyer.  Neither the execution and delivery of this Agreement by Buyer nor the consummation by Buyer of the transactions contemplated hereby will conflict with, result in a breach, default or violation of, or require the consent of a third party under (a) the terms, provisions or conditions of the certificate of limited partnership of Buyer or (b) to the knowledge of Buyer, any judgment, decree or order or any governmental permit, certificate, license, law, statute, rule or regulation or any judgment, decree or order to which Buyer is a party or is subject, or to which the business, assets or operations of Buyer are subject, except for Customary Post-Closing Consents.
6.3	Governmental Consents.  To the knowledge of Buyer, no consent, action, approval or authorization of, or registration, declaration, or filing with, any Governmental Authority is required to authorize, or is otherwise required in connection with, the execution and delivery of this Agreement by Buyer or Buyer's performance of the terms of this Agreement or the validity or enforceability hereof against Buyer, except for Customary Post-Closing Consents.
6.4	Enforceability.  This Agreement constitutes the legal, valid and binding obligation of Buyer enforceable against Buyer in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights generally and general principles of equity.
6.5	Brokers.  No broker or finder has acted for or on behalf of Buyer or any Affiliate of Buyer in connection with this Agreement or the transactions contemplated by this Agreement.  No broker or finder is entitled to any brokerage or finder's fee, or to any commission, based in any way on agreements, arrangements or understandings made by or on behalf of Buyer or any Affiliate of Buyer for which Seller has or will have any liabilities or obligations (contingent or otherwise).
6.6	Suits.  There is no injunction or restraining order or legal, administrative or arbitration proceeding pending against Buyer that restrains or prohibits the consummation of the transactions contemplated by this Agreement.
6.7	Financing.  Buyer is a limited partnership and has currently available (including funds that can be drawn under existing lines of credit) all funds necessary to pay the Purchase Price and any other amounts contemplated by this Agreement.  Buyer's ability to consummate the transactions contemplated hereby is not contingent on its ability to complete any financing prior to or upon the Closing.
ARTICLE 7	

COVENANTS
7.1	General.  Each of Buyer and Seller will use its reasonable efforts in good faith to take all actions and to do all things necessary or advisable in order to consummate and make effective the purchase and sale of the Assets contemplated by this Agreement including satisfaction of the conditions to Closing set forth in Articles 8 and 9 hereof.
7.2	Restrictions.  Without limiting Buyer's other rights in this Agreement, if the Closing occurs and if the transfer of any instrument, contract, license, lease, permit, or other document to Buyer hereunder shall require the consent of any party thereto other than Seller, then this Agreement shall not constitute an agreement to assign the same, and such item shall not be assigned to or assumed by Buyer at the Closing, if an actual or attempted assignment thereof would constitute a breach thereof or default thereunder.  In such case, Seller and Buyer shall cooperate and each shall use commercially reasonable efforts to obtain such consents to the extent required of such other parties and, when any such consents are obtained, to transfer the applicable instrument, contract, license, lease, permit, or other document.  If any such consent cannot be obtained, Seller shall cooperate in any commercially reasonable arrangement requested by Buyer to obtain for Buyer all benefits, privileges, obligations and privileges of the applicable instrument, contract, license, lease, permit, or document.
7.3	Operation of the Assets Prior to the Effective Time.  
(a)	Subject to the provisions of applicable agreements Seller shall continue to maintain, operate and administer the Assets, or shall cause the Assets to be maintained, operated and administered, in a good and workmanlike manner consistent with past practices and in substantial compliance with all Applicable Laws.
(b)	Without the prior written approval of Buyer, Seller shall not enter into any agreement to sell, transfer, encumber or dispose of any part of the Assets, other than assets and equipment not material to, or no longer useful in, the business and which do not have any aggregate value that exceeds Fifty Thousand Dollars ($50,000).
(c)	Between the date of this Agreement and the Closing Date, Seller shall, except for (i) emergency action taken in the face of risk to life, property or the environment (such determination to be made in Seller's sole discretion), and (ii) the expenditures set forth on Schedule 3.2, submit to Buyer for prior written approval (which approval shall not be unreasonably withheld), all requests for capital expenditures relating to the Assets that involve individual commitments of more than Fifty Thousand Dollars ($50,000) or aggregate capital expenditures in excess of Two Hundred Thousand Dollars ($200,000) and which, consistent with generally accepted accounting principles and the FERC's regulations relating to natural gas pipeline accounting, are classified as capital expenditures.  Buyer will respond to Seller in writing within ten (10) business days after receiving from Seller a request for approval of a capital expenditure.  If Buyer fails to deliver a written response to Seller within such ten (10) business days, Buyer will be deemed to have approved such expenditure.  Schedule 2.1 shall be deemed amended to reflect any assets acquired or constructed by Seller in compliance with this Section 7.3(c).
(d)	Without the prior written approval of the representative(s) of Buyer identified on Schedule 7.3(d) (which approval shall not be unreasonably withheld), Seller will not enter into, amend, or terminate any of the Contracts, except for (i) any waivers or amendments to Contracts that do not adversely affect the value of the Assets in any material respects or the ability of Buyer to conduct the day-to-day operations of the business, (ii) any extensions in excess of thirty (30) days, (iii) interruptible Contracts or other Contracts that are not cancelable by Buyer on thirty (30) days' notice, or (iv) transportation Contracts at Seller's maximum tariff rates.  Seller will take all commercially reasonable steps to keep in force and perform the Contracts.
7.4	Permits.  Seller and Buyer agree to keep in force and effect and to cooperate with each other to make application for assignment of existing Permits (effective with the conveyance of the Assets to Buyer) or the issuance of new Permits subsequent to the conveyance of the Assets to Buyer.
7.5	Access.  Between the date hereof and the Closing Date, Seller will permit Buyer's officers, employees, agents and advisors to have reasonable access to the Assets and the employees of the Assets (so long as such access occurs during normal business hours and does not unreasonably interfere with the operation of the Assets) for the following: (a) to inspect the Assets; (b) to observe the operation of the Assets and the performance of duties by the employees of Seller prior to the Closing; and (c) related purposes consistent with this Agreement.  Buyer agrees to perform any such activities and maintain information in accordance with the terms of the Confidentiality Agreement.  In connection with Buyer's right to reasonable access to the Assets BUYER HEREBY AGREES TO DEFEND, INDEMNIFY, RELEASE, PROTECT, SAVE AND HOLD HARMLESS THE SELLER INDEMNITEES FROM AND AGAINST ANY AND ALL LOSSES FOR PERSONAL INJURY OR PROPERTY DAMAGE ARISING OUT OF OR RELATING TO ANY PLANT OR FIELD VISIT, OR OTHER DUE DILIGENCE ACTIVITY, CONDUCTED BY BUYER OR ANY AFFILIATE, SUCCESSOR, ASSIGN, OFFICER, REPRESENTATIVE, DIRECTOR, CONTROLLING PERSON AND AGENT (EACH A "BUYER PARTY"), INCLUDING WITHOUT LIMITATION ANY LOSSES RESULTING, IN WHOLE OR IN PART, FROM THE CONCURRENT OR JOINT NEGLIGENCE OR STRICT LIABILITY OF ANY SELLER INDEMNITEE. NOTWITHSTANDING THE FOREGOING, BUYER SHALL NOT BE OBLIGATED TO INDEMNIFY ANY SELLER INDEMNITEE FOR LOSSES (WITH THE EXPRESS EXCEPTION OF LOSSES SUFFERED BY ANY BUYER PARTY) THAT WERE SOLELY THE RESULT OF ANY SELLER INDEMNITEE'S STRICT LIABILITY OR THE SOLE NEGLIGENCE OF ONE OR MORE SELLER INDEMNITEES.  THE PARTIES AGREE THAT THIS PARAGRAPH CONSTITUTES A CONSPICUOUS LEGEND.
7.6	Pigging Activities.  Between the date of this Agreement and the Closing Date, Seller shall perform the pigging activities as set forth on Schedule 7.6.  Seller shall provide Buyer with reasonable advance notice and opportunity to be present at and to observe the performance of such pigging activities.
7.7	Compressor Removal.  Buyer and Seller shall agree to negotiate in good faith within sixty (60) days after the date of this Agreement a Service Agreement to provide for, at Seller's sole cost and expense, the compressor removal and other work described on Schedule 7.7.
7.8	Payment of Pre-Effective Time Operating Expenses.  Seller agrees that all operating expenses actually incurred by Seller or its Affiliates in connection with the operation of the Assets prior to the Effective Time shall be for the account of, and paid by, Seller or its Affiliates in the ordinary course of business and Buyer shall not be responsible for the payment thereof other than sales and other transfer taxes and fees described in Section 7.11(a), which taxes and fees shall be paid by Buyer.
7.9	FERC Filings.  Seller shall, as soon as practicable, and in any event, within forty-five (45) days after the execution of this Agreement, make the required regulatory filing with FERC for abandonment of the Assets, and shall pursue FERC's approval thereof.  Buyer shall fully cooperate with Seller for purposes of obtaining all such required regulatory approvals.  Buyer shall, as soon as practicable, and in any event, within forty-five (45) days after the execution of this Agreement, make its required regulatory filings with FERC, and shall pursue FERC's approval thereof.  Seller shall fully cooperate with Buyer for purposes of obtaining all such required regulatory approvals.  Buyer shall be responsible for obtaining any and all regulatory approvals, licenses, permits or other authorizations necessary to acquire and operate the Assets.  To the extent that Buyer is so required to obtain such authorizations, it shall, as soon as practicable, file for and diligently pursue such approval, and Seller shall cooperate fully with Buyer for purposes of obtaining such regulatory approvals.
7.10	Risk of Loss of the Assets; Casualty Loss.  The risk of loss to the Assets shall remain on Seller until the Effective Time, and Buyer will receive the Assets, taken as a whole, in generally good operating condition and repair, ordinary wear and tear excepted.  In the event any of the Assets shall be damaged by fire or other casualty prior to the Closing Date, the Parties will negotiate in good faith reasonable compensation reflecting the reasonable costs of repair to the extent such repair, replacement or reconstruction has not occurred at or prior to the Closing.
7.11	Allocation of Taxes.  
(a)	Any sales, use, gross receipts, documentary, recording, stamp, transfer, or similar taxes that arise from and are due and payable as a consequence of the sale of the Assets shall be paid, at the date of Closing, by Buyer to Seller, who shall timely remit such tax to the proper taxing jurisdictions.  Seller shall separately state any sales, use, gross receipts, documentary, recording, stamp, transfer, or similar taxes that are due, from the sales price of the Assets.  In the event that any taxing jurisdiction determines that the tax due is deficient, the deficient tax due shall be paid by Buyer and any associated interest and penalties shall be paid by Seller.  In the event that Buyer believes that the transactions contemplated by this Agreement are exempt from such taxes, Buyer shall deliver to Seller at closing an exemption certificate.
(b)	Any sales, use, gross receipts, documentary, recording, stamp, transfer, or similar taxes that are due and payable as a consequence of ownership and operation of the Assets prior to the date of Closing shall be the responsibility of Seller.
(c)	All ad valorem, property and similar taxes and any other taxes not encompassed by Sections 7.11(a) or (b) for the then current year relating to the Assets shall be prorated as of the Closing.  If the Closing shall occur before the actual taxes for the then current year are known, the apportionment of taxes shall be upon the basis of taxes for the Assets for the immediately preceding year, provided that, if the taxes for the current year are thereafter determined to be more or less than the taxes for the preceding year (after any appeal of the assessed valuation thereof is concluded), Seller and Buyer promptly shall adjust the proration of such taxes based on actual taxes paid with respect to the current year, and Seller or Buyer, as the case may be, shall pay to the other any amount required as a result of such adjustment.  All special taxes or assessments prior to the end of the calendar year of Closing shall be prorated as set forth above.
(d)	Seller will be entitled to any refunds or credits of taxes paid with respect to the Assets to the extent attributable to the period prior to the Closing.  Buyer will be entitled to any refunds or credits of taxes paid with respect to the Assets to the extent attributable to a post-Closing tax period.
(e)	Seller shall be responsible for the preparation and filing of any tax returns that are required to be filed and the payment of any tax related to the Seller for taxable periods ending prior to or on the Closing Date.  Buyer shall be responsible for the preparation and filing of all tax returns and the payment of any tax related to the Buyer that are required to be filed for taxable periods ending after the Closing Date.
7.12	Records: Access and Retention.  
(a)	As soon as reasonably possible after the completion of the accounting cycle for the period up to but excluding the Closing Date, Seller will deliver to Buyer copies of files or, where the files relate exclusively to the Assets, the original files included in the books, records and files associated with the Assets (the "Records"), including without limitation property record files, maps, engineering reports, operating reports and data, and maintenance records dealing with the construction, operation and maintenance of the Assets.  After Closing, Buyer shall give Seller and its authorized representatives such access, during normal business hours, to the Records, as may be reasonably required by Seller, provided that such access does not unreasonably interfere with the ongoing operations of Buyer.  Seller shall be entitled to keep or obtain extracts and copies of such Records.
(b)	For a period of seven (7) years after the Closing Date, Buyer shall preserve and retain all such Records relating to taxes, and for a period of three (3) years after the Closing Date, Buyer shall preserve and retain all such Records relating to the operation of the Assets; provided, however, that in the event that Buyer transfers all or a portion of the Assets to any third party during such period, Buyer may transfer to such third party all or a portion of the Records related thereto, provided such third party transferee expressly assumes in writing the obligations of Buyer under this Section 7.12 and Buyer first offers to Seller the opportunity, at Seller's expense, to copy the Records to be transferred.
7.13	Names.  As soon as reasonably possible after Closing, but in no event later than one hundred eighty (180) days after Closing, Buyer shall remove the names of Seller and its Affiliates, including "ENRON" and all variations thereof, from all of the Assets and make the requisite filings with, and provide the requisite notices to, the appropriate federal, state or local agencies to place the title or other indicia of ownership, including operation of the Assets, in a name other than any name of Seller or any of its Affiliates, or any variations thereof.
7.14	Interim Services Agreement.  Buyer and Seller shall agree to negotiate in good faith between the date of execution of this Agreement and the Closing Date an Interim Services Agreement to provide operational services to the system for a period not to exceed six (6) months from the Closing Date and at a cost to Buyer not to exceed Ten Thousand Dollars ($10,000) per month, with payment for the first month payable at Closing.
7.15	Supplements to Schedules.  From time to time prior to the Closing, Seller will promptly supplement or amend the Schedules attached hereto with respect to any material matter hereafter arising which, if existing or occurring at the date of this Agreement, would have been required to be set forth or described in such Schedule.  Such supplements or amendments to the Schedules, if any, are solely for the purposes of disclosure and shall (i) be disregarded for purposes of determining whether the condition to Buyer's obligation to close the transactions under this Agreement set forth in Section 9.1 has been satisfied and (ii) such matters shall not be deemed to have been included in Seller's schedules for purposes of Seller's indemnity obligations hereunder.
ARTICLE 8	

CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller to consummate the transactions contemplated by this Agreement are subject, at the option of Seller, to the following conditions:
8.1	Representations.  The representations and warranties of Buyer herein contained shall be made again at Closing and shall be true and correct in all material respects on the Closing Date.  Solely for purposes of determining whether the condition in the preceding sentence has been satisfied, qualifications in any representation or warranty as to materiality or Material Adverse Effect shall be disregarded and such representation or warranty shall be interpreted as if it did not contain any such materiality qualifier.   Seller shall have received a certificate of Buyer, executed on its behalf by its President or one of its Vice Presidents, dated the Closing Date, certifying to such effect.
8.2	Performance.  Buyer shall have performed all material obligations, covenants and agreements contained in this Agreement to be performed or complied with by it at or prior to the Closing.
8.3	Pending Matters.  No suit, action or other proceeding shall be pending that could reasonably be expected to restrain, enjoin or otherwise prohibit the consummation of the transactions contemplated by this Agreement.
8.4	Casualty Loss.  The Assets shall not have been materially damaged, lost, or destroyed where the cost to repair or replace such Assets to the condition prior to such damage, loss, or destruction exceeds an amount equal to five percent (5.0%) of the Closing Payment.
8.5	FERC Order.  Seller shall have received from the FERC final orders no longer subject to rehearing on all issues regarding the approval of this sale and the transfer of the Assets to Buyer, including the abandonment application of the facilities and the requested accounting and tax treatment of the transaction.
8.6	Closing Documents.  All agreements, documents and instruments contemplated under this Agreement to be executed and delivered by Buyer shall have been duly executed by Buyer and be ready for delivery concurrently with the consummation of the transactions contemplated by this Agreement.
ARTICLE 9	

CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated by this Agreement are subject, at the option of Buyer, to the following conditions:
9.1	Representations.  The representations and warranties of Seller herein contained shall be made again at Closing and shall be true and correct in all material respects on the Closing Date.  Solely for purposes of determining whether the condition in the preceding sentence has been satisfied, qualifications in any representation or warranty as to materiality or Material Adverse Effect shall be disregarded and such representation or warranty shall be interpreted as if it did not contain any such materiality qualifier.  Buyer shall have received a certificate of Seller, executed on its behalf by its President or one of its Vice Presidents, dated the Closing Date, certifying to such effect.
9.2	Performance.  Seller shall have performed all material obligations, covenants and agreements contained in this Agreement to be performed or complied with by it at or prior to the Closing.
9.3	Pending Matters.  No suit, action or other proceeding shall be pending that could reasonably be expected to restrain, enjoin or otherwise prohibit the consummation of the transactions contemplated by this Agreement.
9.4	Casualty Loss.  The Assets shall not have been materially damaged, lost, or destroyed where the cost to repair or replace such Assets to the condition prior to such damage, loss, or destruction exceeds an amount equal to five percent (5.0%) of the Closing Payment and such repair or replacement has not occurred prior to Closing.
9.5	Consents.  Seller shall have received, at Seller's sole expense, all consents, approvals, permits, licenses and waivers, except such consents, approvals, permits, licenses and waivers the failure to obtain would not materially interfere with Buyer's operation of the Assets.
9.6	FERC Order.  Buyer shall have received from the FERC final orders no longer subject to rehearing on all issues regarding the approval of  the purchase and the transfer of the Assets to Buyer and the revised tariff sheets to separate gathering and transportation rates for the Assets, provided that such orders:  (1) approve the purchase and transfer of  the Assets to Buyer, including the requested accounting and tax treatment; (2) do not contain any requirement that imposes rate regulation on Buyer's service performed on the portion of the Assets at and upstream of the Block 686 platform; (3) do not materially interfere with Buyer's ability to operate the Assets in a manner substantially consistent with that of Seller immediately prior to the execution of this Agreement; and (4) do not impose a rate or revenue cap or analogous mechanism applicable to the jurisdictional and non-jurisdictional portions of the Assets, in the aggregate, that is less than the rates charged or revenue stream realized by the Seller immediately prior to the execution of this Agreement.
9.7	Platform Space Lease.  Seller shall have delivered to Buyer a platform space lease (the "Platform Space Lease") to permit Assets in place on the Matagorda Block 758 platform to remain in place following the Closing Date, and which shall provide for annual payments not to exceed _________ Dollars ($__________).
9.8	Closing Documents.  All agreements, documents and instruments contemplated under this Agreement to be executed and delivered by Seller shall have been duly executed by Seller and be ready for delivery concurrently with the consummation of the transactions contemplated by this Agreement.
ARTICLE 10	

TITLE MATTERS
10.1	Title Examination Period.  From and after the date of execution hereof until 5:00 p.m., local time in Houston, Texas, on the sixtieth (60th) day following the execution hereof (the "Title Examination Period"), Buyer may notify Seller in writing of any alleged Title Defects affecting any of the Assets and discovered by Buyer or any Affiliate or agent of Buyer, setting forth in such notice a detailed description of each Title Defect and the estimated cost to cure each Title Defect.  Any matters that may otherwise constitute Title Defects relating to the Assets but that are not specifically raised in writing by Buyer prior to the expiration of the Title Examination Period shall be deemed to have been waived, except as provided in Section 5.13.  Upon receipt of such notice from Buyer, Seller shall have the right, but not the obligation, to attempt to cure such Title Defects prior to Closing and after the Closing, to the extent that Seller elects pursuant to Section 10.3(a) to indemnify Buyer for Losses arising out of any Title Defects.  Notwithstanding the preceding sentence, prior to the Closing Seller will seek diligently consents and approvals for transfers of easements, rights of way, and realty leases on privately owned lands where they are required.  To the extent that such consents require payments to the affected landowners, if any, the resulting costs will be governed by the provisions of Section 10.3.  Buyer shall not have the right to attempt to cure such Title Defects to the extent that Seller has elected to indemnify Buyer for Losses arising out of such defects, unless in the reasonable opinion of Buyer's counsel Buyer would likely be liable to a third party for punitive or similar damages as a result of such Title Defect.
10.2	Definition of Title Defects.
(a)	Any unobtained consent to assignment or waiver of a preferential purchase right, lien, charge, obligation, encumbrance, defect or irregularity of title or any other circumstance or condition that causes the title of the current owners of the Assets in any of the realty or major facilities that are part of the Assets to be less than Defensible Title (as hereinafter defined) and for which notice is given by Buyer to Seller pursuant to Section 10.1, shall be a title defect (a "Title Defect").
(b)	For purposes of this Agreement, the term "Defensible Title" to the realty and other real property rights or major facilities shall mean, subject to and except for the Permitted Encumbrances, that Seller has, in the realty and other real property rights and major facilities, good and defensible title free and clear of all liens, encumbrances and defects of any kind whatsoever.
(c)	For purposes of this Agreement, the term "Permitted Encumbrances" shall mean any of the following:
(i)	any liens for taxes and assessments not yet delinquent or, if delinquent, that are being contested in good faith in the ordinary course of business and for which adequate reserves have been established;
(ii)	any obligations or duties reserved to or vested in any municipality or other Governmental Authority to contract or regulate any Asset in any manner, all applicable Laws and all applicable rules and orders of any Governmental Authority;
(iii)	the terms and conditions of all leases and servitudes that do not and will not unreasonably interfere with or affect the use, ownership or operation of the Assets;
(iv)	Customary Post-Closing Consents;
(v)	any required third party consents to assignment and similar agreements and obligations arising in connection with the transfer of the Assets to Seller or the sale of the Assets to Buyer with respect to which prior to Closing (A) waivers or consents have been obtained from the appropriate person, (B) the applicable period of time for asserting such rights has expired without any exercise of such rights or (C) lawful arrangements have been made by the Parties to allow Buyer to receive substantially the same economic benefits as if all such waivers and consents had been obtained;
(vi)	existing easements, rights of way, servitudes, permits, licenses, surface leases and other rights with respect to surface obligations, pipelines, grazing, canals, ditches, reservoirs, or the like, conditions, covenants or other restrictions, and easements of streets, alleys, highways, pipelines, telephone lines, power lines, railways and other easements and rights of way on, over or in respect of any of the Assets, in each case, that do not and will not unreasonably interfere with or affect the use, ownership or operation of the Assets;
(vii)	materialmen's, mechanics', repairmen's, employees', contractors', operators', tax and other similar liens or charges arising in the ordinary course of business incidental to construction, maintenance or operation of any of the Assets (A) if they have not been filed pursuant to law, (B) if filed, they have not yet become due and payable or payment is being withheld as provided by law or (C) if their validity is being contested in good faith in the ordinary course of business by appropriate action (and for which adequate reserves have been established);
(viii)	any other presently existing liens, charges, encumbrances, contracts, agreements, instruments, obligations, defects or irregularities of any kind whatsoever (excluding, however, requirements for third party consents for transfer of rights of way, easements, and realty leases) affecting the Assets that do not and will not unreasonably interfere with or affect the use, ownership or operation of the Assets;
(ix)	any Title Defect for which Seller has provided a remedy pursuant to Section 10.3 (including, without limitation, an adjustment to the Closing Payment or indemnification) and any Title Defect that has been waived by Buyer or deemed to be waived by Buyer pursuant to this Agreement; and
(x)	the matters described on Schedule 10.2 attached hereto.
10.3	Remedies for Title Defects.  
(a)	Subject to Section 10.3(b), in the event that any Title Defect is not waived by Buyer or cured on or before Closing, Seller shall, [in its sole election,]and Buyer shall mutually agree to elect to:
(i)	reduce the Closing Payment by an amount agreed upon in writing by Buyer and Seller as being the cost to cure such Title Defect, taking into consideration the portion of the Assets subject to such Title Defect and the legal effect of such Title Defect on the Assets affected thereby and subject to the maximum amount of Seller's liability set forth in Section 13.5(b); or
(ii)	indemnify Buyer, subject to the maximum amount of Seller's liability set forth in Section 13.5(b), against all liability, loss, cost and expense resulting from such Title Defect pursuant to Section 13.3(b).
In the event that Seller elects to proceed under Section 10.3(a)(i) and Buyer and Seller have failed to agree on or before the third business day prior to the then scheduled Closing Date on the proportionate reduction of the Closing Payment (which agreement Buyer and Seller shall use good faith efforts to reach), Seller shall then elect to proceed with respect to such Title Defect under Section 10.3(a)(ii).  Seller may elect to proceed under Section 10.3(a)(i) with respect to certain Title Defects and under Section 10.3(a)(ii) with respect to other Title Defects.
(b)	Notwithstanding anything herein to the contrary, in no event shall Seller be obligated pursuant to Section 10.3(a) to decrease the Closing Payment or indemnify Buyer pursuant to Section 13.3(b) for Title Defects unless the cost to cure all such Title Defects in the aggregate, exceeds a deductible in an amount equal to one percent (1.0%) of the Closing Payment, after which point Buyer shall be entitled to adjustments to the Closing Payment or indemnification only with respect to curative costs in excess of such deductible.  Without the prior written consent of Buyer, Seller shall not incur costs to cure any Title Defects that would be attributable to Buyer's deductible amount.  Further, notwithstanding anything herein to the contrary, in no event shall Seller be obligated pursuant to this Article 10 to decrease the Closing Payment, pursuant to Section 10.3(a)(i), to indemnify Buyer pursuant to Section 10.3(a)(ii) or otherwise incur any liability of any kind whatsoever in excess of the maximum amount of Seller's liability set forth in Section 13.5(b).
ARTICLE 11	

ENVIRONMENTAL MATTERS
11.1	Environmental Representations and Warranties.  Except as set forth on Schedule 11.1, Seller represents and warrants that to the best of Seller's knowledge: 
(a)	all environmental Permits concerning the operation, use and maintenance of the Assets have been obtained from the appropriate Governmental Authority, are in full force and effect and, pursuant to applicable Environmental Laws, fully transferable to Buyer;
(b)	no written notification, or, to Seller's knowledge, otherwise has been received which indicates that a violation has occurred (or is continuing) of any term or condition of any environmental Permit issued for the Assets;
(c)	there is no existing contamination or pollution in violation of or in excess of standards set by applicable Environmental Law or for which Seller has a responsibility to report, remediate or cleanup to any third party or Governmental Authority pursuant to applicable Environmental Laws;
(d)	no written notification, or, to Seller's knowledge, otherwise has been received which indicates that any third party has been adversely affected or damaged by any environmental condition caused by the operation, use or maintenance of the Assets;
(e)	all outside Disposal related to the Assets has been made in accordance with Applicable Law;
(f)	all Releases have been timely reported to the extent required by the applicable Governmental Authority;
(g)	true, correct, and complete copies of all environmental studies, assessments, reports, or other documents or information in its possession relating to the environmental condition of or compliance with Environmental Laws at the Assets have been delivered or supplied to Seller for inspection; however, Seller does not make any representation or warranty as to the accuracy or completeness of the information in such environmental studies, assessments, reports, or other documents; and
(h)	Seller's conduct of its operations and business activities at the Assets have been performed in compliance with Environmental Law.
11.2	Environmental Access/Indemnification/Restoration
(a)	Seller will permit Buyer's employees, agents, and contractors to have reasonable access to the Assets and the employees of the Assets (so long as such access occurs during normal business hours and does not unreasonably interfere with the operation of the Assets) for sixty (60) days (the "Environmental Audit Period") from and after the date of this Agreement for the purpose of conducting an "Environmental Audit," which shall consist of (i) a review of Seller's and its Affiliates' environmental records, (ii) interviews with Seller's employees operating the Assets, and (iii) a Phase I environmental assessment, and if deemed appropriate by Buyer, a Phase II environmental audit (i.e., Buyer seeks to conduct any sampling or intrusive investigation of the surface or the subsurface of the Assets).  Buyer and Seller shall agree upon the scope and nature of such a Phase II audit within sixty (60) days of the date of this Agreement.  The agreed upon Phase II investigation shall be set forth in writing which shall be sufficient to define the scope, nature, location and duration of such an investigation, including appropriate intrusive sampling in accordance with the most current ASTM protocols and standard industry practices and procedures of environmental professionals in order to generate a Baseline Contamination Assessment report for the Assets.  The Environmental Audit shall be conducted by ______________, or another consultant mutually agreed upon by the Parties.  For purposes of this Agreement, "intrusive sampling" shall mean taking samples of subsurface soils or groundwater for the purpose of identifying or quantifying the presence of Hazardous Substances or other materials regulated pursuant to applicable Environment Laws.  Buyer shall pay the costs of such Phase I and Phase II environmental assessments.  The Parties agree that the resulting Baseline Contamination Assessment report shall be used to establish the environmental condition of the Assets at the time of the Baseline Contamination Assessment.
(b)	Buyer hereby agrees to defend, indemnify, release, protect, save and hold harmless the Seller Indemnitees from and against any and all Losses arising out of or relating to acts or omissions of Buyer or any Buyer Indemnitee while conducting the Environmental Audit activity, but excluding any Losses to the extent resulting from the concurrent or joint negligence or strict liability of any Seller Indemnitee.
(c)	Upon completion of the performance of the Environmental Audit activity described in Section 11.2(a) hereinabove, Buyer agrees to promptly restore the Assets to the physical condition the Assets were in immediately prior to the commencement of any such activities, to the extent any change thereto is attributable to such activities.
11.3	Environmental Baseline  Contamination Assessment Report.  
(a)	A true and correct copy of the Baseline Contamination Assessment report shall be addressed and promptly delivered to Buyer and Seller.  The Parties agree that the Baseline Contamination Assessment report shall describe the environmental condition and corresponding cost estimates that Buyer is requesting Seller to undertake.  If the Baseline Contamination Assessment report reveals any Environmental Compliance Deficiency, Seller agrees (without admitting that any Environmental Compliance Deficiency contained in the Baseline Contamination Assessment report is in fact a violation of Environmental Laws) to promptly remove or correct same prior to Closing, subject to the limitations on Seller's liability set forth in Section 13.5(b).
(b)	If there are any Environmental Compliance Deficiencies that are not completed by or on behalf of Seller prior to Closing, Buyer may, at its sole election, either:
(i)	reduce the Closing Payment by a reasonable amount agreed upon in writing by Buyer and Seller as the remaining costs of any incomplete or remaining corrective projects;
(ii)	elect to have Seller perform or cause to be performed, in accordance with Section 11.4, such operations as may be necessary to cure any Environmental Compliance Deficiencies; or
(iii)	elect to have Seller indemnify Buyer against Claims and Losses resulting from any Environmental Compliance Deficiencies pursuant to Section 11.4(a)(ii), subject to the limitations on Seller's liability set forth in Section 13.5(b). In the event that Seller elects to proceed under this clause (iii) for any Environmental Compliance Deficiency, Buyer shall be deemed to have furnished a Claim Notice with respect to such Environmental Compliance Deficiency in accordance with Article 13.
(c)	The Parties agree that in the event Buyer elects for Seller to undertake corrective action of any Environmental Compliance Deficiencies, the corrective action shall be conducted as follows:
(i)	Seller shall notify Buyer of its election to conduct the corrective action.
(ii)	Seller shall provide Buyer with a copy of all materials that may be submitted to or received from agencies with jurisdictional authority over the corrective action, including but not limited to notices, plans, approvals and analytical results.   In the event no plan or proposal is submitted to the jurisdictional agency, then Seller shall provide Buyer with a written plan to conduct the corrective action.  The foregoing documentation shall be sufficient to describe the scope, nature and anticipated duration of the corrective action.  Buyer agrees not to interfere with or oppose (before any jurisdictional authority) in any manner any of Seller's corrective action activities except and unless Seller fails to conduct such corrective actions in accordance with the terms and condition of this Agreement or as may be required by Applicable Laws. 
(iii)	Seller shall conduct the corrective action in a good and workmanlike manner consistent with industry standards and in accordance with any proposal or plans submitted to regulatory agencies and the Buyer, having due regard to minimize in a reasonable manner the cost thereof.
(iv)	Seller shall provide Buyer written notice of all major operations to be conducted on the Assets associated with the corrective action at least forty-eight (48) hours prior to such operations in order that Buyer may witness and observe such operations.  Such operations will include, but not be limited to, any sampling conducted on the Assets.  Buyer shall have the right to split any samples taken by Seller as well as the right to take independent samples and submit such samples to an independent laboratory.  Seller shall have the right to split any samples taken by Buyer and submit such samples for analysis.  Buyer agrees to bear its own costs in regard to witnessing, inspecting or auditing the corrective action activities of Seller.  Such costs include, but are not limited to, sampling costs, laboratory costs, personnel costs, and any third party costs.
(v)	Seller shall notify Buyer in writing of the completion of the corrective action.  Such notice shall include a statement of actual expenditures and where appropriate, supporting analytical information and report(s) sufficient to verify that the Environmental Compliance Deficiency no longer exists. 
(vi)	Seller shall invoice Buyer for Buyer's share, if any, of any costs and expenses incurred as a result of the corrective action, and Buyer shall pay such invoice within thirty (30) days of receipt.  Seller agrees that Buyer shall have the right to audit such records as may be reasonably necessary to verify the expenditures associated with the corrective action.
(vii)	Buyer agrees to fully cooperate with Seller to facilitate the corrective action.  Such cooperation shall include providing information to Seller and access to the Assets during reasonable hours.  Buyer also agrees to provide access to the Assets to Seller's personnel and agents and jurisdictional agency representatives.
11.4	Environmental Indemnification.  
(a)	Subject to the limitations on Seller's liability set forth in section 13.5(b), Seller agrees to indemnify and hold Buyer and Buyer Indemnitees harmless from and against any and all Claims resulting in any Loss in connection with (i) any inaccuracy in or breach of any of Seller's environmental representations and warranties above, (ii) any uncured Environmental Compliance Deficiency, (iii) the use, handling, transportation, and/or disposal of any Hazardous Substance offsite which occurred prior to the Closing Date and/or (iv) third party toxic torts which were caused by an act or omission prior to the Closing Date.
(b)	Buyer agrees to indemnify and hold Seller and Seller Indemnitees harmless from and against any and all Claims resulting in any Loss in connection with the environmental condition of the Assets whether arising before or after the Closing Date except for those liabilities expressly set forth and identified as Seller's indemnification obligations in Section 11.4(a) hereinabove.
(c)	All Claims to be made under the environmental indemnification obligations set forth in Section 11.4(a) and (b) above must be made on or before the end of time periods shown below, commencing on the Closing Date.
Seller's obligation in Section 11.4(a)(i) – Seven hundred twenty (720) days;
Seller's obligation in Section 11.4(a)(ii) – Until cured to the satisfaction of the applicable oversight Governmental Authority;
Seller's obligations in Sections 11.4(a)(iii) and (iv) – Seven hundred twenty (720) days; and
Buyer's obligation in Section 11.4(b) – Forever.
(d)	The Parties acknowledge and agree that this Article 11, as limited by Article 13, shall be the exclusive rights and remedies with respect to environmental matters, and in the event that any other term, condition or provision of this Agreement conflicts herewith, this Article 11 shall control.
ARTICLE 12	

TERMINATION
12.1	Termination At or Prior to Closing.  The occurrence of any of the following events prior to the Closing notwithstanding the reasonable efforts of the Party asserting a termination to avoid the event and to fulfill the conditions to Closing in its control shall be a "Termination Event":
(a)	Seller and Buyer may elect to terminate this Agreement at any time on or prior to the Closing Date by mutual written consent of the Parties;
(b)	Byby delivery of written notice to Buyer, Seller may elect to terminate this Agreement within ninety (90) days of the date hereof if the aggregate amount of (i) all Title Defects in excess of the one percent (1.0%) of Closing Payment deductible asserted pursuant to Article 10 of this Agreement plus (ii) all Environmental Compliance Deficiencies asserted pursuant to Article 11 of this Agreement, exceeds an amount equal to five percent (5.0%) of the Closing Payment;
(c)	Byby delivery of written notice to Seller, Buyer may elect to terminate this Agreement within ninety (90) days of the date hereof if (i) the aggregate amount of Title Defects asserted pursuant to Article 10 of this Agreement up to the amount of the Title Defect Deductible plus (ii) all Environmental Compliance Deficiencies asserted pursuant to Article 11 of this Agreement, exceeds an amount equal to five percent (5.0%) of the Closing Payment;
(d)	if Buyer has requested permission to conduct a Phase II environmental investigation pursuant to Section 11.2(a) and Seller has not agreed with Buyer on such investigation as required by Section 11.2(a), then on or before the ninetieth (90th) day after the date hereof either Seller or Buyer may elect to terminate the transactions contemplated by this Agreement by delivery of written notice to the other Party; or
(e)	either Buyer or Seller may elect to terminate this Agreement by written notice to the other Party if the waiver of the right of first refusal referenced on Schedule 5.5 shall not have been received by Seller prior to December 31, 2001.  In the event of any such termination, Seller shall pay to Buyer Three Hundred Thousand Dollars ($300,000); or
(f)	(e) either Buyer or Seller may elect to terminate this Agreement by written notice to the other Party if the Closing has not occurred on or before the date twelve (12) months from the date hereof.
12.2	Effect of Termination.  In the event that Closing does not occur as a result of either Party exercising its right to terminate pursuant to Section 12.1, then neither Party shall have any further rights or obligations under this Agreement, except that (a) nothing herein shall relieve either Party from any liability for any willful breach hereof, and (b) Buyer's indemnification and related obligations under Section 6.5 shall survive any such termination.
ARTICLE 13	

INDEMNIFICATION
13.1	Assumption of Liabilities Relating to the Assets.  As of the Effective Time and subject to Seller's indemnification obligation set forth in Section 13.3, Buyer shall assume the Assumed Obligations.  "Assumed Obligations" shall mean all liabilities, duties, and obligations of every kind whatsoever relative to ownership, operation, occupancy, condition or use of the Assets attributable to the period of time after the Effective Time.
13.2	Indemnification By Buyer.  Subject to Section 13.5(a), Buyer shall indemnify, release, defend, and hold harmless Seller, its officers, directors, employees, agents, representatives, Affiliates, subsidiaries, successors and assigns (collectively, the "Seller Indemnitees") from and against any and all Losses asserted against, resulting from, imposed upon or incurred by any of the Seller Indemnitees as a result of, or arising out of: (a) the breach of any of the representations, warranties, covenants or agreements of Buyer contained in this Agreement, or (b) the Assumed Obligations, or (c) any liability for taxes (including interest, penalties or fines related thereto) the responsibility for payment of which was assumed by Buyer pursuant to Section 7.11 above; provided, however, that Buyer shall have no obligation to indemnify any of the Seller Indemnitees with respect to any matter for which Seller is indemnifying Buyer pursuant to Section 13.3.
13.3	Indemnification By Seller.  Subject to Section 13.5(b), Seller shall indemnify, defend and hold harmless Buyer, its officers, directors, employees, agents, representatives, Affiliates, subsidiaries, successors and assigns (collectively, the "Buyer Indemnitees") from and against all Losses asserted against, resulting from, imposed upon or incurred by any of the Buyer Indemnitees as a result of, or arising out of, (a) the breach of any of the representations, warranties, covenants or agreements of Seller contained in this Agreement, (b) Title Defects related to the Assets as to which Seller elected pursuant to Section 10.3 above to indemnify Buyer against all liability, loss, cost and expense, subject to satisfaction of the deductible provided for in Section 10.3(b), (c) the ownership, operation, occupancy, condition or use of the Assets attributable to the period prior to the Effective Time, (d) any liability for taxes related to the Assets (including interest, penalties or fines related thereto) for the period prior to the Effective Time, and (e) any claims for gas imbalances in existence as of the Closing Date, or arising out of facts and circumstances occurring before Closing.
13.4	[Reserved]  
13.5	Limitation on Damages; Survival of Representations.  
(a)	NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, IN NO EVENT SHALL BUYER BE LIABLE TO THE SELLER INDEMNITEES FOR ANY CONSEQUENTIAL, EXEMPLARY, PUNITIVE, REMOTE, OR SPECULATIVE DAMAGES OR LOST PROFITS; PROVIDED, HOWEVER, THAT IF ANY SELLER INDEMNITEE IS HELD LIABLE TO A THIRD PARTY FOR ANY SUCH DAMAGES AND BUYER IS OBLIGATED TO INDEMNIFY SUCH SELLER INDEMNITEE FOR THE MATTER THAT GAVE RISE TO SUCH DAMAGES, BUYER SHALL BE LIABLE FOR, AND OBLIGATED TO REIMBURSE SUCH SELLER INDEMNITEE FOR, SUCH DAMAGES.  The representations and warranties of Buyer set forth in Article 6 shall survive the Closing for a period of onethree (13) yearyears and such representations and warranties of Buyer shall terminate at 5:00 p.m., local time in Houston, Texas, on the onethree (13)-year anniversary of the Closing Date; provided, however, that any such representation or warranty that is the subject of a written notice of claim specifying in reasonable detail the specific nature of the Losses and the estimated amount of such Losses ("Claim Notice") delivered in good faith shall survive with respect only to the specific matter described in such claim notice until the earlier to occur of (i) the date on which a final non-appealable resolution of the matter described in such Claim Notice has been reached or (ii) the date on which the matter described in such Claim Notice has otherwise reached final resolution.  
(b)	Notwithstanding anything to the contrary in this Agreement, the liability of Seller under this Agreement and any documents delivered in connection herewith or contemplated hereby shall be limited as follows:
(i)	IN NO EVENT SHALL SELLER BE LIABLE TO THE BUYER INDEMNITEES FOR ANY CONSEQUENTIAL, EXEMPLARY, PUNITIVE, REMOTE OR SPECULATIVE DAMAGES OR LOST PROFITS; PROVIDED, HOWEVER, THAT IF ANY BUYER INDEMNITEE IS HELD LIABLE TO A THIRD PARTY FOR ANY SUCH DAMAGES AND SELLER IS OBLIGATED TO INDEMNIFY SUCH BUYER INDEMNITEE FOR THE MATTER THAT GAVE RISE TO SUCH DAMAGES, SELLER SHALL BE LIABLE FOR, AND OBLIGATED TO REIMBURSE SUCH BUYER INDEMNITEE FOR, SUCH DAMAGES.
(ii)	The representations and warranties of Seller set forth in Article 5 shall survive the Closing for a period of [twothree (23)] years and such representations and warranties shall terminate at 5:00 p.m., local time in Houston, Texas, on the [twothree (23)]-year anniversary of the Closing Date; provided, however, that any such representation and warranty that is the subject of a Claim Notice delivered in good faith shall survive with respect only to the specific matter described in such Claim Notice until the earlier to occur of (A) the date on which a final non-appealable resolution of the matter described in such Claim Notice has been reached or (B) the date on which the matter described in such Claim Notice has otherwise reached final resolution.
(iii)	Notwithstanding anything to the contrary in this Agreement, in no event shall Seller indemnify the Buyer Indemnitees, or be otherwise liable in any way whatsoever to the Buyer Indemnitees, for any Losses (other than Losses as to which a claim has been made pursuant to Article 10 or Section 13.3(d)) until the Buyer Indemnitees have suffered Losses in the aggregate in excess of a deductible in an amount equal to [Two Hundred Thousand Dollars ($200,000)], after which point Seller will be obligated only to indemnify the Buyer Indemnitees from and against further Losses in excess of such deductible (and only to the extent of any such excess).
(iv)	Notwithstanding anything to the contrary herein, except as provided in Section 13.3(e), in no event shall Seller indemnify the Buyer Indemnitees, or otherwise be liable in any way whatsoever to the Buyer Indemnitees, for any Losses (other than Losses as to which a claim has been made pursuant to Section 13.3(d)) under this Agreement in excess of an amount equal to [twenty percentThirteen Million Dollars (20.0%$13,000,000)] of the Closing Payment.  For purposes of this Section 13.5(b)(iv), the term Losses shall include (A) any amount agreed upon by Buyer and Seller pursuant to Article 10 as the value of any Title Defect and (B) any amounts paid by Seller for environmental liabilities or corrective actions pursuant to Article 11.
(v)	[No amount shall be recovered from Seller for the breach or inaccuracy of any of Seller's representations, warranties, covenants or agreements, or for any other matter, to the extent that Buyer had knowledge of such breach, inaccuracy or other matter at or prior to the Closing, nor shall Buyer be entitled to post-Closing rescission with respect to any such matter.]
(v)	(vi) Seller shall have no liability for Losses pursuant to this Article unless a Claim Notice has been delivered to Seller as required by Section 13.6 within ninety (90) days following expiration of the applicable statutes of limitation for taxes for which a claim is made pursuant to Section 13.3(d) and otherwise within twothree (23) years after the Effective Time.
(vi)	(vii) Notwithstanding anything to the contrary herein, Seller's indemnification for Losses pursuant to Section 13.3(d) shall not be subject to the monetary limitations of this Section 13.5(b).
13.6	Notice of Asserted Liability; Opportunity to Defend.  All claims for indemnification under Sections 11.4, 13.2 and 13.3 shall be asserted and resolved pursuant to this Section 13.6.  Any person claiming indemnification hereunder is hereinafter referred to as the "Indemnified Party" and any person against whom such claims are asserted hereunder is hereinafter referred to as the "Indemnifying Party."  In the event that any Losses are asserted against or sought to be collected from an Indemnified Party by a third party, said Indemnified Party shall with reasonable promptness provide to the Indemnifying Party a Claim Notice.  The Indemnifying Party shall not be obligated to indemnify the Indemnified Party with respect to any such Losses if the Indemnified Party fails to notify the Indemnifying Party thereof in accordance with the provisions of this Agreement in reasonably sufficient time so that the Indemnifying Party's ability to defend against the Losses is not prejudiced.  The Indemnifying Party shall have thirty (30) days from the personal delivery or receipt of the Claim Notice (the "Notice Period") to notify the Indemnified Party (i) whether or not it disputes the liability of the Indemnifying Party to the Indemnified Party here-under with respect to such Losses and/or (ii) whether or not it desires, at the sole cost and expense of the Indemnifying Party, to defend the Indemnified Party against such Losses; provided, however, that any Indemnified Party is hereby authorized prior to and during the Notice Period to file any motion, answer or other pleading that it shall deem necessary or appropriate to protect its interests or those of the Indemnifying Party (and of which it shall have given notice and opportunity to comment to the Indemnifying Party) and not prejudicial to the Indemnifying Party.  In the event that the Indemnifying Party notifies the Indemnified Party within the Notice Period that it desires to defend the Indemnified Party against such Losses, the Indemnifying Party shall have the right to defend all appropriate proceedings, and with counsel of its own choosing, which proceedings shall be promptly settled or prosecuted by them to a final conclusion.  If the Indemnified Party desires to participate in, but not control, any such defense or settlement it may do so at its sole cost and expense.  If requested by the Indemnifying Party, the Indemnified Party agrees to cooperate with the Indemnifying Party and its counsel in contesting any Losses that the Indemnifying Party elects to contest or, if appropriate and related to the claim in question, in making any counterclaim against the person asserting the third party Losses, or any cross-complaint against any person.  No claim may be settled or otherwise compromised without the prior written consent of the Indemnifying Party.
13.7	Exclusive Remedy.  As between the Buyer Indemnitees and the Seller Indemnitees the rights and obligations set forth in this Agreement, and the related agreements, instruments, and certificates executed in connection herewith will be the exclusive rights and obligations with respect to the transactions provided for herein or contemplated hereby or thereby.  It being understood and agreed between Seller and Buyer that all other rights and obligations between Seller and its Affiliates on the one hand and the Buyer and its Affiliates on the other hand shall be governed by this Agreement, and the related agreements, instruments and certificates executed in connection herewith.
13.8	NEGLIGENCE AND STRICT LIABILITY WAIVER.  WITHOUT LIMITING OR ENLARGING THE SCOPE OF THE INDEMNIFICATION OBLIGATIONS SET FORTH IN THIS AGREEMENT, AN INDEMNIFIED PARTY SHALL BE ENTITLED TO INDEMNIFICATION PURSUANT TO SECTIONS 13.2(b) AND 13.3(c) HEREUNDER IN ACCORDANCE WITH THE TERMS HEREOF, REGARDLESS OF WHETHER THE LOSS OR CLAIM GIVING RISE TO SUCH INDEMNIFICATION OBLIGATION IS THE RESULT OF THE SOLE, CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY OR VIOLATION OF ANY LAW OF OR BY SUCH INDEMNIFIED PARTY.  THE PARTIES AGREE THAT THIS PARAGRAPH CONSTITUTES A CONSPICUOUS LEGEND.

ARTICLE 14	

MISCELLANEOUS
14.1	Applicable Law.  This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Texas without giving effect to any choice or conflict of law provision or rule (whether of the State of Texas or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Texas. 
14.2	Expenses.  Each Party shall be solely responsible for all expenses, including due diligence expenses, incurred by it in connection with this transaction, and neither Party shall be entitled to any reimbursement for such expenses from the other Party hereto.  Without limiting the generality of the foregoing, Buyer will be solely responsible for all recording fees and taxes relating to the conveyances to be delivered pursuant hereto.
14.3	Independent Investigation.  Buyer represents and acknowledges that it is knowledgeable of the business of operating pipelines and that it has had access to the Assets, the officers and employees of Seller and its Affiliates, and the Records of Seller and its Affiliates relating to the Assets and in making the decision to enter into this Agreement and consummate the transactions contemplated hereby, Buyer has relied solely on the basis of its own independent due diligence investigation of the Assets and upon the representations, warranties, covenants and other agreements of Seller in this Agreement and the agreements, instruments and certificates delivered in connection with this Agreement.  
14.4	Disclaimer Regarding Assets.  Except as otherwise expressly provided in this Agreement, BUYER ACKNOWLEDGES THAT SELLER HAS NOT MADE, AND SELLER HEREBY EXPRESSLY DISCLAIMS AND NEGATES, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, RELATING TO THE CONDITION OF ANY PART OF THE ASSETS (INCLUDING, WITHOUT LIMITATION, (a) ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, (b) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (c) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, AND (d) ANY IMPLIED OR EXPRESS WARRANTY OF FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT) IT BEING THE EXPRESS INTENTION OF BUYER AND SELLER THAT (EXCEPT TO THE EXTENT EXPRESSLY PROVIDED IN THIS AGREEMENT) THE ASSETS SHALL BE ACCEPTED BY BUYER AS IS AND IN THEIR PRESENT CONDITION AND STATE OF REPAIR.  THE PARTIES AGREE THAT THIS PARAGRAPH CONSTITUTES A CONSPICUOUS LEGEND.
14.5	Reserved.  
14.6	No Third Party Beneficiaries.  Nothing in this Agreement shall provide any benefit to any third party or entitle any third party to any claim, cause of action, remedy or right of any kind, it being the intent of the Parties that this Agreement shall not be construed as a third party beneficiary contract; provided, however, that the indemnification provisions in Article 11 and Article 13 shall inure to the benefit of the Buyer Indemnitees and the Seller Indemnitees as provided therein.
14.7	Waiver.  Except as expressly provided in this Agreement, neither the failure nor any delay on the part of any Party hereto in exercising any right, power or remedy hereunder shall operate as a waiver thereof, or of any other right, power or remedy; nor shall any single or partial exercise of any right, power or remedy preclude any further or other exercise thereof, or the exercise of any other right, power or remedy.  Except as expressly provided herein, no waiver of any of the provisions of this Agreement shall be valid unless it is in writing and signed by the Party against whom it is sought to be enforced.
14.8	Entire Agreement; Amendment.  This Agreement, the Schedules and Exhibits hereto, each of which is deemed to be a part hereof, and any agreements, instruments or documents executed and delivered by the Parties pursuant to this Agreement, constitute the entire agreement and understanding between the Parties, and all previous undertakings, negotiations and agreements between the Parties regarding the subject matter hereof are merged herein; provided however, that this Agreement does not supersede the Confidentiality Agreement, which shall not terminate (except in accordance with its terms) unless and until the Closing occurs, and following the Closing, only to the extent it relates to the Assets.  This Agreement may not be modified orally, but only by an agreement in writing signed by Buyer and Seller.
14.9	Notices.  Any and all notices or other communications required or permitted under this Agreement shall be given in writing and delivered in person or sent by United States certified or registered mail, postage prepaid, return receipt requested, or by overnight express mail, or by telex, facsimile or telecopy to the address of such Party set forth below.  Any such notice shall be effective upon receipt or three (3) days after placed in the mail, whichever is earlier.
If to Buyer:
By Mail or Hand Delivery:
Attention:
Telephone Number:
Telecopy Number:

with a copy to:
Attention:
Telecopy Number:
Telephone Number

If to Seller:
By Mail:
Northern Natural Gas Company
P.O. Box 1188
Houston, Texas 77251-1188
Attention:  Rod Hayslett, Senior Vice President and Treasurer, EB 4054
With a copy to: Vice President and General Counsel, EB4773

By Hand Delivery:
Northern Natural Gas Company
1400 Smith Street
Houston, Texas 77002
Attention:  Rod Hayslett, Senior Vice President and Treasurer, EB4054
Telephone Number: (713) 853-6178
Telecopy Number: (713) 646-3708
With a copy to: Vice President and General Counsel, EB4773
Telephone Number (713) 345-2455
Telecopy Number: (713) 646-2738
Any Party may, by notice so delivered, change its address for notice purposes hereunder.
14.10	No Assignment.  This Agreement shall not be assigned or transferred in any way whatsoever by either Party hereto except with prior written consent of the other Party hereto, which consent such Party shall be under no obligation to grant, and any assignment or attempted assignment without such consent shall have no force or effect with respect to the non-assigning Party; provided, however, that Buyer may assign its right to purchase the Assets hereunder to an Affiliate or Affiliates of Buyer without the prior written consent of Seller; and provided, further, that Buyer shall remain obligated under the Agreement.  Subject to the preceding sentence, this Agreement shall be binding on and inure to the benefit of the Parties hereto and their permitted successors and assigns.
14.11	Severability.  If any provision of this Agreement is invalid, illegal or unenforceable, the balance of this Agreement shall remain in full force and effect and this Agreement shall be construed in all respects as if such invalid, illegal or unenforceable provision were omitted.  If any provision is inapplicable to any Person or circumstance, it shall, nevertheless, remain applicable to all other persons and circumstances.
14.12	Publicity.  Seller and Buyer shall consult with each other with regard to all publicity and other releases concerning this Agreement and the transactions contemplated hereby and, except as required by applicable law or the applicable rules or regulations of any governmental entity or stock exchange, no Party shall issue any such publicity or other release without the prior written consent of the other Party, which shall not be unreasonably withheld.
14.13	Construction.  Any section headings in this Agreement are for convenience of reference only, and shall be given no effect in the construction or interpretation of this Agreement or any provisions thereof.  No provision of this Agreement will be interpreted in favor of, or against, any Party by reason of the extent to which any such Party or its counsel participated in the drafting thereof.
14.14	Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and which together shall constitute but one and the same instrument.
14.15	Further Assurances.  After the Closing Date, each Party hereto at the reasonable request of the other and without additional consideration, shall execute and deliver, or shall cause to be executed and delivered, from time to time, such further certificates, agreements or instruments of conveyance and transfer, assumption, release and acquittance and shall take such other action as the other Party hereto may reasonably request, to convey and deliver the Assets to Buyer, to assure to Seller the assumption of the liabilities and obligations intended to be assumed by Buyer hereunder and to otherwise consummate or implement the transactions contemplated by this Agreement.
14.16	Payment of Funds.  The amount of all revenues received by Seller (or any Affiliates thereof) relating to the ownership or operation of the Assets on or after the Effective Time shall be remitted to Buyer in immediately available funds on a timely basis.  The amount of all revenues received by Buyer (or any Affiliates thereof) relating to the ownership or operation of the Assets prior to the Effective Time shall be remitted to Seller in immediately available funds on a timely basis.  Without in any way limiting either Party's obligation to remit such amounts on a timely basis, if any such amounts received by a Party (or any Affiliate thereof) are in excess of Twenty-Five Thousand Dollars ($25,000) in the aggregate and have not been remitted to the other Party within thirty (30) days of receipt by the receiving Party (or any Affiliate thereof), such amounts shall bear interest from the date of such receipt until the date upon which the other Party receives remittance of such amount in full and in immediately available funds at an annual rate of six percent (6.0%).
14.17	Certain Interpretive Matters.  The inclusion of any matter on any Schedule will not be deemed an admission by either Party that such listed matter has or would have a Material Adverse Effect.

IN WITNESS WHEREOF, the Parties have duly executed and delivered this Agreement as of the date first written above.
NORTHERN NATURAL GAS COMPANY

By:						
Printed name:					
Title:						

WILLIAMS FIELD SERVICES-GULF COAST COMPANY, LP

By: 	Williams Field Services Company,
	its general partner

By:						
Printed name:					
Title:						

Document comparison done by DeltaView on Thursday, October 25, 2001 14:45:53
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Document 2	pcdocs://HOU01/664310/7 	
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