-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
 MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 C+Euyk/c8W8Pl9vVqqKbLHOo1UQRtgKi4JFO9+8jybWF4tfzsWcwtkz3MupXprtb
 2dyPvcuqyvOwzambrcApZA==

<SEC-DOCUMENT>0000950134-02-001868.txt : 20020415
<SEC-HEADER>0000950134-02-001868.hdr.sgml : 20020415
ACCESSION NUMBER:		0000950134-02-001868
CONFORMED SUBMISSION TYPE:	10-K
PUBLIC DOCUMENT COUNT:		19
CONFORMED PERIOD OF REPORT:	20011231
FILED AS OF DATE:		20020307

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			WILLIAMS COMPANIES INC
		CENTRAL INDEX KEY:			0000107263
		STANDARD INDUSTRIAL CLASSIFICATION:	NATURAL GAS TRANSMISSION [4922]
		IRS NUMBER:				730569878
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-04174
		FILM NUMBER:		02569261

	BUSINESS ADDRESS:	
		STREET 1:		ONE WILLIAMS CTR
		CITY:			TULSA
		STATE:			OK
		ZIP:			74172
		BUSINESS PHONE:		9185732000

	MAIL ADDRESS:	
		STREET 1:		ONE WILLIAM CENTER
		CITY:			TULSA
		STATE:			OK
		ZIP:			74172

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	WILLIAMS BROTHERS COMPANIES
		DATE OF NAME CHANGE:	19710817
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>d93687e10-k.txt
<DESCRIPTION>FORM 10-K FOR FISCAL YEAR END DECEMBER 31, 2001
<TEXT>
<PAGE>

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

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K

<Table>
<C>          <S>
(MARK ONE)
    [X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
             OF THE SECURITIES EXCHANGE ACT OF 1934



             FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001



                                   OR




    [ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
             OF THE SECURITIES EXCHANGE ACT OF 1934



             FOR THE TRANSITION PERIOD FROM           TO
</Table>

                         COMMISSION FILE NUMBER 1-4174

                          THE WILLIAMS COMPANIES, INC.
             (Exact name of registrant as specified in its charter)

<Table>
<S>                                            <C>
                   DELAWARE                                      73-0569878
       (State or other jurisdiction of                        (I.R.S. Employer
        incorporation or organization)                      Identification No.)

     ONE WILLIAMS CENTER, TULSA, OKLAHOMA                          74172
   (Address of principal executive offices)                      (Zip Code)
</Table>

              Registrant's telephone number, including area code:
                                  918-573-2000

          Securities registered pursuant to Section 12(b) of the Act:

<Table>
<Caption>
                                                          NAME OF EACH EXCHANGE ON
             TITLE OF EACH CLASS                              WHICH REGISTERED
             -------------------                          ------------------------
<S>                                            <C>
        Common Stock, $1.00 par value                 New York Stock Exchange and the
     Preferred Stock Purchase Rights; and               Pacific Stock Exchange; and
                 Income PACS                              New York Stock Exchange
</Table>

        Securities registered Pursuant to Section 12(g) of the Act: NONE

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes [X]     No [ ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

     The aggregate market value of the registrant's voting and non-voting stock
held by non-affiliates as of the close of business on February 28, 2002, was
approximately $7,972,392,000.

     The number of shares of the registrant's common stock held by
non-affiliates outstanding at February 28, 2002, was 516,012,427.

                      DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the registrant's Proxy Statement being prepared for the
solicitation of proxies in connection with the Annual Meeting of Stockholders of
Williams for 2002 are incorporated by reference in Part III.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

                          THE WILLIAMS COMPANIES, INC.

                                   FORM 10-K

                                     PART I

ITEM 1. BUSINESS

(a) GENERAL DEVELOPMENT OF BUSINESS

     The Williams Companies, Inc. (Williams) was incorporated under the laws of
the State of Nevada in 1949 and was reincorporated under the laws of the State
of Delaware in 1987. The principal executive offices of Williams are located at
One Williams Center, Tulsa, Oklahoma 74172 (telephone (918) 573-2000).

     On October 6, 1999, a former majority-owned subsidiary of Williams,
Williams Communications Group, Inc. (WCG), completed an initial public offering
by selling shares of its Class A common stock to the public. In separate private
placements, SBC Communications Inc., Intel Corporation and Telefonos de Mexico
S.A. de C.V. each purchased a portion of WCG's Class A common stock. On February
26, 2001, Williams and WCG entered into an agreement under which Williams
contributed an outstanding promissory note from WCG of approximately $975
million and certain other assets to WCG in exchange for 24,265,892 shares of
WCG's Class A common stock. Until the spinoff of WCG on April 23, 2001, Williams
owned 100 percent of WCG's outstanding Class B common stock, which gave Williams
approximately 98 percent of the voting power of WCG and approximately 86 percent
of the economic interest in WCG.

     On March 30, 2001, Williams announced that its board of directors had
approved a tax-free distribution of 398,500,000 WCG Class A shares held by
Williams to its shareholders of record on April 9, 2001, in the form of a
dividend. Immediately prior to the distribution, 100 percent of the shares of
WCG's Class B common stock outstanding was converted into shares of Class A
common stock. On April 23, 2001, Williams completed the spinoff of WCG to its
shareholders, retaining approximately 4.9 percent of the outstanding Class A
common stock of WCG.

     Also prior to the spinoff of WCG, Williams provided indirect credit support
for $1.4 billion of WCG's Note Trust Notes through a commitment to make
available proceeds of a Williams equity issuance in the event any one of the
following were to occur: (1) a WCG default; (2) downgrading of Williams' senior
unsecured debt by any of its credit rating agencies to below investment grade if
Williams' common stock closing price is below $30.22 for ten consecutive trading
days while such downgrade is in effect; or (3) to the extent proceeds from WCG's
refinancing or remarketing of certain structured notes prior to March 2004
produces proceeds of less than $1.4 billion.

     On March 5, 2002, Williams received the requisite approvals on its consent
solicitation to amend the terms of the WCG Note Trust Notes. The amendment,
among other things, eliminates acceleration of the Notes due to a WCG bankruptcy
or a Williams credit rating downgrade. The amendment also affirms Williams'
obligations for all payments related to the WCG Note Trust Notes, which are due
March 2004, and allows Williams to fund such payments from any available
sources. With the exception of the March and September 2002 interest payments,
totaling $115 million, WCG remains indirectly obligated to reimburse Williams
for any payments Williams is required to make in connection with the WCG Note
Trust Notes.

     On September 13, 2001, Williams purchased the WCG headquarters building and
other ancillary assets from WCG for $276 million. Williams then entered into
long-term lease arrangements under which WCG is the sole lessee of these assets.

     On August 2, 2001, Williams completed its acquisition of Barrett Resources
Corporation of Denver, Colorado, following the approval of Barrett stockholders
at a special stockholder meeting held August 2, 2001. In the acquisition a
wholly owned subsidiary of Williams acquired all of the outstanding shares of
Barrett common stock (including the associated preferred stock purchase rights)
through a two-step transaction comprised of a cash tender offer for 16,730,502
of the Barrett shares, or approximately 50 percent of the Barrett shares then
outstanding, followed by a second step merger in which Barrett was merged with
and into a wholly owned subsidiary of Williams. In the merger, each outstanding
share, other than shares held by Williams or its subsidiaries, was converted
into the right to receive 1.767 shares of Williams' common stock.
                                        1
<PAGE>

At the time of the merger, Barrett had total proved reserves of 1.9 trillion
cubic feet equivalent and equity production of 350 million cubic feet equivalent
per day. The Barrett merger established several new core areas in the Rockies
with development drilling programs in the Piceance, Raton and Powder River
basins. Other projects exist in the Uinta basin, Wind River basin, Mid-continent
area and the Gulf of Mexico.

     On August 1, 2001, Kern River Gas Transmission Company filed an application
with the Federal Energy Regulatory Commission (FERC) to construct and operate an
expansion of its pipeline system that will provide an additional 906,626
dekatherms per day of firm transportation capacity to serve primarily power
generation demand in southern Nevada and California. The 2003 Expansion Project
will include installing 717 miles of pipeline, three new compressor stations,
upgrading, replacing or modifying six existing compressor stations, adding a net
total of 163,700 horsepower and upgrading five meter stations. Kern River
expects the FERC to issue a certificate by May 1, 2002, and plans to start
construction by June 2002. The estimated cost of the expansion is $1.26 billion
with a targeted in-service date of May 1, 2003. Kern River's customers will pay
for the cost of service of this expansion on an incremental basis.

     Williams announced on December 19, 2001, its plans to take several steps to
strengthen its balance sheet in order to maintain its investment grade credit
rating. The steps of this plan include a $1 billion reduction in 2002 estimated
capital spending and the sale of certain non-core assets, the expected proceeds
of which total $250 million to $750 million. An additional step of the plan
included the sale, which was completed on January 14, 2002, of $1.1 billion of
publicly traded units, known as the Income PACS or FELINE PACS, that include a
senior debt security and an equity purchase contract. On February 4, 2002,
Williams announced that it plans to sell its Midwest petroleum products pipeline
and on-system terminals, which sale is in addition to, and more than doubles the
cash proceeds from, the balance sheet strengthening plan announced on December
19, 2001. A potential buyer of this pipeline system may be Williams Energy
Partners L.P., a subsidiary of Williams.

(b) FINANCIAL INFORMATION ABOUT SEGMENTS

     See Part II, Item 8 -- Financial Statements and Supplementary Data.

(c) NARRATIVE DESCRIPTION OF BUSINESS

     Williams, through Williams Energy Marketing & Trading Company, Williams Gas
Pipeline Company, LLC and Williams Energy Services, LLC, and their respective
subsidiaries, engages in the following types of energy-related activities:

     - price risk management services and the purchase and sale, and arranging
       of transportation or transmission, of energy and energy-related
       commodities including natural gas and gas liquids, crude oil and refined
       products and electricity;

     - transportation and storage of natural gas and related activities through
       the operation and ownership of five wholly owned interstate natural gas
       pipelines, several pipeline joint ventures and a wholly owned liquefied
       natural gas terminal;

     - exploration, production and marketing of oil and gas through ownership of
       3.2 trillion cubic feet equivalent of proved natural gas reserves
       primarily located in the Rocky Mountain, Mid-Continent and Gulf Coast
       regions of the United States;

     - direct investments in international energy projects located primarily in
       South America and Lithuania, investments in energy and infrastructure
       development funds in Asia and South America and soda ash mining
       operations in Colorado;

     - natural gas gathering, treating and processing activities through
       ownership and operation of approximately 11,200 miles of gathering lines,
       10 natural gas treating plants and 18 natural gas processing plants
       (three of which are partially owned) located in the United States and
       Canada;

     - natural gas liquids transportation through ownership and operation of
       approximately 14,300 miles of natural gas liquids pipeline (4,770 miles
       of which are partially owned);

     - transportation of petroleum products and related terminal services
       through ownership or operation of approximately 6,747 miles of petroleum
       products pipeline and 39 petroleum products terminals;

                                        2
<PAGE>

     - light hydrocarbon/olefin transportation through 300 miles of pipeline in
       Southern Louisiana;

     - ethylene production through a 5/12 interest in a 1.3 billion pounds per
       year facility in Geismar, Louisiana;

     - production and marketing of ethanol and bio-products through operation
       and ownership of two ethanol plants (one of which is partially owned) and
       ownership of minority interests or investments in four other plants;

     - refining of petroleum products through operation and ownership of two
       refineries;

     - retail marketing through 61 travel centers;

     - petroleum products terminal services through the ownership and operation
       of five marine terminals and 25 inland terminals that form a distribution
       network for gasoline and other refined petroleum products throughout the
       southeastern United States; and

     - ammonia transportation and terminal services through ownership and
       operation of an ammonia pipeline and terminals system that extends for
       approximately 1,100 miles from Texas and Oklahoma to Minnesota.

     Substantially all operations of Williams are conducted through
subsidiaries. Williams performs certain management, legal, financial, tax,
consultative, administrative and other services for its subsidiaries and at
December 31, 2001, employed approximately 1,500 employees at the corporate level
to provide these services. Williams' principal sources of cash are from external
financings, dividends and advances from its subsidiaries, investments, payments
by subsidiaries for services rendered and interest payments from subsidiaries on
cash advances. The amount of dividends available to Williams from subsidiaries
largely depends upon each subsidiary's earnings and operating capital
requirements. The terms of certain subsidiaries' borrowing arrangements limit
the transfer of funds to Williams.

     To achieve organizational and operating efficiencies, Williams' energy
marketing and trading activities are primarily grouped together under its wholly
owned subsidiary, Williams Energy Marketing & Trading Company, its interstate
natural gas pipelines and pipeline joint venture investments are grouped
together under its wholly owned subsidiary, Williams Gas Pipeline Company, LLC
and the other energy operations are primarily grouped together under its wholly
owned subsidiary, Williams Energy Services, LLC. Item 1 of this report is
formatted to reflect this structure.

                      WILLIAMS ENERGY MARKETING & TRADING

     Williams Energy Marketing & Trading Company, and its subsidiaries, is a
national energy services provider that buys, sells and transports a full suite
of energy and energy-related commodities, including power, natural gas, refined
products, natural gas liquids, crude oil, propane, liquefied natural gas,
liquefied petroleum gas and emission credits, primarily on a wholesale level,
serving over 652 customers. In addition, Energy Marketing & Trading provides and
procures risk management and other energy-related services through a variety of
financial instruments and structured transactions including exchange-traded
futures, as well as over-the-counter forwards, options, swap, tolling, load
serving and full requirements agreements and other derivatives related to
various energy and energy-related commodities. See Note 18 of Notes to
Consolidated financial statements for information on financial instruments and
energy trading activities. At December 31, 2001, Energy Marketing & Trading
employed approximately 1,000 employees.

     During 2001, Energy Marketing & Trading marketed over 293,808 physical
gigawatt hours of power. As part of its approximately 15,000 megawatt power
supply portfolio, Energy Marketing & Trading has a mix of owned generation,
tolling agreements and supply resources through full requirements transactions
in support of its load obligations. Energy Marketing & Trading has entered into
a number of long-term agreements at December 31, 2001, to market capacity of
electric generation facilities (either existing or to be constructed at various
locations throughout the United States) totaling approximately 7,600 megawatts
(Alabama -- 846 megawatts; California -- 3,954 megawatts; Louisiana -- 750
megawatts; New Jersey -- 832 megawatts; Pennsylvania -- 700 megawatts;
Michigan -- 550 megawatts). Energy Marketing & Trading also has an additional
approximately 2,700 megawatts in planned tolling projects to be sited at various
locations within the
                                        3
<PAGE>

United States. A portion of this supply, for which has been contracted, is in
the construction and development stages. On certain contracts, the
counterparties have not started construction and are currently negotiating
development and environmental permits. Under these tolling arrangements, Energy
Marketing & Trading supplies fuel for conversion to electricity and markets
capacity, energy and ancillary services related to the generating facilities
owned and operated by various counterparties. Approximately 5,400 megawatts of
electric generation capacity available through these tolling arrangements
located in California, Louisiana and Pennsylvania are operational, with the
balance expected to come online by year-end 2002. Energy Marketing & Trading
also has entered into several agreements to provide full requirements services
for a number of customers whose supply resources are being managed with
approximately 2,600 megawatts of load in the United States, including
transactions in Indiana, Pennsylvania and Georgia. Additionally, Energy
Marketing & Trading has marketing rights for the energy and capacity from three
natural gas-fired electric generating plants owned by affiliated companies and
located near Bloomfield, New Mexico (60 megawatts); in Hazleton, Pennsylvania
(63 megawatts to be expanded to 162 in 2002); and near Worthington, Indiana (170
megawatts). Energy Marketing & Trading's primary power customers include
utilities, municipalities, cooperatives, governmental agencies and other power
marketers.

     Energy Marketing & Trading markets natural gas throughout North America
with total physical volumes averaging 3.4 billion cubic feet per day in 2001.
Beginning in 2000, Energy Marketing & Trading's natural gas marketing operations
focused on activities that facilitate and/or complement the group's power
portfolio. Energy Marketing & Trading's natural gas customers include local
distribution companies, utilities, producers, industrials and other gas
marketers.

     In 2001, Energy Marketing & Trading provided supply, distribution and
related risk management services to petroleum producers, refiners and end-users
in the United States and various international regions. During 2001, Energy
Marketing & Trading's total physical crude oil and petroleum products marketed
exceeded 240,600 barrels per day. During 2001, Energy Marketing & Trading also
marketed natural gas liquids with total physical volumes averaging 287,200
barrels per day.

  Operating Statistics

     The following table summarizes marketing and trading volumes for the
periods indicated (natural gas volumes for 1999 include sales by the retail gas
and electric business, which has now been divested):

<Table>
<Caption>
                                                            2001      2000      1999
                                                          --------   -------   ------
<S>                                                       <C>        <C>       <C>
Marketing and trading physical volumes:
  Power (thousand megawatt hours).......................   293,808   141,311   89,810
  Natural gas (billion cubic feet per day)..............       3.4       3.3      3.6
  Refined products, natural gas liquids and crude oil
     (thousand barrels per day).........................       528     1,009      765
</Table>

REGULATORY MATTERS

     Energy Marketing & Trading's business is subject to a variety of laws and
regulations at the local, state and federal levels. At the federal level,
important regulatory agencies include the Federal Energy Regulatory Commission
(regarding energy commodity transportation and wholesale trading) and the
Commodity Futures Trading Commission (regarding various over-the-counter
derivative transactions and exemptions and exclusions from the Commodity
Exchange Act). Electricity markets, particularly in California, continue to be
subject to numerous and wide-ranging regulatory proceedings and investigations,
regarding among other things, market structure, behavior of market participants
and market prices. Energy Marketing & Trading may be liable for partial refunds
as a part of these regulatory actions. Energy Marketing & Trading is also the
subject of related state and federal investigations and Civil actions. Each of
these matters is discussed in more detail in Note 19 of the Notes to
Consolidated Financial Statements.

     Management believes that Energy Marketing & Trading's activities are
conducted in substantial compliance with the marketing affiliate rules of FERC
Order 497. Order 497 imposes certain nondiscrimina-

                                        4
<PAGE>

tion, disclosure and separation requirements upon interstate natural gas
pipelines with respect to their natural gas trading affiliates. Energy Marketing
& Trading has taken steps to ensure it does not share employees or officers with
affiliated interstate natural gas pipelines and does not receive information
from affiliated interstate natural gas pipelines that is not also available to
unaffiliated natural gas trading companies.

COMPETITION

     Energy Marketing & Trading's operations directly compete with large
independent energy marketers, marketing affiliates of regulated pipelines and
utilities and natural gas producers. The financial trading business competes
with other energy-based companies offering similar services as well as certain
brokerage houses. This level of competition contributes to a business
environment of constant pricing and margin pressure.

OWNERSHIP OF PROPERTY

     The primary assets of Energy Marketing & Trading are its term contracts,
employees, related systems and technological support. In addition, through
subsidiaries, Energy Marketing & Trading owns an approximately 170 megawatt
gas-fired generating facility located near Worthington, Indiana.

ENVIRONMENTAL

     Electricity generation facilities that are subject to tolling or other
agreements are subject to various environmental laws and regulations, including
laws and regulations regarding emissions. Facility availability may be affected
by these laws and regulations.

                             WILLIAMS GAS PIPELINE

     Williams' interstate natural gas pipeline group, comprised of Williams Gas
Pipeline Company, LLC and its subsidiaries (WGP), owns and operates a combined
total of approximately 27,500 miles of pipelines with a total annual throughput
of approximately 3,800 trillion British Thermal Units of natural gas and
peak-day delivery capacity of approximately 17 billion cubic feet of gas. WGP
consists of Transcontinental Gas Pipe Line Corporation (Transco), Northwest
Pipeline Corporation (Northwest Pipeline), Kern River Gas Transmission Company
(Kern River), Texas Gas Transmission Corporation (Texas Gas) and Williams Gas
Pipelines Central, Inc. (Central). WGP also holds interests in joint venture
interstate and intrastate natural gas pipeline systems.

     WGP has combined certain administrative functions, such as information
services, technical services and finance, of its operating companies in an
effort to lower costs and increase efficiency. Although a single management team
manages both Northwest Pipeline and Kern River and a single management team
manages both Texas Gas and Central, each of these operating companies operates
as a separate legal entity. At December 31, 2001, WGP employed approximately
3,400 employees.

     WGP's transmission and storage activities are subject to regulation by the
FERC under the Natural Gas Act of 1938 and under the Natural Gas Policy Act of
1978, and, as such, their rates and charges for the transportation of natural
gas in interstate commerce, the extension, enlargement or abandonment of
jurisdictional facilities and accounting, among other things, are subject to
regulation. Each gas pipeline company holds certificates of public convenience
and necessity issued by the FERC authorizing ownership and operation of all
pipelines, facilities and properties considered jurisdictional for which
certificates are required under the Natural Gas Act of 1938. Each gas pipeline
company is also subject to the Natural Gas Pipeline Safety Act of 1968, as
amended by Title I of the Pipeline Safety Act of 1979, which regulates safety
requirements in the design, construction, operation and maintenance of
interstate natural gas pipelines.

     As a result of Williams' merger with MAPCO Inc. in 1998, Williams acquired
an approximate 4.8 percent investment interest in Alliance Pipeline. On December
31, 1999, Williams acquired an additional 9.8 percent interest in Alliance
Pipeline. Alliance Pipeline consists of two segments, a Canadian segment and a
United States segment. Alliance Pipeline operates an approximate 1,800-mile
natural gas pipeline system
                                        5
<PAGE>

extending from northeast British Columbia to the Chicago, Illinois area market
center, where it interconnects with the North American pipeline grid. On
September 17, 1998, the FERC granted a certificate of public convenience and
necessity for the United States portion of the Alliance Pipeline system, and on
December 3, 1998, the National Energy Board (NEB) of Canada granted a
certificate of public convenience and necessity for the Canadian portion.
Construction began in the spring of 1999 and the pipeline was placed in service
on December 1, 2000. Total cost of the Alliance pipeline system was in excess of
$3 billion. At December 31, 2001, Williams' investment in Alliance Pipeline was
approximately $185 million.

     In February 2001, subsidiaries of Duke Energy and Williams completed their
joint acquisition of The Coastal Corporation's 100 percent ownership interest in
Gulfstream Natural Gas System, L.L.C., and announced that they are proceeding
with the development of the Gulfstream project in lieu of their jointly owned
Buccaneer Gas Pipeline Company, L.L.C. gas pipeline project. The Gulfstream
project will consist of a new natural gas pipeline system extending from the
Mobile Bay area in Alabama to markets in Florida. On February 22, 2001, the FERC
issued an order authorizing the construction and operation of the Gulfstream
project, and in June 2001 construction commenced on the project. On December 28,
2001, Gulfstream filed an application with the FERC to allow Gulfstream to phase
the construction of the approved facilities such that a portion of the project
will be placed into service on June 1, 2002 and the remainder on or about June
1, 2003. The estimated capital cost of the project is approximately $1.6
billion, of which Williams' portion is approximately $800 million.

     In June 2000, two wholly owned subsidiaries of WGP purchased 100 percent of
the partnership interests in Cove Point LNG Limited Partnership (Cove Point).
The Cove Point liquefied natural gas (LNG) facility is located in Calvert
County, Maryland, and is currently utilized to provide firm peaking services and
firm and interruptible transportation services. On January 30, 2001, Cove Point
filed an application with the FERC to construct certain new facilities and to
reactivate and operate existing facilities and to provide LNG tanker discharging
services on a firm and interruptible basis to shippers importing LNG. On October
12, 2001, the FERC issued an order granting Cove Point the authorization to
reactivate its existing LNG terminal, to expand the facility, and to construct a
fifth storage tank as proposed. Cove Point accepted the certificate on October
18, 2001. On December 19, 2001, the FERC issued an order affirming its October
12 decision. Cove Point proposes to reactivate the LNG import and terminal
facilities by the fall of 2002 and to construct and place in service the new LNG
storage tank by early 2004. The total estimated cost of the project is
approximately $142 million. Cove Point and three shippers have executed 20-year
agreements for 100 percent of the 750,000 dekatherms per day of firm LNG
discharging services that will be created by the proposed reactivation project.

     On April 24, 2001, Georgia Strait Crossing Pipeline LP, a joint venture of
WGP and BC Hydro, filed applications with the FERC and the NEB to construct and
operate a new pipeline that will provide 95,700 dekatherms per day of firm
transportation capacity from Sumas, Washington to Vancouver Island, British
Columbia. The Georgia Strait project will include installing 85 miles of
pipeline, a 10,302 horse power compression station and two meter stations.
Georgia Strait Crossing Pipeline anticipates the FERC to issue a certificate
approving the project by July 2002 and the NEB to issue a certificate approving
the project by February 2003. Construction is expected to begin in the fall of
2003. The estimated cost of the total Georgia Strait project is approximately
$166 million, with WGP's share being 50 percent of such amount. The targeted
in-service date is November 2004.

     On June 29, 2001, Western Frontier Pipeline Company, LLC, a wholly owned
subsidiary of WGP, completed a binding open season for parties interested in
subscribing for firm natural gas transportation service on its proposed
expansion project. On October 24, 2001, Western Frontier filed an application
with the FERC to construct and operate the Western Frontier Pipeline, which will
consist of a 400-mile, 30-inch diameter pipeline and 30,000 horsepower of
compression designed to transport up to 540,000 dekatherms of natural gas per
day from the Cheyenne Hub in northeastern Colorado to Williams' Central pipeline
in southwest Kansas and the Oklahoma panhandle. The open season resulted in
precedent agreements for 365,000 dekatherms per day of firm transportation
service. The project's target in-service date has been delayed one year to
November 1, 2004, and work is being done with prospective shippers to further
define the market for and scope of this project. The estimated cost of the
project is approximately $365 million.
                                        6
<PAGE>

     Segment revenues and segment profit for WGP are reported in Note 22 of
Notes to Consolidated Financial Statements herein.

     A business description of the principal companies in the interstate natural
gas pipeline group follows.

TRANSCONTINENTAL GAS PIPE LINE CORPORATION

     Transco is an interstate natural gas transportation company that owns and
operates a 10,400-mile natural gas pipeline system extending from Texas,
Louisiana, Mississippi and the offshore Gulf of Mexico through Alabama, Georgia,
South Carolina, North Carolina, Virginia, Maryland, Pennsylvania and New Jersey
to the New York City metropolitan area. The system serves customers in Texas and
eleven southeast and Atlantic seaboard states, including major metropolitan
areas in Georgia, North Carolina, New York, New Jersey and Pennsylvania.
Effective May 1, 1995, Transco transferred the operation of certain production
area facilities to Williams Field Services Group, Inc., an affiliated company.

  Pipeline System and Customers

     At December 31, 2001, Transco's system had a mainline delivery capacity of
approximately 4.0 billion cubic feet of natural gas per day from its production
areas to its primary markets. Using its Leidy Line and market-area storage
capacity, Transco can deliver an additional 3.0 billion cubic feet of natural
gas per day for a system-wide delivery capacity total of approximately 7.0
billion cubic feet of natural gas per day. Excluding the production area
facilities operated by Williams Field Services Group, Inc., an affiliate,
Transco's system is composed of approximately 7,200 miles of mainline and branch
transmission pipelines, 44 transmission compressor stations and six storage
locations. Transmission compression facilities at a sea level-rated capacity
total approximately 1.4 million horsepower.

     Transco's major natural gas transportation customers are public utilities
and municipalities that provide service to residential, commercial, industrial
and electric generation end users. Shippers on Transco's system include public
utilities, municipalities, intrastate pipelines, direct industrial users,
electrical generators, gas marketers and producers. One customer accounted for
approximately 11.5 percent of Transco's transportation and storage revenues in
2001. No other customer accounted for more than ten percent of Transco's total
revenues in 2001. Transco's firm transportation agreements are generally
long-term agreements with various expiration dates and account for the major
portion of Transco's business. Additionally, Transco offers interruptible
transportation and storage services under short-term agreements.

     Transco has natural gas storage capacity in five underground storage fields
located on or near its pipeline system and/or market areas and operates three of
these storage fields. Transco also has storage capacity in a liquefied natural
gas (LNG) storage facility and operates the facility. The total top gas storage
capacity available to Transco and its customers in such storage fields and LNG
facility and through storage service contracts is approximately 216 billion
cubic feet of gas. In addition, wholly owned subsidiaries of Transco operate and
hold a 35 percent ownership interest in Pine Needle LNG Company, a LNG storage
facility with 4 billion cubic feet of storage capacity. Storage capacity permits
Transco's customers to inject gas into storage during the summer and off-peak
periods for delivery during peak winter demand periods.

  Expansion Projects

     On May 13, 1998, Transco filed an application with the FERC for approval to
construct and operate mainline and Leidy Line facilities (MarketLink) to create
an additional 676 million cubic feet per day of firm transportation capacity to
serve increased demand in the mid-Atlantic and south Atlantic regions of the
United States by a targeted in-service date of November 1, 2000, at an estimated
cost of $529 million. On December 17, 1999, the FERC issued an interim order
giving Transco conditional approval for MarketLink. Transco filed for rehearing
of the interim order and, on April 26, 2000, the FERC issued an order on
rehearing that authorized Transco to proceed with the MarketLink project subject
to certain conditions. On May 23, 2000, Transco filed a letter with the FERC
accepting the MarketLink certificate. On September 20, 2000, Transco filed an
application to amend the certificate of public convenience and necessity issued
in this proceeding to enable Transco to (a) phase the construction of the
MarketLink project to satisfy phased in-
                                        7
<PAGE>

service dates requested by the project shippers, and (b) redesign the recourse
rate based on the phased construction of the project. On December 13, 2000, the
FERC issued an order permitting Transco to construct the MarketLink project in
phases as proposed. Phase 1 of the project, which provides approximately 160
million cubic feet per day of additional firm transportation service, was placed
into service in December 2001. Phase 2 of the project will consist of 126
million cubic feet per day of additional firm service with an expected
in-service date of November 1, 2002. The FERC's December 13, 2000, order
required Transco to file executed contracts fully subscribing the remaining
capacity of the project (approximately 390 million cubic feet per day) by April
13, 2001. Transco accepted the amended certificate on December 21, 2000. Certain
parties filed with the FERC requests for rehearing of the December 13, 2000
order, and on February 12, 2001, the FERC denied the requests. On April 3, 2001,
Transco filed a motion requesting that the FERC clarify that Transco could
construct Phase 3 of the MarketLink project that consisted of less than all of
the remaining certificated MarketLink facilities after the construction of
Phases 1 and 2, and that Transco could file by May 1 a report identifying the
certificated facilities to be constructed in Phase 3 and a revised project
recourse rate. On April 13, 2001, Transco filed firm service agreements with 5
shippers for 205 million cubic feet per day of capacity as required by the
December 13, 2000 order approving the phasing of the project. On April 26, 2001,
the FERC issued an order denying Transco's pending motion for clarification and
stating that Phase 3 of the MarketLink project must consist of all the remaining
certificated facilities. The order stated that as of April 13, 2001 the
certificate authority to construct additional MarketLink capacity in excess of
the 286 million cubic feet per day to be constructed as Phases 1 and 2 expired,
but that Transco could file a new application to serve the contracts filed on
April 13, 2001. On June 19, 2001, Transco submitted an application for the Leidy
East project discussed below, which incorporates a portion of the Phase 3
markets and facilities.

     Transco filed an application with the FERC on June 19, 2001, to construct
and operate the Leidy East project, which will provide an additional 126 million
cubic feet per day of firm natural gas transportation service from Leidy,
Pennsylvania to the northeastern United States. Project facilities include
approximately 31 miles of pipeline looping and 3,400 horsepower of uprated
compression. On October 24, 2001, the FERC issued an order approving the
project. Construction is scheduled to begin in March 2002. The proposed in-
service date for the project is November 1, 2002. The capital cost of the
project is approximately $98 million.

     In March 1997, as amended in December 1997, Independence Pipeline Company
filed an application with the FERC for approval to construct and operate a new
pipeline consisting of approximately 400 miles of 36-inch pipe from ANR Pipeline
Company's (ANR) existing compressor station at Defiance, Ohio to Transco's
facilities at Leidy, Pennsylvania. The Independence Pipeline project is proposed
to provide approximately 916 million cubic feet per day of firm transportation
capacity by an anticipated in-service date of November 2002. Independence is
owned equally by wholly-owned subsidiaries of Transco, ANR and National Fuel Gas
Company. The estimated cost of the project is $678 million, and Transco's equity
contributions are estimated to be approximately $68 million based on its
expected one-third ownership interest in the project. On December 17, 1999, the
FERC gave conditional approval for the Independence Pipeline project, subject to
Independence filing long-term, executed contracts with nonaffiliated shippers
for at least 35 percent of the capacity of the project. Independence Pipeline
filed for rehearing of the interim order. On April 26, 2000, the FERC issued an
order denying rehearing and requiring that Independence Pipeline submit by June
26, 2000, agreements with nonaffiliated shippers for at least 35 percent of the
capacity of the project. Independence Pipeline met this requirement, and on July
12, 2000, the FERC issued an order granting the necessary certificate
authorizations on August 11, 2000 for the Independence Pipeline project. On
September 28, 2000, the FERC issued an order denying all requests for rehearing
and requests for reconsideration of the Independence certificate order filed by
various parties. On November 1, 2001, Independence filed a letter with the FERC
requesting an extension of the in service date for the project to November 2004
and an extension of time until November 2003 to submit the final environmental
Implementation Plan required by the FERC's order approving the project.

     On April 3, 2000, Transco filed an application with the FERC for its
Sundance Expansion project, which will create approximately 228 million cubic
feet per day of additional firm transportation capacity from Transco's Station
65 in Louisiana to delivery points in Georgia, South Carolina and North
Carolina. On March 29, 2001, the FERC issued an order authorizing Transco to
construct and operate the project and

                                        8
<PAGE>

Transco accepted the order on April 6, 2001. Approximately 38 miles of new
pipeline loop along the existing mainline system is being installed along with
approximately 33,000 horsepower of new compression and modifications to existing
compressor stations in Georgia, South Carolina and North Carolina. The project
has a target in-service date of May 2002 and an estimated cost of approximately
$134 million.

     On September 25, 2001, Transco filed with the FERC an amendment to its
certificate application for its Momentum Expansion project to redesign and
downsize the project to reflect the termination of two shippers from the project
and certain additional capacity subscribed by two other shippers. As amended,
the project is proposed to create approximately 347 million cubic feet per day
of additional firm transportation capacity on Transco's pipeline system from
Station 65 in Louisiana to Station 165 in Virginia. The revised project
facilities include approximately 64 miles of pipeline looping and 45,000
horsepower of compression. The revised capital cost of the project is estimated
to be approximately $197 million. On February 14, 2002, the FERC issued an order
authorizing Transco to construct and operate the project. The project has a
targeted in-service date of May 1, 2003.

     Transco held an open season in February 2001 for an expansion of the
Trenton-Woodbury line, which runs from Transco's mainline at Station 200 in
eastern Pennsylvania, around the metropolitan Philadelphia area and southern New
Jersey area, to Transco's mainline near Station 205. As a result of the open
season, precedent agreements are being negotiated for a total of 49 million
cubic feet per day of incremental firm transportation capacity. Transco plans to
file for FERC approval of the project in the first quarter of 2002. The target
in-service date for the project is November 1, 2003. The project will require
approximately 6 miles of looping at a capital cost of approximately $20 million.

     Transco completed an open season on July 18, 2001, for the Cornerstone
Expansion project, an expansion of Transco's mainline system from Station 65 in
Louisiana to Station 165 in Virginia. The project has a target in-service date
May 1, 2004. Transco plans to begin the process for seeking FERC approval in the
second quarter of 2002. The capital cost of the project will depend on the level
of firm market commitment received.

     Transco completed an open season on September 7, 2001, for the South
Virginia Line Expansion project, a proposed expansion on Transco's pipeline
system from Station 165 in Virginia to Hertford County, North Carolina. The
project has a target in-service date of May 1, 2005. The capital cost of the
project will depend on the level of firm market commitment received.

     On July 21, 2000, Cross Bay Pipeline Company, L.L.C. (Cross Bay), a limited
liability company formed between subsidiaries of Transco, Duke Energy and
KeySpan Energy, filed an application with the FERC for approval of a gas
pipeline project which would increase natural gas deliveries into the New York
City metropolitan area by replacing and uprating pipeline facilities and
installing compression to expand the capacity of Transco's existing Lower New
York Bay Extension by approximately 121 million cubic feet per day. On November
8, 2001, the FERC issued an order authorizing the Cross Bay project, subject to
certain conditions. On December 5, 2001, the Cross Bay owners elected not to
accept the certificate issued by the FERC and decided not to proceed with the
Cross Bay project, which resulted in the dissolution of Cross Bay. A wholly
owned subsidiary of Transco had a 37.5 percent ownership interest in Cross Bay.
Transco's investment in this project was not significant.

     On December 1, 2001, Transco transferred certain of its offshore Texas
facilities, which assets are not regulated by the FERC, to subsidiaries of
Williams Field Services Group, Inc. pursuant to orders granted by the FERC in
Docket Nos. CP01-32 and CP01-34. The facilities had a net book value of
approximately $3 million.

                                        9
<PAGE>

  Operating Statistics

     The following table summarizes transportation data for the periods
indicated (in trillion British Thermal Units):

<Table>
<Caption>
                                                              2001    2000    1999
                                                              -----   -----   -----
<S>                                                           <C>     <C>     <C>
Market-area deliveries:
  Long-haul transportation..................................    766     787     820
  Market-area transportation................................    645     710     623
                                                              -----   -----   -----
          Total market-area deliveries......................  1,411   1,497   1,433
Production-area transportation..............................    202     262     222
                                                              -----   -----   -----
          Total system deliveries...........................  1,613   1,759   1,665
                                                              =====   =====   =====
Average Daily Transportation Volumes........................    4.4     4.8     4.6
Average Daily Firm Reserved Capacity........................    6.2     6.3     6.3
</Table>

     Transco's facilities are divided into eight rate zones. Five are located in
the production area, and three are located in the market area. Long-haul
transportation involves gas that Transco receives in one of the production-area
zones and delivers in a market-area zone. Market-area transportation involves
gas that Transco both receives and delivers within the market-area zones.
Production-area transportation involves gas that Transco both receives and
delivers within the production-area zones.

NORTHWEST PIPELINE CORPORATION

     Northwest Pipeline is an interstate natural gas transportation company that
owns and operates a natural gas pipeline system extending from the San Juan
Basin in northwestern New Mexico and southwestern Colorado through Colorado,
Utah, Wyoming, Idaho, Oregon and Washington to a point on the Canadian border
near Sumas, Washington. Northwest Pipeline provides services for markets in
California, New Mexico, Colorado, Utah, Nevada, Wyoming, Idaho, Oregon and
Washington directly or indirectly through interconnections with other pipelines.

  Pipeline System and Customers

     At December 31, 2001, Northwest Pipeline's system, having a mainline
delivery capacity of approximately 2.9 billion cubic feet of natural gas per
day, was composed of approximately 4,100 miles of mainline and branch
transmission pipelines and 43 compressor stations having sea level-rated
capacity of approximately 343,000 horsepower.

     In 2001, Northwest Pipeline transported natural gas for a total of 148
customers. Transportation customers include distribution companies,
municipalities, interstate and intrastate pipelines, gas marketers and direct
industrial users. The two largest customers of Northwest Pipeline in 2001
accounted for approximately 15.4 percent and 13.7 percent, respectively, of its
total operating revenues. No other customer accounted for more than ten percent
of total operating revenues in 2001. Northwest Pipeline's firm transportation
agreements are generally long-term agreements with various expiration dates and
account for the major portion of Northwest Pipeline's business. Additionally,
Northwest Pipeline offers interruptible and short-term firm transportation
service.

     As a part of its transportation services, Northwest Pipeline utilizes
underground storage facilities in Utah and Washington enabling it to balance
daily receipts and deliveries. Northwest Pipeline also owns and operates a
liquefied natural gas storage facility in Washington that provides a
needle-peaking service for its system. These storage facilities have an
aggregate delivery capacity of approximately 1.3 billion cubic feet of gas per
day.

                                        10
<PAGE>

  Expansion Projects

     On August 29, 2001, Northwest Pipeline filed an application with the FERC
to construct and operate an expansion of its pipeline system that will provide
an additional 175,000 dekatherms per day of capacity to its transmission system
in Wyoming and Idaho in order to reduce reliance on displacement capacity. The
Rockies Expansion Project will include installing 91 miles of pipeline loop,
upgrades or modifications to five compressor stations for a total increase of
24,924 horsepower. Northwest reached a settlement agreement with the majority of
its firm shippers to support roll-in of the expansion costs into its existing
rates. Northwest expects the FERC to issue a certificate by September 2002.
Northwest plans to start construction by April 2003. The estimated cost of the
expansion project is approximately $154 million and the targeted completion date
is October 31, 2003.

     On October 3, 2001, Northwest Pipeline filed an application with the FERC
to construct and operate an expansion of its pipeline system that will provide
276 million cubic feet per day of firm transportation capacity to serve new
power generation demand in western Washington. The Evergreen Expansion Project
will include installing 28 miles of pipeline loop, upgrading, replacing or
modifying five compressor stations and adding a net total of 67,000 horsepower
of compression. Northwest expects the FERC to issue a certificate by July 2002
and plans to start construction by August 2002. The estimated cost of the
expansion project is approximately $197 million with a targeted in-service date
of June 2003. The customers will pay for the cost of service of this expansion
on an incremental basis.

     On October 3, 2001, Northwest Pipeline filed an application with the FERC
to construct and operate an expansion of its pipeline system that will provide
an additional 57,000 dekatherms per day of capacity to its transmission system
from Stanfield, Oregon to Washougal, Washington. The Columbia Gorge Project will
include upgrading, replacing or modifying five existing compressor stations,
adding a net total of 24,430 horsepower of compression. The Columbia Gorge
Project was filed as part of the Evergreen Expansion Project to reduce reliance
on displacement capacity. Northwest reached a settlement with the majority of
its firm shippers to support roll-in of 88 percent of the expansion costs with
the remainder to be allocated to the Evergreen Project. Northwest expects the
FERC to issue a certificate by July 2002 and plans to start construction by
April 2003. The estimated cost of the expansion project is approximately $43
million with a targeted in-service date of October 31, 2003.

     On May 11, 2001, Northwest Pipeline filed an application with the FERC to
construct and operate a lateral pipeline that will provide 161,500 dekatherms
per day of firm transportation capacity to serve a new power generation plant.
The Grays Harbor Lateral project will include installing 49 miles of 20-inch
pipeline, adding 4,700 horsepower at an existing compressor station, and a new
meter station. Northwest expects the FERC to issue a certificate by April 15,
2002 and plans to start construction by June 2002. The estimated cost of the
lateral project is approximately $75 million with a targeted in-service date of
November 2002. The customer will pay for the cost of service of the lateral on
an incremental rate basis.

  Operating Statistics

     The following table summarizes transportation data for the periods
indicated (in trillion British Thermal Units):

<Table>
<Caption>
                                                              2001   2000   1999
                                                              ----   ----   ----
<S>                                                           <C>    <C>    <C>
Transportation Volumes......................................  734    752    708
Average Daily Transportation Volumes........................  2.0    2.1    1.9
Average Daily Firm Reserved Capacity........................  2.7    2.7    2.5
</Table>

KERN RIVER GAS TRANSMISSION COMPANY

     Kern River is an interstate natural gas transportation company that owns
and operates a natural gas pipeline system extending from Wyoming through Utah
and Nevada to California. Gas transported on the Kern River pipeline is used in
enhanced oil recovery operations in the heavy oil fields in California. Gas is
also transported to other natural gas consumers in Utah, southern Nevada and
southern California for use in the

                                        11
<PAGE>

production of electricity, cogeneration of electricity and steam and other
applications. The system commenced operations in February 1992.

  Pipeline System and Customers

     At December 31, 2001, Kern River's system was composed of approximately 926
miles of mainline and branch transmission pipelines and five compressor stations
having a mainline designed delivery capacity of approximately 835 million cubic
feet of natural gas per day. The pipeline system interconnects with the pipeline
facilities of another pipeline company at Daggett, California. From the point of
interconnection, Kern River and the other pipeline company have a common
219-mile pipeline, which is owned as tenants in common and is designed to
accommodate the combined throughput of both systems. This common facility has a
designed delivery capacity of 1.235 billion cubic feet of natural gas per day.
Kern River currently has a design capacity of 835 million cubic feet of natural
gas per day while the other pipeline has a design capacity of 400 million cubic
feet of natural gas per day.

     In 2001, Kern River transported natural gas for customers in California,
Nevada and Utah. Kern River transported natural gas for use in enhanced oil
recovery operations in the heavy oil fields in California and transported to
other natural gas consumers in Utah, southern Nevada and southern California for
use in the production of electricity, cogeneration of electricity and steam and
other applications. At December 31, 2001, Kern River had a total of 29
customers. The three largest customers of Kern River in 2001 accounted for
approximately 20.4 percent, 13.3 percent and 11.4 percent, respectively, of its
total operating revenues. No other customer accounted for more than ten percent
of total operating revenues in 2001. Kern River transports natural gas for
customers under firm long-term transportation agreements totaling approximately
835 million cubic feet of natural gas per day and under various interruptible,
short-term firm and seasonal firm transportation agreements.

  Expansion Projects

     On April 6, 2001, Kern River received a FERC certificate to construct and
operate an expansion of its pipeline, known as the California Action Project, to
provide an additional 114,000 dekatherms per day of limited term transportation
capacity from July 1, 2001, through April 30, 2002, and an additional 21,000
dekatherms per day of limited term transportation from July 1, 2001, through
April 30, 2003. Temporary facilities will be removed and the permanent
facilities will be used as part of the facilities needed to satisfy the 124,500
dekatherms per day of firm transportation contracts initially signed as a part
of the Kern River 2002 Expansion Project. The cost of the expansion project was
$81.3 million and was placed in service on July 1, 2001. The customers will pay
for the cost of service of this expansion on an incremental rate basis.

     On July 26, 2001, Kern River received a FERC certificate to construct and
operate an expansion of its pipeline, known as the Kern River Amended 2002
Expansion Project, to provide an additional 10,500 dekatherms per day of
long-term firm transportation capacity from Wyoming to markets in California.
Kern River started construction on October 9, 2001. The project will make
permanent the California Action Project facilities which includes the
construction of three new compressor stations. An additional compressor at an
existing facility in Wyoming will be installed as well as restaging a compressor
in Utah and upgrading two-meter stations. The estimated cost of the project
excluding the permanent California Action Project facilities is $31.5 million
with a targeted in-service date of May 1, 2002. The customers will pay for the
cost of the service of this expansion on a rolled-in basis.

     On July 18, 2001, Kern River filed an application with the FERC to
construct and operate a lateral pipeline that will provide 282,000 dekatherms
per day of firm transportation capacity to serve a new power generation plant.
The High Desert Lateral will include installing 32 miles of 24-inch pipeline and
two meter stations. Kern River expects the FERC to issue a certificate by May 1,
2002, and plans to start construction by June 2002. The estimated cost of the
lateral project is approximately $29 million with a targeted in-service date of
September 2002. The customer will pay for the cost of the service of the lateral
line on an incremental rate basis.

                                        12
<PAGE>

     On August 1, 2001, Kern River filed an application with the FERC to
construct and operate an expansion of its pipeline system that will serve an
additional 902,626 dekatherms per day of firm transportation capacity to serve
primarily power generation demand in southern Nevada and California. The 2003
Expansion Project will include installing 717 miles of loop pipeline, three new
compressor stations, upgrading, replacing or modifying six existing compressor
stations, adding a net total of 163,700 horsepower and upgrading five-meter
stations. Kern River expects the FERC to issue a certificate by May 1, 2002, and
plans to start construction by June 2002. The estimated cost of the expansion is
$1.27 billion with a targeted in-service date of May 1, 2003. The customers will
pay for the cost of service of this expansion on an incremental basis.

  Operating Statistics

     The following table summarizes transportation data for the periods
indicated (in trillion British Thermal Units):

<Table>
<Caption>
                                                              2001   2000   1999
                                                              ----   ----   ----
<S>                                                           <C>    <C>    <C>
Transportation Volumes......................................   348   312    303
Average Daily Transportation Volumes........................   1.0    .9     .8
Average Daily Firm Reserved Capacity........................    .8    .8     .7
</Table>

TEXAS GAS TRANSMISSION CORPORATION

     Texas Gas is an interstate natural gas transportation company that owns and
operates a natural gas pipeline system extending from the Louisiana Gulf Coast
area and eastern Texas and running generally north and east through Louisiana,
Arkansas, Mississippi, Tennessee, Kentucky, Indiana and into Ohio, with smaller
diameter lines extending into Illinois. Texas Gas' direct market area
encompasses eight states in the South and Midwest, and includes the Memphis,
Tennessee; Louisville, Kentucky; Cincinnati and Dayton, Ohio; and Indianapolis,
Indiana metropolitan areas. Texas Gas also has indirect market access to the
Northeast through interconnections with unaffiliated pipelines.

  Pipeline System and Customers

     At December 31, 2001, Texas Gas' system, having a mainline delivery
capacity of approximately 2.8 billion cubic feet of natural gas per day, was
composed of approximately 5,900 miles of mainline, storage and branch
transmission pipelines and 31 compressor stations having a sea level-rated
capacity totaling approximately 556,000 horsepower.

     In 2001, Texas Gas transported natural gas to customers in Louisiana,
Arkansas, Mississippi, Tennessee, Kentucky, Indiana, Illinois and Ohio, and
indirectly to customers in the Northeast. Texas Gas transported gas for 105
distribution companies and municipalities for resale to residential, commercial
and industrial end users. Texas Gas provided transportation services to
approximately 15 industrial customers located along its system. At December 31,
2001, Texas Gas had transportation contracts with approximately 560 shippers.
Transportation shippers include distribution companies, municipalities,
intrastate pipelines, direct industrial users, electrical generators, gas
marketers and producers. The largest customer of Texas Gas in 2001 accounted for
approximately 13.9 percent of its total operating revenues. No other customer
accounted for more than ten percent of total operating revenues in 2001. Texas
Gas' firm transportation and storage agreements are generally long-term
agreements with various expiration dates and account for the major portion of
Texas Gas's business. Additionally, Texas Gas offers interruptible
transportation, short-term firm transportation and storage services under
agreements that are generally shorter term.

     Texas Gas owns and operates gas storage reservoirs in nine underground
storage fields located on or near its system or market areas. The storage
capacity of Texas Gas' certificated storage fields is approximately 178 billion
cubic feet of natural gas. Texas Gas' storage gas is used in part to meet
operational balancing needs on its system, to meet the requirements of Texas
Gas' firm and interruptible storage customers and to meet the requirements of
Texas Gas' No-Notice transportation service, which allows Texas Gas' customers
to temporarily draw from Texas Gas' storage gas to be repaid in-kind during the
following summer season. A

                                        13
<PAGE>

small amount of storage gas is also used to provide Summer No-Notice (SNS)
transportation service, designed primarily to meet the needs of summer-season
electrical power generation facilities. SNS customers may temporarily draw from
Texas Gas' storage gas in the summer, to be repaid during the same summer
season. A large portion of the natural gas delivered by Texas Gas to its market
area is used for space heating, resulting in substantially higher daily
requirements during winter months.

  Operating Statistics

     The following table summarizes transportation data for the periods
indicated (in trillion British Thermal Units):

<Table>
<Caption>
                                                              2001    2000    1999
                                                              -----   -----   -----
<S>                                                           <C>     <C>     <C>
Transportation Volumes......................................  709.9   737.8   749.6
Average Daily Transportation Volumes........................    1.9     2.0     2.1
Average Daily Firm Reserved Capacity........................    2.1     2.1     2.2
</Table>

WILLIAMS GAS PIPELINES CENTRAL, INC.

     Central is an interstate natural gas transportation company that owns and
operates a natural gas pipeline system located in Colorado, Kansas, Missouri,
Nebraska, Oklahoma, Texas and Wyoming. The system serves customers in seven
states, including major metropolitan areas in Kansas and Missouri, its chief
market areas.

  Pipeline System and Customers

     At December 31, 2001, Central's system, having a mainline delivery capacity
of approximately 2.3 billion cubic feet of natural gas per day, was composed of
approximately 6,000 miles of mainline and branch transmission and storage
pipelines and 43 compressor stations having a sea level-rated capacity totaling
approximately 226,000 horsepower.

     In 2001, Central transported natural gas to customers in Colorado, Kansas,
Missouri, Nebraska, Oklahoma, Texas and Wyoming. At December 31, 2001, Central
had transportation contracts with approximately 175 shippers serving
approximately 530 cities and towns and 222 industrial customers.

     In 2001, approximately 58 percent of Central's total operating revenues
were generated from gas transportation services to Central's two largest
customers, Kansas Gas Service Company, a division of Oneok, Inc. (approximately
28 percent), and Missouri Gas Energy Company (approximately 30 percent). Kansas
Gas Service Company sells or resells gas to residential, commercial and
industrial customers principally in certain major metropolitan areas of Kansas.
Missouri Gas Energy Company sells or resells gas to residential, commercial and
industrial customers principally in certain major metropolitan areas of
Missouri. No other customer accounted for more than ten percent of operating
revenues in 2001.

     Central's firm transportation agreements have various expiration dates
ranging from one to 20 years, with the majority expiring in three to eight
years. Additionally, Central offers interruptible transportation services under
shorter term agreements.

     Central operates eight underground storage fields with an aggregate natural
gas storage capacity of approximately 43 billion cubic feet and an aggregate
delivery capacity of approximately 1.2 billion cubic feet of natural gas per
day. Central's customers inject gas into these fields when demand is low and
withdraw it to supply their peak requirements. During periods of peak demand,
approximately two-thirds of the firm gas delivered to customers is supplied from
these storage fields. Storage capacity enables Central's system to operate more
uniformly and efficiently during the year.

                                        14
<PAGE>

  Operating Statistics

     The following table summarizes transportation data for the periods
indicated (in trillion British Thermal Units):

<Table>
<Caption>
                                                              2001    2000    1999
                                                              -----   -----   ----
<S>                                                           <C>     <C>     <C>
Transportation Volumes......................................  337.6   326.4   324
Average Daily Transportation Volumes........................     .9      .9    .9
Average Daily Firm Reserved Capacity........................    2.3     2.2   2.2
</Table>

REGULATORY MATTERS

     Each of the interstate natural gas pipeline companies discussed above has
various regulatory proceedings pending. Each company establishes its rates
primarily through the FERC's ratemaking process. Key determinants in the
ratemaking process are (1) costs of providing service, including depreciation
expense, (2) allowed rate of return, including the equity component of the
capital structure and related income taxes and (3) volume throughput
assumptions. The FERC determines the allowed rate of return in each rate case.
Rate design and the allocation of costs between the demand and commodity rates
also impact profitability. As a result of these proceedings, the interstate
natural gas pipeline companies have collected a portion of their revenues
subject to refund. See Note 19 of Notes to Consolidated Financial Statements for
the amount accrued for potential refund at December 31, 2001.

     Each of the interstate natural gas pipeline companies that were formerly
gas supply merchants have undertaken the reformation of its respective gas
supply contracts. None of the pipeline companies have any pending supplier
take-or-pay, ratable-take or minimum-take claims, which are material to Williams
on a consolidated basis. For information on outstanding issues with respect to
contract reformation, gas purchase deficiencies and related regulatory issues,
see Note 19 of Notes to Consolidated Financial Statements.

COMPETITION

     The FERC continues to regulate each of Williams' interstate natural gas
pipeline companies pursuant to the Natural Gas Act and the Natural Gas Policy
Act of 1978. Competition for natural gas transportation has intensified in
recent years due to customer access to other pipelines, rate competitiveness
among pipelines, customers' desire to have more than one transporter and
regulatory developments. Future utilization of pipeline capacity will depend on
competition from other pipelines, use of alternative fuels, the general level of
natural gas demand and weather conditions. Electricity and distillate fuel oil
are the primary competitive forms of energy for residential and commercial
markets. Coal and residual fuel oil compete for industrial and electric
generation markets. Nuclear and hydroelectric power and power purchased from
electric transmission grid arrangements among electric utilities also compete
with gas-fired electric generation in certain markets.

     Suppliers of natural gas are able to compete for any gas markets capable of
being served by pipelines using nondiscriminatory transportation services
provided by the pipeline companies. As the regulated environment has matured,
many pipeline companies have faced reduced levels of subscribed capacity as
contractual terms expire and customers opt to reduce firm capacity under
contract in favor of alternative sources of transmission and related services.
This situation, known in the industry as "capacity turnback," is forcing the
pipeline companies to evaluate the consequences of major demand reductions in
traditional long-term contracts. It could also result in significant shifts in
system utilization, and possible realignment of cost structure for remaining
customers since all interstate natural gas pipeline companies continue to be
authorized to charge maximum rates approved by the FERC on a cost of service
basis. WGP does not anticipate any significant financial impact from "capacity
turnback". WGP anticipates that it will be able to remarket most future capacity
subject to turnback, although competition may cause some of the remarketed
capacity to be sold at lower rates or for shorter terms.

     Several state jurisdictions have been involved in implementing changes
similar to the changes that have occurred at the federal level. States,
including New York, New Jersey, Pennsylvania, Maryland, Georgia, Delaware,
Virginia, California, Wyoming, Kentucky and Indiana, are currently at various
points in the process

                                        15
<PAGE>

of unbundling services at local distribution companies. Management expects the
implementation of these changes to encourage greater competition in the natural
gas marketplace.

OWNERSHIP OF PROPERTY

     Each of Williams' interstate natural gas pipeline companies generally owns
its facilities in fee, with certain portions, such as certain offshore
facilities, being held jointly with third parties. However, a substantial
portion of each pipeline company's facilities is constructed and maintained
pursuant to rights-of-way, easements, permits, licenses or consents on and
across properties owned by others. Compressor stations, with appurtenant
facilities, are located in whole or in part either on lands owned or on sites
held under leases or permits issued or approved by public authorities. The
storage facilities are either owned or contracted under long-term leases or
easements.

ENVIRONMENTAL MATTERS

     Each interstate natural gas pipeline is subject to the National
Environmental Policy Act and federal, state and local laws and regulations
relating to environmental quality control. Management believes that, with
respect to any capital expenditures and operation and maintenance expenses
required to meet applicable environmental standards and regulations, the FERC
would grant the requisite rate relief so that the pipeline companies could
recover most of the cost of these expenditures in their rates. For this reason,
management believes that compliance with applicable environmental requirements
by the interstate pipeline companies is not likely to have a material effect
upon Williams' earnings or competitive position.

     For a discussion of specific environmental issues involving the interstate
pipelines, including estimated cleanup costs associated with certain pipeline
activities, see "Environmental" under Management's Discussion and Analysis of
Financial Condition and Results of Operations and "Environmental Matters" in
Note 19 of Notes to Consolidated Financial Statements.

                            WILLIAMS ENERGY SERVICES

     Williams Energy Services, LLC (Williams Energy) is comprised of five major
business units: Exploration & Production, International, Midstream Gas &
Liquids, Petroleum Services and Williams Energy Partners L.P. Williams Energy,
through its subsidiaries, engages in energy exploration and production
activities by owning 3.2 trillion cubic feet equivalent of proved natural gas
reserves located primarily in New Mexico, Wyoming and Colorado; directly invests
in international energy projects located primarily in South America and
Lithuania and invests in energy and infrastructure development funds in Asia and
Latin America; partially owns a soda ash mining operation in Colorado; and owns
or operates approximately 11,200 miles of gathering pipelines (including certain
gathering lines owned by Transco but operated by Midstream Gas & Liquids),
approximately 14,300 miles of natural gas liquids pipelines (4,770 of which are
partially owned), 10 natural gas treating plants, 18 natural gas processing
plants (three of which are partially owned) located in the United States and
Canada, 69 petroleum products terminals, two ethanol production facilities (one
of which is partially owned), two refineries, 89 convenience stores/travel
centers, approximately 6,747 miles of petroleum products pipeline and
approximately 1,100 miles of ammonia pipeline. At December 31, 2001, Williams
Energy, through its subsidiaries, employed approximately 6,870 employees.

     Segment revenues and segment profit for Williams Energy's business units
are reported in Note 22 of Notes to Consolidated Financial Statements herein.

     A business description of each of Williams Energy's business units follows.

EXPLORATION & PRODUCTION

     Williams Energy, through its wholly owned subsidiaries Williams Production
Company and Williams Production RMT Company in its Exploration & Production unit
(E&P), owns and operates producing natural gas leasehold properties in the
United States. In addition, E&P is exploring for oil and natural gas.

                                        16
<PAGE>

  Acquisitions

     On August 2, 2001, Williams Production RMT Company completed its
acquisition of Barrett Resources Corporation of Denver, Colorado, through a
merger. At the time of the merger, Barrett had total proved reserves of 1.9
trillion cubic feet equivalent and equity productions of 350 million cubic feet
equivalent per day. The merger established several new core areas in the Rockies
with development drilling programs in the Piceance, Raton and Powder River
basins. Other projects exist in the Uinta basin, Wind River basin, Mid-
continent area and the Gulf of Mexico.

  Oil and Gas Properties

     E&P's properties are located primarily in the Rocky Mountains and Gulf
Coast areas. Rocky Mountain properties are located in New Mexico, Wyoming and
Colorado. Gulf Coast properties are located in Louisiana and east and south
Texas.

  Gas Reserves and Wells

     At December 31, 2001, 2000 and 1999, E&P had proved developed natural gas
reserves of 1,599 billion cubic feet equivalent, 603 billion cubic feet
equivalent and 548 billion cubic feet equivalent, respectively, and proved
undeveloped reserves of 1,579 billion cubic feet equivalent, 599 billion cubic
feet equivalent and 504 billion cubic feet equivalent, respectively. Of E&P's
total proved reserves, 21 percent are located in the San Juan Basin of Colorado
and New Mexico, 26 percent are located in Wyoming and 46 percent are located in
Colorado outside of the San Juan Basin. No major discovery or other favorable or
adverse event has caused a significant change in estimated gas reserves since
year end 2001. E&P has not filed any information with any other federal
authority or agency with respect to its estimated total proved reserves at
December 31, 2001.

     At December 31, 2001, the gross and net developed leasehold acres owned by
E&P totaled 1,025,119 and 515,295, respectively, and the gross and net
undeveloped acres owned were 3,852,811 and 2,424,763, respectively. At December
31, 2001, E&P owned interests in 9,846 gross producing wells (4,252 net) on its
leasehold lands.

  Operating Statistics

     The following tables summarize drilling activity for the periods indicated:

<Table>
<Caption>
2001 WELLS                                                    GROSS   NET
- ----------                                                    -----   ---
<S>                                                           <C>     <C>
Development
  Drilled...................................................   769    347
  Completed.................................................   767    346
Exploration
  Drilled...................................................    14      7
  Completed.................................................     9      6
</Table>

<Table>
<Caption>
                                                              GROSS    NET
COMPLETED DURING                                              WELLS   WELLS
- ----------------                                              -----   -----
<S>                                                           <C>     <C>
2001........................................................   776     352
2000........................................................   246      62
1999........................................................   249      48
</Table>

     The majority of E&P's natural gas production is currently being sold to
Energy Marketing & Trading at spot market prices. Additionally, E&P has entered
into derivative contracts with Energy Marketing & Trading that hedge
approximately 79 percent of projected 2002 natural gas production. Energy
Marketing & Trading then enters into offsetting derivative contracts with
unrelated third parties. Approximately 75 percent of production in 2001 was
hedged. The total net production sold during 2001, 2000 and 1999 was 130.7
billion cubic feet equivalent, 65.6 billion cubic feet equivalent and 57.9
billion cubic feet equivalent, respectively. The average production costs
including production taxes per million cubic feet of gas produced were $.61,
$.57 and

                                        17
<PAGE>

$.46, in 2001, 2000 and 1999, respectively. The average wellhead sales price per
million cubic feet was $3.13, $2.67 and $1.48, respectively, for the same
periods.

     In 1993, E&P conveyed a net profits interest in certain of its properties
to the Williams Coal Seam Gas Royalty Trust. Substantially all of the production
attributable to the properties conveyed to the Trust was from the Fruitland coal
formation and constituted coal seam gas. Williams subsequently sold trust units
to the public in an underwritten public offering and retained 3,568,791 trust
units representing 36.8 percent of outstanding trust units. During 2000,
Williams sold its trust units as part of a Section 29 tax credit transaction, in
which Williams retained an option to repurchase the units. Williams registered
the units with the SEC and has been repurchasing the units and reselling the
units on the open market from time to time. As of February 18, 2002, Williams'
option to repurchase totaled 3,308,791 units.

INTERNATIONAL

     Williams International Company, through subsidiaries, has made direct
investments in energy projects primarily in South America and Lithuania and
continues to explore and develop additional projects for international
investments. Williams International also has investments in energy and
infrastructure development funds in Asia and South America and a soda ash mining
operation in Colorado.

     El Furrial.  Williams International owns a 67 percent interest in a venture
near the El Furrial field in eastern Venezuela that constructed, owns and
operates medium and high pressure gas compression facilities for Petroleos de
Venezuela S.A. (PDVSA), the state owned petroleum corporation of Venezuela.

     The medium pressure facility has compression capacity of 130 million cubic
feet per day of raw natural gas from 100 to 1,200 p.s.i.g. for delivery into a
natural gas processing plant owned by PDVSA. The high pressure facility has
compression capacity of 650 million cubic feet per day of processed natural gas
from 1,100 to 7,500 p.s.i.g. for injection into PDVSA's El Furrial producing
field.

     Jose Terminal.  Through a long-term operations and maintenance agreement, a
consortium, in which Williams International owns 45 percent, operates the PDVSA,
Eastern Venezuela crude oil storage and shiploading terminal. Operations began
in the second quarter of 1999, and volumes have averaged 500,000 barrels per
day. Crude oil exports shipped through this offshore facility are expected to
generate approximately 30 percent of Venezuela's forecasted revenues. PDVSA
expects to significantly increase the terminal's volume and capacity, currently
800,000 barrels per day, during the next several years.

     Pigap II.  In April 1999, a consortium in which Williams International owns
70 percent entered into an agreement with PDVSA Petroleo y Gas, S.A., to
develop, design, construct, operate, maintain and own a high pressure natural
gas injection facility and related infrastructure to take gas, process it and
deliver it for injection for secondary recovery of oil from the Santa
Barbara/Pirital oil fields located in North Monogas, Venezuela for an initial
term of 20 years. Williams International commenced construction in February
2000. Initial operations began in August 2001. The facility is now fully
operational. Performance tests have been completed and approved by PDVSA to 75
percent of capacity. The plant is currently being tested at 100 percent of
capacity. Maximum capacity is 1.4 billion cubic feet per day.

     Accroven.  Williams International acquired by purchase from TCPL
International Limited and TC International Limited and owns 49.25 percent of
Accroven, the Eastern Venezuela project which built, owns and operates two 400
million cubic feet per day natural gas liquids extraction plants, a 50,000
barrel per day natural gas liquids fractionation plant and associated storage
and refrigeration facilities for PDVSA. Operations commenced in June 2001. The
facility is fully operational with all performance tests completed and approved
to 100 percent of capacity.

     AB Mazeikiu Nafta.  In October 1999 Williams acquired a 33 percent
ownership interest and the right to operate AB Mazeikiu Nafta (MN). MN consists
of a 320,000 barrel per day refinery, which as of February 28, 2002 was refining
140,000 barrels per day, a 720,000 barrel per day crude oil and refined product
pipeline systems within Lithuania and a 160,000 barrel per day crude export
facility on the Baltic Sea. Williams took over the operation of these assets in
October 1999.

                                        18
<PAGE>

     In September of 2000, MN signed an agreement with Yukos Oil Company to
transport 80,000 barrels per day through the Butinge terminal. Additionally, MN
has entered into multiple short-term supply agreements for the supply of crude
oil to the refinery. MN is currently in negotiations with Russian producers for
a long-term 80,000-barrel per day refinery supply agreement.

     Apco Argentina.  Williams International owns approximately a 70 percent
interest in Apco Argentina Inc., an oil and gas exploration and production
company with operations in Argentina, whose securities are traded on the NASDAQ
stock market. Apco Argentina's principal business is its 47.6 percent interest
in the Entre Lomas concession in southwest Argentina. It also owns a 45 percent
interest in the Canadon Ramirez concession and a 1.5 percent interest in the
Acambuco concession.

     American Soda L.L.P. -- Sodium Mineral Resource Investment.  American Soda
L.L.P. is a partnership based in the Piceance Creek Basin of western Colorado
for the purpose of engaging in the exploration, development, mining and
marketing of soda ash and sodium bicarbonate in an efficient and environmentally
responsible manner. This facility has capacities of approximately one million
tons of soda ash per year and 150,000 tons of sodium bicarbonate per year. The
project is included in International's portfolio because it exports a
significant portion of the soda ash production through the United States
producer export-marketing consortium, American Natural Soda Ash Company. Soda
ash is used in the manufacture of glass, chemicals, paper and detergents. Sodium
bicarbonate, more commonly known as baking soda, is used in animal feed,
pharmaceutical products, food additives, water treatment, cleaning products and
fire extinguishers. As a result of higher than expected construction costs and
implementation difficulties, a $170 million impairment charge on the facility
was recorded in the fourth-quarter of 2001.

MIDSTREAM GAS & LIQUIDS

     Williams Energy, through Williams Field Services Group, Inc. and its
subsidiaries, Williams Energy (Canada), Inc. and its subsidiaries, Williams
Natural Gas Liquids, Inc. and its subsidiaries and Williams Midstream Natural
Gas Liquids, Inc. (collectively Midstream), owns and operates natural gas
gathering, processing and treating facilities, and natural gas liquids
transportation, fractionation and storage facilities in northwestern New Mexico,
southwestern Colorado, southwestern Wyoming, eastern Utah, northwestern
Oklahoma, Kansas, northern Missouri, eastern Nebraska, Iowa, southern Minnesota,
Tennessee, central Alberta and western British Columbia, Canada and also in
areas offshore and onshore in Texas, Alabama, Mississippi and Louisiana.
Midstream also operates gathering facilities owned by Transcontinental Gas Pipe
Line Corporation, an affiliated interstate natural gas pipeline company, that
are currently regulated by the FERC.

  Expansion Projects

     In 2001, Midstream continued to expand its Gulf Coast operations with the
November completion of an onshore gas processing facility and the mid-2002
scheduled completion of deepwater gathering and transportation facilities, each
of which is leased by Midstream. Midstream's deepwater expansion efforts
continued with agreements to gather and transport oil and natural gas production
from Kerr-McGee Corporation's deepwater developments in the Nansen and Boomvang
areas in the Western Gulf of Mexico. In order to provide these services to
Kerr-McGee and other future prospects, a 137-mile gathering system was
constructed to move gas and oil produced by the Nansen and Boomvang prospects.
In November 2001, the newly-constructed cryogenic plant located near Markham,
Texas was placed into operation. The 300 million cubic feet per day plant
processes the gas flows generated from the East Breaks infrastructure. Midstream
leases each of these facilities. The lease terms include a five-year base term
including the construction phase and can be renewed for another five-year term.

     Midstream also signed agreements to provide infrastructure for Dominion
Exploration & Production, Inc. and Pioneer Natural Resources Company deepwater
projects located in the Devils Tower field in the Gulf of Mexico. Terms of the
agreement call for Midstream to construct and own a floating production
facility, a 90-mile gas pipeline and a 120-mile oil pipeline to handle
production from the Devils Tower field. Midstream intends to use the facilities
to provide production-handling services to surrounding fields. The project is

                                        19
<PAGE>

scheduled to become operational in June 2003. Midstream's Mobile Bay plant will
process the gas and recover NGL's, which will then be transported to the Baton
Rouge fractionator via the Tri-States and Wilprise pipelines.

     The Redwater Olefins fractionation facility located adjacent to the
existing Redwater Fractionation Facility near Edmonton, Alberta, is nearing
completion. The new facility is scheduled to be in service in the first quarter
2002 and include feed storage, feed treatment, fractionation, product storage,
product treatment and rail loading. The new olefins facility will be an integral
part of Midstream's existing McMurray-Redwater System, which involves the
recovery of hydrocarbon liquids from the offgas produced at a third party
facility near Ft. McMurray, Alberta.

  Customers and Operations

     Facilities owned and/or operated by Midstream consist of approximately
11,200 miles of gathering pipelines (including certain gathering lines owned by
Transco but operated by Midstream), 10 natural gas treating plants, 18 natural
gas processing plants (three of which are partially owned), and approximately
14,300 miles of natural gas liquids pipeline, of which approximately 4,770 miles
are partially owned. The aggregate daily inlet capacity is approximately 9.0
billion cubic feet for the gathering systems and 12.2 billion cubic feet for the
gas processing, treating and dehydration facilities. Midstream's pipeline
operations provide customers with one of the nation's largest natural gas
liquids transportation systems, while gathering and processing customers have
direct access to interstate pipelines, including affiliated pipelines, which
provide access to multiple markets.

     During 2001, Midstream gathered gas for 255 customers, processed gas for 93
customers and provided transportation to 87 customers. The largest customer
accounted for approximately 14 percent of total gathered volumes, and the two
largest processing customers accounted for 19 percent and 16 percent,
respectively, of processed volumes. The largest transportation customers
accounted for 17 percent of transportation volumes. No other customer accounted
for more than ten percent of gathered, processed or transported volumes.
Williams Canada sold NGLs to 10 customers, three of which individually represent
over ten percent of Canadian NGL sales. Midstream's gathering and processing
agreements with large customers are generally long-term agreements with various
expiration dates. These long-term agreements account for the majority of the gas
gathered and processed by Midstream. The natural gas liquids transportation
contracts are tariff-based and generally short-term in nature with some
long-term contracts for system-connected processing plants. The Canadian NGL
sales contracts are typically long-term in nature and are based on
cost-of-service or flat fee arrangements.

  Acquisitions

     Midstream continues to realign its assets to focus on providing producer
services in significant growth basins. In order to strengthen its strategic
position in the Gulf Coast offshore production areas, Midstream acquired a
series of Gulf Coast pipelines in 2001 that included the Black Marlin Pipeline,
Green Canyon Gathering System and the Tarpon Transmission System. In January
2002, Midstream announced an asset swap with Duke Energy Field Services that
will increase its ownership in the Wyoming area in exchange for its assets in
the Hugoton Basin. Terms of the agreement include Midstream receiving Duke's 34
percent ownership interest in the Echo Spring processing plant and related
gathering systems near Wamsutter, Wyoming. Midstream currently owns the
remaining 66 percent ownership interest in the Wamsutter assets. In exchange,
Duke will receive Midstream's Oklahoma Hugoton gathering system, and the Baker,
Hobart Ranch and South Bishop gas processing plants located in the Texas and
Oklahoma panhandle area. The transaction is expected to close in the first
quarter of 2002.

     In January 2002, Midstream sold various gas gathering and processing assets
located in south Texas. These assets included a sour gas treatment plant and
gathering lines near Tilden, an inactive gas processing plant in Bee County and
Midstream's 76 percent interest in the Webb Duval gathering system. In addition,
the sale of 492 miles of Transco transmission lines in far southern Texas is
expected to close in the third quarter of 2002.

                                        20
<PAGE>

  Operating Statistics

     The following table summarizes gathering, processing, natural gas liquid
sales and transportation volumes for the periods indicated. The information
includes operations attributed to facilities owned by Transco but operated by
Midstream.

<Table>
<Caption>
                                                              2001    2000    1999
                                                              -----   -----   -----
<S>                                                           <C>     <C>     <C>
Gas volumes:
  Domestic gathering (trillion British Thermal Units).......  2,174   2,116   2,085
  Domestic processing (trillion British Thermal Units)......    563     561     539
  Domestic natural gas liquids sales (millions of
     gallons)...............................................    980   1,151     838
  Domestic natural gas liquids transportation (millions of
     barrels)...............................................    303     291     282
Canadian gas liquids sales (millions of gallons)............  1,391     368*     --
</Table>

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

* Partial year (acquired October 11, 2000)

PETROLEUM SERVICES

     Williams Energy, through wholly owned subsidiaries in its Petroleum
Services unit, owns and operates a petroleum products pipeline system, an
ethylene plant and olefin pipeline, 39 petroleum products terminals (some of
which are partially owned), two ethanol production plants (one of which is
majority owned), two refineries and 89 convenience stores/travel centers, and
provides services and markets products related thereto. In 2001, no one customer
accounted for ten percent of Petroleum Services' total revenues.

  Transportation

     A subsidiary in the Petroleum Services unit, Williams Pipe Line Company,
owns and operates a petroleum products pipeline system that covers an 11-state
area extending from Oklahoma to North Dakota, Minnesota and Illinois. The system
is operated as a common carrier offering transportation and terminalling
services on a nondiscriminatory basis under published tariffs. The system
transports refined products and liquified petroleum gases. On February 4, 2002,
Williams announced that it plans to sell this pipeline system and its on-system
terminals. Williams Energy Partners L.P. is a potential purchaser of this
pipeline system.

     At December 31, 2001 the system includes approximately 6,747 miles of
pipeline in various sizes up to 16 inches in diameter. The system includes 77
pumping stations, 26.5 million barrels of storage capacity and 39 delivery
terminals. The terminals are equipped to deliver refined products into tank
trucks and tank rail cars. The maximum number of barrels that the system can
transport per day depends upon the operating balance achieved at a given time
between various segments of the system. Because the balance is dependent upon
the mix of products to be shipped and the demand levels at the various delivery
points, the exact capacity of the system cannot be stated. In 2001, total system
shipments averaged 647,000 barrels per day.

     The operating statistics set forth below relate to the system's operations
for the periods indicated:

<Table>
<Caption>
                                                           2001      2000      1999
                                                          -------   -------   -------
<S>                                                       <C>       <C>       <C>
Shipments (thousands of barrels):
  Refined products:
     Gasolines..........................................  137,552   130,580   132,444
     Distillates........................................   75,887    74,299    70,466
     Aviation fuels.....................................   14,752    16,488    12,060
     LP-Gases...........................................    7,901     7,781     7,521
                                                          -------   -------   -------
       Total Shipments..................................  236,092   229,148   222,491
                                                          =======   =======   =======
Daily average (thousands of barrels)....................      647       626       610
Barrel miles (millions).................................   70,466    68,211    67,768
</Table>

     Williams and its subsidiary, Longhorn Enterprises of Texas, Inc. (LETI),
own a total 32.1 percent interest in Longhorn Partners Pipeline, LP, a joint
venture formed to construct and operate a refined products

                                        21
<PAGE>

pipeline from Houston, Texas, to El Paso, Texas. Pipeline construction is
substantially complete pending regulatory and environmental approvals, and
operations are expected to commence after receiving such approvals in mid-2002.
Williams Pipe Line has designed and constructed and will operate the pipeline,
and Williams Pipe Line and LETI have contributed a total of approximately $105
million and loaned approximately $32 million to the joint venture.

     On June 30, 2000, a subsidiary in the Petroleum Services unit purchased an
interest in the Trans-Alaska Pipeline System from Mobil Alaska Pipeline Company
for $32.5 million. Petroleum Services' interest consists of 3.0845 percent of
the pipeline and the Valdez crude terminal. Petroleum Services' share of the
crude oil deliveries for 2001 was approximately 14.0 million barrels.

  Olefins

     Petroleum Services owns and operates an approximate 42 percent interest in
a 1.3 billion pounds per year ethylene plant near Geismar, Louisiana. Williams
Energy Marketing & Trading provides feedstocks to the olefins facility and
markets the Williams share of the ethylene produced from the facility through a
tolling arrangement with Petroleum Services. The olefins facility is supported
by pipeline and storage assets owned by Williams Midstream Gas & Liquids.
Midstream owns and operates a 215-mile light hydrocarbon transportation system
and operates and has partial ownership in an 85-mile olefin pipeline and storage
network, which connects, either directly or indirectly, most major natural gas
liquids producers and olefin consumers in Louisiana.

     Feedstock processed and ethylene produced by the olefin facility, which was
acquired in March 1999, noted below represents Williams approximate 42 percent
interest:

<Table>
<Caption>
                                                           2001      2000      1999
                                                          -------   -------   -------
<S>                                                       <C>       <C>       <C>
Feedstock processed (thousands of pounds):..............  477,106   793,316   596,512
Ethylene production (thousands of pounds):..............  315,113   520,758   386,998
</Table>

  Bio-Energy

     Williams Bio-Energy, LLC, is engaged in the production and marketing of
ethanol. Williams Bio-Energy owns and operates two ethanol plants (one of which
is partially owned) for which corn is the principal feedstock. The Pekin,
Illinois, plant has an annual production capacity of 100 million gallons of
fuel-grade and industrial ethanol and also produces various coproducts and
bio-products. Bio-products, mainly flavor enhancers, produced at the Pekin plant
are marketed primarily to food processing companies. The Aurora, Nebraska, plant
(in which Williams Bio-Energy owns an approximate 77 percent interest) has an
annual production capacity of 30 million gallons. In late 2000, Williams
Bio-Energy acquired a minority interest in two affiliate plants in South Dakota
and made equity investments in two other plants in Minnesota and Iowa totaling
approximately 40 million gallons of annual ethanol production capacity produced
primarily from corn. In addition, Williams Bio-Energy obtained marketing rights
to 100 percent of the ethanol output of the four plants. Williams Bio-Energy
also markets ethanol produced by third parties. In 2001, Williams Bio-Energy
entered into marketing agreements to market all of the ethanol produced by
Heartland Grain Fuels, L.P., Minnesota Energy, Sunrise Energy and Tri-State
Ethanol Company, LLC.

     The sales volumes set forth below include ethanol produced by third parties
as well as by Williams Bio-Energy for the periods indicated:

<Table>
<Caption>
                                                           2001      2000      1999
                                                          -------   -------   -------
<S>                                                       <C>       <C>       <C>
Ethanol sold (thousands of gallons).....................  265,854   227,458   200,077
</Table>

  Refining

     Petroleum Services, through subsidiaries in its unit, owns and operates two
petroleum products refineries: the North Pole, Alaska refinery and the Memphis,
Tennessee refinery. The financial results of the North Pole refinery and the
Memphis refinery may be significantly impacted by changes in market prices for
crude oil and

                                        22
<PAGE>

refined products. Petroleum Services cannot predict the future of crude oil and
product prices or their impact on its financial results.

     The North Pole Refinery includes the refinery located at North Pole, Alaska
and a terminal facility at Anchorage, Alaska. The refinery, the largest in the
state, is located approximately two miles from its supply point for crude oil,
the Trans-Alaska Pipeline System (TAPS). The refinery's processing capability is
approximately 215,000 barrels per day. At maximum crude throughput, the refinery
can produce up to 70,000 barrels per day of retained refined products. These
products are jet fuel, gasoline, diesel fuel, heating oil, fuel oil, naphtha and
asphalt. These products are marketed in Alaska, Western Canada and the Pacific
Rim principally to wholesale, commercial, industrial and government customers
and to Petroleum Services' retail petroleum group.

     Barrels processed and transferred by the North Pole Refinery per day are
noted below:

<Table>
<Caption>
                                                           2001      2000      1999
                                                          -------   -------   -------
<S>                                                       <C>       <C>       <C>
Barrels Processed and Sold (barrels)....................   65,089    58,109    56,395
</Table>

     The North Pole Refinery's crude oil is purchased from the state of Alaska
or is purchased or received on exchanges from crude oil producers. The refinery
has two long-term agreements with the state of Alaska for the purchase of
royalty oil, both of which are scheduled to expire on December 31, 2003. The
agreements provide for the purchase of up to 56,000 barrels per day
(approximately 80 percent of the refinery's supply needs for retained
production) of the state's royalty share of crude oil produced from Prudhoe Bay,
Alaska. These volumes, along with crude oil either purchased or received under
exchange agreements from crude oil producers or other short-term supply
agreements with the state of Alaska, are utilized as throughput for the
refinery. Approximately 30 percent of the throughput is refined, retained and
sold as finished product and the remainder of the throughput is returned to the
TAPS and either delivered to repay exchange obligations or sold.

     The Memphis Refinery, which includes three petroleum products terminals, is
the only refinery in the state of Tennessee and has a throughput capacity of
approximately 175,000 barrels per day. Petroleum Services commissioned a 36,000
barrel per day continuous catalyst regeneration reformer in May 2000. The
reformer enables the refinery to produce in greater volumes premium gasoline to
be delivered in the mid-South region of the United States.

     The Memphis Refinery produces gasoline, low sulfur diesel fuel, jet fuel,
K-1 kerosene, refinery-grade propylene, No. 6 fuel oil, propane and elemental
sulfur. In 2001, these products were exchanged or marketed primarily in the
Mid-South region of the United States to wholesale customers, such as industrial
and commercial consumers, jobbers, independent dealers and other
refiner/marketers. Through January 2001, Williams' Energy Marketing & Trading
unit marketed the refinery's products. Petroleum Services began marketing the
refinery's products directly in February 2001.

     The Memphis Refinery has access to crude oil from the Gulf Coast via common
carrier pipeline and by river barges. In addition to domestic crude oil, the
Memphis Refinery receives and processes certain foreign crudes. The Memphis
Refinery's purchase contracts are generally short-term agreements.

     Average daily barrels processed and transferred by the Memphis Refinery are
noted below:

<Table>
<Caption>
                                                           2001      2000      1999
                                                          -------   -------   -------
<S>                                                       <C>       <C>       <C>
Barrels Processed and Sold (barrels)....................  175,914   161,751   133,494
</Table>

  Retail Petroleum

     Petroleum Services, primarily under the brand names "Williams
TravelCenters" and "Williams Express," is engaged in the retail marketing of
gasoline, diesel fuel, other petroleum products, convenience merchandise and
restaurant and fast food items. On May 31, 2001, Petroleum Services sold 198
MAPCO Express convenience stores to Delek -- The Israel Fuel Corporation
Limited. At December 31, 2001, the retail petroleum group operated 61 interstate
TravelCenter locations and 28 Williams Express convenience stores in Alaska. The
TravelCenter sites consist of 35 modern facilities providing gasoline and diesel
fuel,

                                        23
<PAGE>

merchandise and restaurant offerings for both traveling consumers and
professional drivers, and 15 locations providing fuel and merchandise. The
convenience store sites are primarily concentrated in the vicinities of
Nashville and Memphis, Tennessee and Anchorage and Fairbanks, Alaska. All of the
motor fuel sold by Williams TravelCenters and convenience stores is supplied
either by exchanges, directly from either the Memphis or North Pole Refineries
or through Williams Energy Marketing & Trading.

     Convenience merchandise, restaurants and fast food accounted for
approximately 60 percent of the retail petroleum group's gross margins in 2001.
Gasoline and diesel sales volumes for the periods indicated are noted below:

<Table>
<Caption>
                                                           2001      2000      1999
                                                          -------   -------   -------
<S>                                                       <C>       <C>       <C>
Gasoline (thousands of gallons).........................  254,762   340,724   339,470
Diesel (thousands of gallons)...........................  574,039   434,655   264,248
</Table>

WILLIAMS ENERGY PARTNERS L.P.

     In October 2000, Williams formed Williams Energy Partners L.P. (WEP), a
wholly owned partnership, to acquire, own and operate a diversified portfolio of
energy assets, concentrated around the storage, transportation and distribution
of refined petroleum products and ammonia. On October 30, 2000, WEP filed with
the Securities and Exchange Commission a registration statement on Form S-1
related to an initial public offering of common units. In February 2001,
4,600,000 common units, representing approximately 40 percent of the total
outstanding units, were sold to the public. Williams currently owns
approximately 60 percent of the partnership including its general partner
interest. WEP's common units trade on the New York Stock Exchange under the
symbol WEG.

     WEP's asset portfolio includes five marine petroleum product terminal
facilities with an aggregate storage capacity of approximately 18 million
barrels, 25 inland terminals with an aggregate storage capacity of 4.7 million
barrels and an ammonia pipeline and terminals system that extends for
approximately 1,100 miles from Texas and Oklahoma to Minnesota. Williams Energy
Marketing & Trading is WEP's largest terminal customer accounting for
approximately 9.5 percent of WEP's terminal revenues for 2001.

REGULATORY MATTERS

     International.  AB Mazeikiu Nafta is regulated by the Government of the
Republic of Lithuania. The four primary ministries that interact on the day to
day activities of MN are the Ministry of Economy, the Ministry of
Transportation, the Ministry of Environment and the Ministry of Finance. These
Ministries provide governmental regulations regarding the operation of the
refinery, transportation of crude oil and refined products through the pipeline
and terminal system, and financial reporting of MN. In addition the Ministry of
Economy controls MN's Board of Directors and Supervisory Council.

     Midstream.  In May 1994, after reviewing its legal authority in a Public
Comment Proceeding, the FERC determined that while it retains some regulatory
jurisdiction over gathering and processing performed by interstate pipelines,
pipeline-affiliated gathering and processing companies are outside its authority
under the Natural Gas Act. An appellate court has affirmed the FERC's
determination, and the United States Supreme Court has denied requests for
certiorari. As a result of these FERC decisions, some of the individual states
in which Midstream conducts its operations have considered whether to impose
regulatory requirements on gathering companies. Kansas, Oklahoma and Texas
currently regulate gathering activities using complaint mechanisms under which
the state commission may resolve disputes involving an individual gathering
arrangement. Other states may also consider whether to impose regulatory
requirements on gathering companies.

     In February 1996, Midstream and Transco filed applications with the FERC to
spindown all of Transco's gathering facilities to Midstream. The FERC
subsequently denied the request in September 1996. Midstream and Transco sought
rehearing in October 1996. In August 1997, Midstream and Transco filed a second
request for expedited treatment of the rehearing request. The FERC denied
rehearing on June 14, 2001. On July 26, 2001, Midstream and Transco filed an
appeal of the orders with the Circuit Court of Appeals for the District

                                        24
<PAGE>

of Columbia. In February 1998, Midstream and Transco filed separate applications
to spindown an onshore gathering system located in Texas, the Tilden/McMullen
gathering system, which was also one of the subjects of the pending rehearing
request. In May 1999, the FERC approved the spindown application only for the
facilities upstream of the Tilden treating plant. The transfer of ownership of
these facilities occurred in April 2000. As a result of a court appeal reversing
and remanding the FERC's decision that the offshore system of Sea Robin pipeline
were transmission facilities regulated by FERC under the Natural Gas Act, in
June 1999, the FERC issued an order in the Sea Robin remand proceeding finding
that the upstream portions of the Sea Robin system are nonjurisdictional
gathering but the downstream portion is regulated transmission. In July 2000,
the FERC affirmed that determination and denied rehearing requests. Appeals are
pending in the District of Columbia Circuit Court of Appeals. In April 2000, the
FERC issued "Regulations under the Outer Continental Shelf Lands Act Governing
the Movement of Natural Gas on Facilities on the Outer Continental Shelf," which
require most non-interstate natural gas pipelines located on the Outer
Continental Shelf to post prices, terms and conditions of service. Williams and
other parties appealed the Rule, challenging FERC's authority to issue it. On
January 11, 2002, the United States District Court for the District of Columbia
granted William's motion for summary judgment and permanently enjoined the FERC
from enforcing that rule. In November 2000, Midstream and Transco filed
applications with the FERC to spindown two of Transco's offshore gathering
facilities to Midstream (the North Padre system and the Central Texas system).
Transco and Midstream explained that it was the first in a series of spindown
filings designed to be consistent with the current policy under the Sea Robin
reformulated test. Subsequently, Midstream and Transco filed to spindown the
North High Island/West Cameron system and the Central Louisiana system. This
series of spindown filings will generally request the spindown of smaller
systems than originally proposed in the 1996 filings, but Transco and Midstream
have stated that they reserve their rights to continue pursuit of the original
spindown proposals. The FERC granted the proposed spindown of the North Padre
Island system and the Central Texas system on July 25, 2001. A rehearing order
was issued on December 19, 2001, which maintained the July 25th order's
determination on the function of the facilities, but did not require Transco to
change its rates before the transfer of facilities. The FERC granted only part
of the proposed spindowns for the North High Island/West Cameron system on July
25, 2001 and on the Central Louisiana system on August 31, 2001. On December 19,
2001, the FERC issued orders on rehearing in both proceedings, maintaining its
previous determination that only some of the proposed facilities function as
non-jurisdictional gathering. On January 7, 2002 Midstream filed an appeal of
each of the orders, the North High Island/West Cameron order and the Central
Louisiana order, with the Circuit Court of Appeals for the District of Columbia.
On January 9, 2002, Midstream and Transco moved to consolidate those two appeals
with the pending appeal of the comprehensive spindown that had been filed July
26, 2001.

     Midstream's natural gas liquids group is subject to various federal, state,
and local environmental and safety laws and regulations. Midstream's pipeline
operations are subject to the provisions of the Hazardous Liquid Pipeline Safety
Act. In addition, the tariff rates, shipping regulations, and other practices of
the Mid-America, Rio Grande, Seminole, Wilprise and Tri-States pipelines are
regulated by the FERC pursuant to the provisions of the Interstate Commerce Act
applicable to interstate common carrier petroleum and petroleum products
pipelines. Both of these statutes require the filing of reasonable and
nondiscriminatory tariff rates and subject Midstream to certain other
regulations concerning its terms and conditions of service. The Mid-America, Rio
Grande, Seminole, Wilprise and Tri-States pipelines also file tariff rates
covering intrastate movements with various state commissions. The United States
Department of Transportation has prescribed safety regulations for common
carrier pipelines. The pipeline systems are subject to various state laws and
regulations concerning safety standards, exercise of eminent domain, and similar
matters.

     Midstream's Canadian natural gas group's assets, except for the Taylor to
Boundary Lake Pipeline, are regulated provincially. The Alberta-based assets are
regulated by the Alberta Energy & Utilities Board (AEUB) and Alberta
Environment, while the British Columbia-based assets are regulated by B.C. Oil
and Gas Commission and the British Columbia Ministry of Environment, Lands and
Parks. The regulatory system for Alberta oil and gas industry incorporates a
large measure of self-regulation, meaning that licensed operators are held
responsible for ensuring that their operations are conducted in accordance with
all provincial regulatory requirements. For situations in which non-compliance
with the applicable regulations is at issue, the AEUB and Alberta Environment
have implemented an enforcement process with escalating
                                        25
<PAGE>

consequences. The British Columbia Oil and Gas Commission operates in a slightly
different manner than the AEUB, with more emphasis placed on pre-construction
criteria and the submission of post-construction documentation, as well as
periodic inspections. Only one asset is subject to federal regulation, under the
jurisdiction of the NEB. The Taylor to Boundary Lake Pipeline, which is Leg
Number 2 of the NGL Gathering System, is regulated by the National Energy Board
as a Group 2 inter-provincial pipeline between B.C. and Alberta. While Group 2
regulated companies are required to post a toll and tariff for the facilities
they operate, they are regulated on a "complaint only" basis and need only to
employ standard uniform accounting procedures, rather than the more onerous
Group 1 NEB-mandated accounting and reporting requirements.

     Petroleum Services.  Williams Pipe Line, as an interstate common carrier
pipeline, is subject to the provisions and regulations of the Interstate
Commerce Act. Under this Act, Williams Pipe Line is required, among other
things, to establish just, reasonable and nondiscriminatory rates, to file its
tariffs with the FERC, to keep its records and accounts pursuant to the Uniform
System of Accounts for Oil Pipeline Companies, to make annual reports to the
FERC and to submit to examination of its records by the audit staff of the FERC.
Authority to regulate rates, shipping rules and other practices and to prescribe
depreciation rates for common carrier pipelines is exercised by the FERC. The
Department of Transportation, as authorized by the 1995 Pipeline Safety
Reauthorization Act, is the oversight authority for interstate liquids
pipelines. Williams Pipe Line is also subject to the provisions of various state
laws applicable to intrastate pipelines.

     Environmental regulations and changing crude oil supply patterns continue
to affect the refining industry. The industry's response to environmental
regulations and changing supply patterns will directly affect volumes and
products shipped on the Williams Pipe Line system. Environmental Protection
Agency regulations, driven by the Clean Air Act, require refiners to change the
composition of fuel manufactured. A pipeline's ability to respond to the effects
of regulation and changing supply patterns will determine its ability to
maintain and capture new market shares. Williams Pipe Line has successfully
responded to changes in diesel fuel composition and product supply and has
adapted to new gasoline additive requirements. Reformulated gasoline regulations
have not yet significantly affected Williams Pipe Line. Williams Pipe Line will
continue to attempt to position itself to respond to changing regulations and
supply patterns but cannot predict how future changes in the marketplace will
affect its market areas.

     Williams Energy Partners L.P.  The Surface Transportation Board, a part of
the United States Department of Transportation, has jurisdiction over interstate
pipeline transportation of ammonia. Ammonia transportation rates must be
reasonable, and a pipeline carrier may not unreasonably discriminate among its
shippers. In determining a reasonable rate, the Surface Transportation Board
will consider, among other factors, the effect of the rate on the volumes
transported by that carrier, the carrier's revenue needs and the availability of
other economic transportation alternatives. Because in some instances WEP
transports ammonia between two terminals in the same state, its pipeline
operations are subject to regulation by the state regulatory authorities in
Iowa, Nebraska, Oklahoma and Texas.

COMPETITION

     Exploration & Production.  Williams Energy's E&P unit competes with a wide
variety of independent producers as well as integrated oil and gas companies for
markets for its production. E&P has three general phases of operations:
acquiring oil and gas properties, developing non-producing properties and
operating producing properties. In the process of acquiring minerals, the
primary methods of competition are on acquisition price and terms such as
duration of the mineral lease, the amount of the royalty payment and special
conditions related to rights to use the surface of the land under which the
mineral interest lies. In the process of developing non-producing properties,
E&P does not face significant competition. In the operating phase, the primary
method of competition involves operating efficiencies related to the cost to
produce the hydrocarbons from the reservoir. The majority of Williams Energy's
ownership interests in exploration and production properties are held as working
interests in oil and gas leaseholds.

     Midstream.  Williams Energy competes for gathering and processing business
with interstate and intrastate pipelines, producers and independent gatherers
and processors. Numerous factors impact any given

                                        26
<PAGE>

customer's choice of a gathering or processing services provider, including
rate, location, term, timeliness of well connections, pressure obligations and
the willingness of the provider to process for either a fee or for liquids taken
in-kind. Competition for the natural gas liquids pipelines include other
pipelines, tank cars, trucks, barges, local sources of supply (refineries,
gasoline plants and ammonia plants) and other sources of energy such as natural
gas, coal, oil and electricity. Factors that influence customer transportation
decisions include rate, location, nature of service and timeliness of delivery.

     Petroleum Services.  Williams Pipe Line operates without the protection of
a federal certificate of public convenience and necessity that might preclude
other entrants from providing like service in its area of operations. Further,
Williams Pipe Line must plan, operate and compete without the operating
stability inherent in a broad base of contractually obligated or
owner-controlled usage. Because Williams Pipe Line is a common carrier, its
shippers need only meet the requirements set forth in its published tariffs in
order to avail themselves of the transportation services offered by Williams
Pipe Line.

     Competition exists from other pipelines, refineries, barge traffic,
railroads and tank trucks. Competition is affected by trades of products or
crude oil between refineries that have access to the system and by trades among
brokers, traders and others who control products. These trades can result in the
diversion from the Williams Pipe Line system of volume that might otherwise be
transported on the system. Shorter, lower revenue hauls may also result from
these trades. Williams Pipe Line also is exposed to interfuel competition
whereby an energy form shipped by a liquids pipeline, such as heating fuel, is
replaced by a form not transported by a liquids pipeline, such as electricity or
natural gas. While Williams Pipe Line faces competition from a variety of
sources throughout its marketing areas, the principal competition is other
pipelines. A number of pipeline systems, competing on a broad range of price and
service levels, provide transportation service to various areas served by the
system. The possible construction of additional competing products or crude oil
pipelines, conversions of crude oil or natural gas pipelines to products
transportation, changes in refining capacity, refinery closings, changes in the
availability of crude oil to refineries located in its marketing area or
conservation and conversion efforts by fuel consumers may adversely affect the
volumes available for transportation by Williams Pipe Line.

     Williams Bio-Energy's fuel ethanol operations compete in local, regional
and national fuel additive markets with other ethanol products and other fuel
additive producers, such as refineries and methyl tertiary butyl ether (MTBE)
producers. MTBE has been banned in California effective January 1, 2003, and in
other states due to ground water contamination problems. Williams Bio-Energy's
other products compete in global markets against a variety of competitors and
substitute products.

     The principal competitive forces affecting Williams Energy's refining
businesses are feedstock costs, refinery efficiency, refinery product mix and
product distribution. Some of Memphis Refinery's competitors can process sour
crude, and accordingly, are more flexible in the crudes that they can process.
Williams Energy has limited crude oil reserves and does not engage in crude oil
exploration, and it must therefore obtain its crude oil requirements from
unaffiliated sources. Williams Energy believes that it will be able to obtain
adequate crude oil and other feedstocks at generally competitive prices for the
foreseeable future.

     The principal competitive factors affecting Williams Energy's retail
petroleum business are location, product price and quality, appearance and
cleanliness of stores and brand-name identification. Competition in the
convenience store industry is intense. Within the travel center industry,
Williams TravelCenters strives to be a market leader in customer service to the
local consumer, traveling consumer and professional driver.

     Williams Energy's gathering and processing facilities and natural gas
liquids pipelines are owned in fee. Midstream Gas & Liquids constructs and
maintains gathering and natural gas liquids pipeline systems pursuant to
rights-of-way, easements, permits, licenses, and consents on and across
properties owned by others. The compressor stations and gas processing and
treating facilities are located in whole or in part on lands owned by
subsidiaries of Williams Energy or on sites held under leases or permits issued
or approved by public authorities.

     Williams Energy owns its petroleum pipeline system in fee. However, a
substantial portion of the system is operated, constructed and maintained
pursuant to rights-of-way, easements, permits, licenses or consents on

                                        27
<PAGE>

and across properties owned by others. The terminals, pump stations and all
other facilities of the system are located on lands owned in fee or on lands
held under long-term leases, permits or contracts. The North Pole Refinery is
located on land leased from the state of Alaska under a long-term lease
scheduled to expire in 2025 and renewable at that time by Williams Energy. The
Anchorage, Alaska terminal is located on land leased from the Alaska Railroad
Corporation under two long-term leases. The Memphis Refinery is located on land
owned by Williams Energy. Williams Energy management believes its assets are in
such a condition and maintained in such a manner that they are adequate and
sufficient for the conduct of business.

     Williams Energy Partners L.P.  WEP competes with other independent terminal
operators as well as integrated oil companies on the basis of terminal location
and versatility, services provided and price. Its competition from independent
operators primarily comes from distribution companies with marketing and trading
arms, independent terminal operators and refining and marketing companies.

     WEP competes primarily with ammonia shipped by rail carriers, but it has a
distinct advantage over rail carriers because ammonia is a gas under normal
atmospheric conditions and must be either placed under pressure or cooled to -33
degrees Celsius to be shipped or stored. WEP also competes to a limited extent
in the areas served by the far northern segment of their ammonia pipeline and
terminals system with the other United States ammonia pipeline, which originates
on the Gulf Coast and transports domestically produced and imported ammonia.

ENVIRONMENTAL MATTERS

     Williams Energy is subject to various international, federal, state and
local laws and regulations relating to environmental quality control. Management
believes that Williams Energy's operations are in substantial compliance with
existing environmental legal requirements. Management expects that compliance
with existing environmental legal requirements will not have a material adverse
effect on the capital expenditures, earnings and competitive position of
Williams Energy. See Note 19 of Notes to Consolidated Financial Statements.

     The International unit must comply with the environmental laws of the
country in which its assets are located. For example, Mazeikiu Nafta, a refinery
located in Lithuania, must comply with its Permit for Use of Natural Resources
issued by the government.

     Groundwater monitoring and remediation are ongoing at both refineries and
air and water pollution control equipment is operating at both refineries to
comply with applicable regulations. The Clean Air Act Amendments of 1990
continue to impact Williams Energy's refining businesses through a number of
programs and provisions. The provisions include Maximum Achievable Control
Technology rules, which are being developed for the refining industry, controls
on individual chemical substances, new operating permit rules and new fuel
specifications to reduce vehicle emissions. The provisions impact other
companies in the industry in similar ways and are not expected to adversely
impact Williams Energy's competitive position.

     Williams Energy and its subsidiaries also accrue environmental remediation
costs for its natural gas gathering and processing facilities, natural gas
liquids pipelines and storage facilities, petroleum products pipelines, retail
petroleum and refining operations and for certain facilities related to former
propane marketing operations primarily related to soil and groundwater
contamination. In addition, Williams Energy owns a discontinued petroleum
refining facility that is being evaluated for potential remediation efforts. At
December 31, 2001, Williams Energy and its subsidiaries had accrued liabilities
totaling approximately $43 million. Williams Energy accrues receivables related
to environmental remediation costs based upon an estimate of amounts that will
be reimbursed from state funds for certain expenses associated with underground
storage tank problems and repairs.

     WEG's operation of terminals and associated facilities in connection with
the storage and transportation of crude oil and other liquid hydrocarbons,
together with its operation of an ammonia pipeline, are subject to stringent and
complex laws and regulations governing the discharge of materials into the
environment or otherwise relating to environmental protection. As an owner or
lessee and operator of these facilities, WEG must comply with these laws and
regulations at the federal, state and local levels. Failure to comply with these

                                        28
<PAGE>

laws and regulations may result in the assessment of administrative, civil and
criminal penalties, imposition of remedial actions, and issuance of injunctions
or construction bans or delays on ongoing operations.

OTHER INFORMATION

     Williams believes that it has adequate sources and availability of raw
materials and commodities to assure the continued supply of its services and
products for existing and anticipated business needs. Williams' pipeline systems
are all regulated in various ways resulting in the financial return on the
investments made in the systems being limited to standards permitted by the
regulatory bodies. Each of the pipeline systems has ongoing capital requirements
for efficiency and mandatory improvements, with expansion opportunities also
necessitating periodic capital outlays.

     At December 31, 2001, Williams and its subsidiaries had approximately
12,433 full-time employees, of whom approximately 883 were represented by unions
and covered by collective bargaining agreements. Williams' employees are jointly
employed by Williams and one of its subsidiaries. Williams considers its
relations with its employees to be generally good.

FORWARD-LOOKING STATEMENTS

     Certain matters discussed in this report, excluding historical information,
include forward-looking statements -- statements that discuss Williams' expected
future results based on current and pending business operations. Williams makes
these forward-looking statements in reliance on the safe harbor protections
provided under the Private Securities Litigation Reform Act of 1995.

     Forward-looking statements can be identified by words such as
"anticipates," "believes," "expects," "planned," "scheduled" or similar
expressions. Although Williams believes these forward-looking statements are
based on reasonable assumptions, statements made regarding future results are
subject to a number of assumptions, uncertainties and risks that could cause
future results to be materially different from the results stated or implied in
this document.

     Events in 2001 significantly impacted the risk environment all businesses
face and raised a level of uncertainty in the capital markets that has
approached that which lead to the general market collapse of 1929. Beliefs and
assumptions as to what constitutes appropriate levels of capitalization and
fundamental value have changed abruptly. The collapse of Enron combined with the
meltdown of the telecommunications industry are both new realities that have had
and will likely continue to have specific impacts on all companies, including
Williams.

     Following Enron's collapse, the credit rating agencies reacted by
substantially shifting the financial criteria that companies must meet in order
to support an investment grade credit rating. This change in criteria resulted
in, among other things, the need for Williams to increase its equity by reducing
its capital spending to a level that allows surplus cash to be generated and to
issue new public equity. In addition, the credit rating agencies began to view
credit rating downgrade triggers in financial structures as capable of producing
an unpredictable event risk, so Williams committed to take action to eliminate
credit rating triggers from certain of its financial structures. While Williams
responded constructively to these new standards implemented by the credit rating
agencies, there is no assurance that the credit rating agencies will not change
the standards for maintaining an investment grade credit rating again in the
future. The probability of the credit rating agencies changing the standards for
maintaining an investment grade credit rating is high if the market remains
unsettled or if additional Enron-like events occur.

     The meltdown in the telecommunications and dot-com industry sectors
combined with the Enron collapse caused lenders to become more conservative with
respect to the credit exposure they were willing to take with regard to any
company, including Williams. In some extreme cases, lenders sought ways to avoid
honoring previous lending commitments or to restructure outstanding loans both
by taking legal action and by creating credit or liquidity issues for companies
by taking advantage of the heightened sensitivity of the markets to such issues.
Williams can provide no assurance that its lenders will not respond in the same
manner.

                                        29
<PAGE>

     The equity markets have also become much more volatile and perception plays
a much more important role in short-term market fluctuations than fundamentals.
There is a pronounced downward bias in the markets. The hint of uncertainty or
negative news regarding a company results in an abrupt loss of value in that
company's stock. While markets have experienced such pressure before for limited
periods of time, there is no assurance that the current uncertainty and negative
bias will be temporary in nature.

     Like its peers, business transactions in each of Williams' businesses, but
especially in Williams' Energy Marketing & Trading business, will likely require
greater credit assurances, both to be given from and received by Williams' to
satisfy credit support requirements. If Williams' credit ratings were to decline
below investment grade, its ability to participate in the Energy Marketing &
Trading business could be significantly limited. Alternate credit support would
be required under certain existing agreements and would be necessary to support
future transactions. Without an investment grade rating, Williams would be
required to fund margining requirements pursuant to industry standard derivative
agreements with cash, letters of credit or other negotiable instruments. At
December 31, 2001, the total notional amounts that would require such funding,
in the event of a credit rating decline of Williams to below investment grade,
is approximately $500 million, before consideration of offsetting positions and
margin deposits from the same counterparties. Under extreme circumstances, the
level of credit quality and assurances necessary to support the Energy Marketing
& Trading business may reach a point that makes it impractical for Williams to
continue to pursue the Energy Marketing & Trading business. In addition, the
FERC's regulatory response to the events of 2001, including the California power
crisis and Enron's bankruptcy, may make it impossible for Williams to conduct
its Energy Marketing & Trading business along side its interstate natural gas
pipelines business, which is subject to the FERC's direct jurisdiction.

     A direct result of the highly-charged political environment caused by the
Enron bankruptcy and the various perceived improper activities engaged in by
Enron may be the proliferation of laws or regulations that could have a
significant impact on the future conduct of all businesses. This proliferation
of new laws and regulations may rival the laws and regulations that resulted
from the Great Depression. These new laws and regulations could be mandated at
the federal level through the legislature or federal agencies such as the
Securities and Exchange Commission or Department of Labor, or from state
legislatures and agencies. These new rules and regulations could, for example,
cause companies to reexamine its employee benefit and compensation plans. More
specifically, companies may determine that the risks of maintaining their 401(k)
savings plans outweigh the benefits of the 401(k) savings plan to their
employees. Other legislative and regulatory responses to the events of 2001
could increase the legal risk of participating on the board or acting as a
senior officer of a publicly traded company impairing companies' ability to
attract highly qualified individuals for these important positions. Under
extreme circumstances, new laws and regulations which result from the events of
2001 could result in Williams adopting a risk avoidance strategy in pursuing its
business which would impair its ability to make investments in the business that
would provide growth for its shareholders and optimal service levels for its
current and potential customers. At a minimum, Williams expects the cost of
doing business to increase and the need to operate under more conservative
financial structures as permanent outcomes of the current environment.

     In addition to the collapse of Enron and the meltdown of the
telecommunications industry, the security of our country has been challenged. It
has been reported that terrorists may be targeting domestic energy facilities.
While Williams is taking appropriate steps to increase the security of its
energy assets, there is no assurance that Williams can completely secure its
assets because it is impossible to completely protect against such an attack.

     While Williams believes that it has the capacity to deal constructively
with each of these possible impacts of the events of 2001, it is clear that a
dramatic new level of uncertainty has been introduced. That uncertainty makes it
impossible for Williams to predict outcomes with respect to any of these impacts
with any meaningful level of confidence.

                                        30
<PAGE>

     In addition to the factors discussed above, the following are important
factors that could cause actual results to differ materially from any results
projected, forecasted, estimated or budgeted:

     - Changes in general economic conditions in the United States and changes
       in the industries in which Williams conducts business;

     - Changes in federal or state laws and regulations to which Williams is
       subject, including tax, environmental and employment laws and
       regulations;

     - The cost and effects of legal and administrative claims and proceedings
       against Williams or its subsidiaries;

     - Conditions of the capital markets Williams utilizes to access capital to
       finance operations;

     - The ability to raise capital in a cost-effective way;

     - The effect of changes in accounting policies;

     - The ability to manage rapid growth;

     - The ability to control costs;

     - The ability of each business unit to successfully implement key systems,
       such as order entry systems and service delivery systems;

     - Changes in foreign economies, currencies, laws and regulations, and
       political climates, especially in Canada, Argentina, Brazil, Venezuela
       and Lithuania, where Williams has made direct investments;

     - The impact of future federal and state regulations of business
       activities, including allowed rates of return, the pace of deregulation
       in retail natural gas and electricity markets, and the resolution of
       other regulatory matters discussed herein;

     - Fluctuating energy commodity prices;

     - The ability of Williams to develop expanded markets and product offerings
       as well as their ability to maintain existing markets;

     - The ability of Williams and its subsidiaries to obtain governmental and
       regulatory approval of various expansion projects;

     - The ability of customers of the energy marketing and trading business to
       obtain governmental and regulatory approval of various projects,
       including power generation projects;

     - Future utilization of pipeline capacity, which can depend on energy
       prices, competition from other pipelines and alternative fuels, the
       general level of natural gas and petroleum product demand, decisions by
       customers not to renew expiring natural gas transportation contracts, and
       weather conditions;

     - The accuracy of estimated hydrocarbon reserves and seismic data;

     - The ability to successfully integrate any newly acquired businesses; and

     - Global and domestic economic repercussions from terrorist activities and
       the government's response thereto.

(d) FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS

     See Item 1(c) for a description of Williams' international activities. See
Note 22 for amounts of revenue and long-lived assets attributable to
international activities.

                                        31
<PAGE>

ITEM 2. PROPERTIES

     See Item 1(c) for a description of the locations and general character of
the material properties of Williams and its subsidiaries.

ITEM 3. LEGAL PROCEEDINGS

     For information regarding certain proceedings pending before federal
regulatory agencies, see Note 19 of Notes to Consolidated Financial Statements.
Williams is also subject to other ordinary routine litigation incidental to its
businesses.

     Environmental matters.  Since 1989, Texas Gas and Transco have had studies
under way to test certain of their facilities for the presence of toxic and
hazardous substances to determine to what extent, if any, remediation may be
necessary. Transco has responded to data requests regarding such potential
contamination of certain of its sites. The costs of any such remediation will
depend upon the scope of the remediation. At December 31, 2001, these
subsidiaries had accrued liabilities totaling approximately $33 million for
these costs.

     Certain Williams' subsidiaries, including Texas Gas and Transco have been
identified as potentially responsible parties (PRP) at various Superfund and
state waste disposal sites. In addition, these subsidiaries have incurred, or
are alleged to have incurred, various other hazardous materials removal or
remediation obligations under environmental laws. Although no assurances can be
given, Williams does not believe that these obligations or the PRP status of
these subsidiaries will have a material adverse effect on its financial
position, results of operations or net cash flows.

     Transco, Texas Gas and Central have identified polychlorinated biphenyl
(PCB) contamination in air compressor systems, soils and related properties at
certain compressor station sites. Transco, Texas Gas and Central have also been
involved in negotiations with the EPA and state agencies to develop screening,
sampling and cleanup programs. In addition, negotiations with certain
environmental authorities and other programs concerning investigative and
remedial actions relative to potential mercury contamination at certain gas
metering sites have been commenced by Central, Texas Gas and Transco. As of
December 31, 2001, Central had accrued a liability for approximately $9 million,
representing the current estimate of future environmental cleanup costs to be
incurred over the next six to ten years. Texas Gas and Transco likewise had
accrued liabilities for these costs, which are included in the $33 million
liability mentioned above. Actual costs incurred will depend on the actual
number of contaminated sites identified, the actual amount and extent of
contamination discovered, the final cleanup standards mandated by the EPA and
other governmental authorities and other factors.

     In July 1999, Transco received a letter stating that the DOJ, at the
request of the EPA, intends to file a civil action against Transco arising from
its waste management practices at Transco's compressor stations and metering
stations in 11 states from Texas to New Jersey. Transco, the EPA and the DOJ
agreed to settle this matter by signing a Consent Decree that provides for a
civil penalty of $1.4 million.

     Williams Energy and its subsidiaries also accrue environmental remediation
costs for its natural gas gathering and processing facilities, petroleum
products pipelines, retail petroleum and refining operations and for certain
facilities related to former propane marketing operations primarily related to
soil and groundwater contamination. In addition, Williams Energy owns a
discontinued petroleum refining facility that is being evaluated for potential
remediation efforts. At December 31, 2001, Williams Energy and its subsidiaries
had accrued liabilities totaling approximately $43 million. Williams Energy
accrues receivables related to environmental remediation costs based upon an
estimate of amounts that will be reimbursed from state funds for certain
expenses associated with underground storage tank problems and repairs. At
December 31, 2001, Williams Energy and its subsidiaries had accrued receivables
totaling $1 million.

     Williams Field Services (WFS), a subsidiary of Williams Energy, received a
Notice of Violation (NOV) from the EPA in February 2000. WFS received a
contemporaneous letter from the DOJ indicating that DOJ will also be involved in
the matter. The NOV alleged violations of the Clean Air Act at a gas processing
plant. WFS, the EPA and the DOJ agreed to settle this matter for a penalty of
$850,000. In the course of
                                        32
<PAGE>

investigating this matter, WFS discovered a similar potential violation at the
plant and disclosed it to the EPA and the DOJ. In December 2001, the EPA, DOJ
and WFS agreed to settle this self-reported matter by signing a Consent Decree
that provides for a civil penalty of $950,000.

     In connection with the 1987 sale of the assets of Agrico Chemical Company,
Williams agreed to indemnify the purchaser for environmental cleanup costs
resulting from certain conditions at specified locations, to the extent such
costs exceed a specified amount. At December 31, 2001, Williams had
approximately $10 million accrued for such excess costs. The actual costs
incurred will depend on the actual amount and extent of contamination
discovered, the final cleanup standards mandated by the EPA or other
governmental authorities, and other factors.

     On July 2, 2001, the EPA issued an information request asking for
information on oil releases and discharges in any amount from Williams'
pipelines, pipeline systems and pipeline facilities used in the movement of oil
or petroleum products, during the period July 1, 1998, through July 2, 2001. In
November 2001, Williams furnished its response.

     Other legal matters.  In connection with agreements to resolve take-or-pay
and other contract claims and to amend gas purchase contracts, Transco and Texas
Gas each entered into certain settlements with producers which may require the
indemnification of certain claims for additional royalties which the producers
may be required to pay as a result of such settlements. As a result of such
settlements, Transco is currently defending three lawsuits brought by producers.
In one of the cases, a jury verdict found that Transco was required to pay a
producer damages of $23.3 million including $3.8 million in attorneys' fees. In
addition, through December 31, 2001, post judgment interest was approximately
$10.5 million. Transco's appeals have been denied by the Texas Court of Appeals
for the First District of Texas, and on April 2, 2001, the company filed an
appeal to the Texas Supreme Court. On February 21, 2002, the Texas Supreme Court
denied Transco's petition for review. As a result, Transco recorded a pre-tax
charge to income for the year ended December 31, 2001, in the amount of $37
million representing management's estimate of the effect of this ruling. Transco
plans to request rehearing of the court's decision. In the other cases,
producers have asserted damages, including interest calculated through December
31, 2001, of approximately $16.3 million. Producers have received and may
receive other demands, which could result in additional claims. Indemnification
for royalties will depend on, among other things, the specific lease provisions
between the producer and the lessor and the terms of the settlement between the
producer and either Transco or Texas Gas. Texas Gas may file to recover 75
percent of any such additional amounts it may be required to pay pursuant to
indemnities for royalties under the provisions of Order 528.

     On June 8, 2001, 14 Williams entities were named as defendants in a
nationwide class action lawsuit which has been pending against other defendants,
generally pipeline and gathering companies, for more than one year. The
plaintiffs allege that the defendants, including the Williams defendants, have
engaged in mismeasurement techniques that distort the heating content of natural
gas, resulting in an alleged underpayment of royalties to the class of producer
plaintiffs. In September 2001, the plaintiffs voluntarily dismissed two of the
14 Williams entities named as defendants. In November 2001, Williams, along with
other Coordinating Defendants, filed a motion to dismiss under Rules 9b and 12b
of the Kansas Rules of Civil Procedure. In January 2002, most of the Williams
defendants, along with a group of Coordinating Defendants, filed a motion to
dismiss for lack of personal jurisdiction. The court has not yet ruled on these
motions. In the next several months, the Williams entities will join with other
defendants in contesting certification of the plaintiff class.

     In 1998, the DOJ informed Williams that Jack Grynberg, an individual, had
filed claims in the United States District Court for the District of Colorado
under the False Claims Act against Williams and certain of its wholly owned
subsidiaries including Central, Kern River, Northwest Pipeline, WGP, Transco,
Texas Gas, WFS and Williams Production Company. Mr. Grynberg has also filed
claims against approximately 300 other energy companies and alleges that the
defendants violated the False Claims Act in connection with the measurement and
purchase of hydrocarbons. The relief sought is an unspecified amount of
royalties allegedly not paid to the federal government, treble damages, a civil
penalty, attorneys' fees, and costs. On April 9, 1999, the DOJ announced that it
was declining to intervene in any of the Grynberg qui tam cases, including the
action filed against the Williams entities in the United States District Court
for the District of Colorado. On

                                        33
<PAGE>

October 21, 1999, the Panel on Multi-District Litigation transferred all of the
Grynberg qui tam cases, including those filed against Williams, to the United
States District Court for the District of Wyoming for pre-trial purposes.
Motions to dismiss the complaints, filed by various defendants, including
Williams, were denied on May 18, 2001.

     Between November 2000 and May 2001, class actions were filed on behalf of
San Diego ratepayers against California power generators and traders including
Williams Energy Marketing & Trading Company, a subsidiary of Williams. These
lawsuits concern the increase in power prices in California during the summer of
2000 through the winter of 2000-01. The suits claim that the defendants acted to
manipulate prices in violation of the California antitrust and business practice
statutes and other state and federal laws. Plaintiffs are seeking injunctive
relief as well as restitution, disgorgement, appointment of a receiver, and
damages, including treble damages. These cases have been consolidated before the
San Diego County Superior Court. Numerous other state and federal investigations
regarding California power prices are also underway that involve Williams Energy
Marketing & Trading Company.

     Since January 29, 2002, Williams is aware of numerous shareholder class
action suits that have been filed in the United States District Court for the
Northern District of Oklahoma. The majority of the suits allege that Williams
and co-defendants, Williams Communications and certain corporate officers, have
acted jointly and separately to inflate the stock price of both companies. Other
suits allege similar causes of action related to a public offering in early
January 2002, known as the FELINE PACS offering. This case was filed against
Williams, certain corporate officers, all members of the Williams board of
directors and all of the offerings' underwriters. Williams does not anticipate
any immediate action by the Court in these actions. In addition, class action
complaints have been filed against Williams and the members of its board of
directors under the Employee Retirement Income Security Act by participants in
Williams' 401(k) plan based on similar allegations.

  Summary

     While no assurances may be given, Williams, based on advice of counsel,
does not believe that the ultimate resolution of the foregoing matters, taken as
a whole and after consideration of amounts accrued, insurance coverage, recovery
from customers or other indemnification arrangements, will have a materially
adverse effect upon Williams' future financial position, results of operations
or cash flow requirements.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     Not applicable.

                                        34
<PAGE>

EXECUTIVE OFFICERS OF WILLIAMS

     The names, ages, positions and earliest election dates of the executive
officers of Williams are:

<Table>
<Caption>
                                                                                     HELD OFFICE
NAME                                   AGE        POSITIONS AND OFFICES HELD            SINCE
- ----                                   ---        --------------------------         -----------
<S>                                    <C>   <C>                                     <C>
Gary R. Belitz.......................  52    Controller -- Williams (Principal        01-01-92
                                             Accounting Officer)
William E. Hobbs.....................  42    Chairman of the Board, President and     02-04-00
                                             Chief Executive Officer -- Williams
                                             Energy Marketing & Trading Company
Michael P. Johnson, Sr. .............  54    Senior Vice President, Human             05-01-99
                                             Resources -- Williams
Steven J. Malcolm....................  53    President and Director -- Williams       09-21-01
                                             (Principal Executive Officer)
                                             Chief Executive Officer                  01-20-02
Jack D. McCarthy.....................  59    Senior Vice President, Finance  --       01-01-92
                                             Williams (Principal Financial
                                             Officer)
William G. von Glahn.................  58    Senior Vice President and General        08-01-96
                                             Counsel -- Williams
J. Douglas Whisenant.................  55    President and Chief Executive            12-28-01
                                             Officer -- Williams Gas Pipeline
                                             Company, LLC
Phillip D. Wright....................  46    President and Chief Executive            09-21-01
                                             Officer -- Williams Energy Services,
                                             LLC
</Table>

     Except for Mr. Johnson, all of the above officers have been employed by
Williams or its subsidiaries as officers or otherwise for more than five years
and have had no other employment during the period. Prior to joining Williams,
Mr. Johnson held various officer positions with Amoco Corporation for more than
five years.

     Mr. Keith E. Bailey resigned as Chief Executive Officer of Williams on
January 20, 2002, but continues to serve as the Chairman of the Board.

                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Williams' common stock is listed on the New York and Pacific Stock
exchanges under the symbol "WMB." At the close of business on December 31, 2001,
Williams had approximately 15,017 holders of record of its Common Stock. The
high and low closing sales price ranges (composite transactions) and dividends
declared by quarter for each of the past two years are as follows:

<Table>
<Caption>
                                              2001                         2000
                                   --------------------------   --------------------------
QUARTER                             HIGH     LOW     DIVIDEND    HIGH     LOW     DIVIDEND
- -------                            ------   ------   --------   ------   ------   --------
<S>                                <C>      <C>      <C>        <C>      <C>      <C>
1st..............................  $45.90   $34.56     $.15     $48.69   $30.31     $.15
2nd..............................  $43.55   $32.40     $.15     $44.50   $35.50     $.15
3rd..............................  $33.97   $24.99     $.18     $47.63   $39.98     $.15
4th..............................  $30.43   $22.10     $.20     $44.06   $31.81     $.15
</Table>

     Terms of certain subsidiaries' borrowing arrangements limit transfer of
funds to Williams. These terms have not impeded, nor are they expected to
impede, Williams' ability to meet its cash flow needs.

                                        35
<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA

     The following financial data as of December 31, 2001 and 2000 and for the
three years ended December 31, 2001 are an integral part of, and should be read
in conjunction with, the consolidated financial statements and notes thereto.
All other amounts have been prepared from the Company's financial records.
Certain amounts below have been restated or reclassified (see Note 1).
Information concerning significant trends in the financial condition and results
of operations is contained in Management's Discussion & Analysis of Financial
Condition and Results of Operations on pages 37 through 69 of this report.

<Table>
<Caption>
                                           2001        2000       1999       1998       1997
                                         ---------   --------   --------   --------   --------
                                                 (MILLIONS, EXCEPT PER-SHARE AMOUNTS)
<S>                                      <C>         <C>        <C>        <C>        <C>
Revenues(1)............................  $11,034.7   $9,591.9   $6,629.4   $5,660.0   $6,800.4
Income from continuing operations(2)...      835.4      965.4      354.9      249.1      441.2
Loss from discontinued operations(3)...   (1,313.1)    (441.1)    (198.7)    (122.0)     (10.7)
Extraordinary gain (loss)(4)...........         --         --       65.2       (4.8)     (79.1)
Diluted earnings (loss) per share:
  Income from continuing operations....       1.67       2.15        .79        .56       1.02
  Loss from discontinued operations....      (2.62)      (.98)      (.44)      (.28)      (.03)
  Extraordinary gain (loss)............         --         --        .15       (.01)      (.18)
Total assets at December 31............   38,906.2   34,776.6   21,682.1   17,900.2   15,802.6
Long-term debt at December 31..........    9,500.7    6,830.5    7,240.2    6,363.1    5,225.8
Preferred interests in consolidated
  subsidiaries at December 31..........      976.4      877.9      335.1      335.1         --
Williams obligated mandatorily
  redeemable preferred securities of
  Trust at December 31.................         --      189.9      175.5         --         --
Stockholders' equity at December
  31(5)................................    6,044.0    5,892.0    5,585.2    4,257.4    4,237.8
Cash dividends per common share........        .68        .60        .60        .60        .54
</Table>

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

(1) See Note 1 for discussion of change in management of certain operations,
    previously conducted by Energy Marketing & Trading, that were transferred to
    Petroleum Services. The sales activity which was transferred was previously
    reported on a "net" basis and is now reported on a "gross" basis. Also in
    1998, there was a change in the reporting of certain marketing activities
    from a "gross" basis to a "net" basis consistent with fair value accounting.

(2) See Note 4 for discussion of write-downs of certain Williams Communications
    Group, Inc. (WCG) related assets in 2001 and see Note 5 for discussion of
    asset sales, impairments and other accruals in 2001, 2000 and 1999. Income
    from continuing operations in 1997 includes a $66 million pre-tax gain on
    the sale of Williams' interest in the natural gas liquids and condensate
    reserves in the West Panhandle field in Texas.

(3) See Note 3 for the discussion of the 2001, 2000 and 1999 losses from
    discontinued operations. The loss from discontinued operations for 1998 and
    1997 relates to the operations of WCG and the sale of the MAPCO coal
    business.

(4) See Note 7 for discussion of the 1999 extraordinary gain. The extraordinary
    loss for 1998 and 1997 relates to redemption of higher interest rate debt.

(5) See Note 2 for discussion of the 2001 issuance of common stock for the
    Barrett acquisition, Note 3 for discussion of the WCG spinoff and Note 16
    for discussion of Williams' January 2001 common stock issuance. See Note 3
    for discussion of the 1999 issuance of subsidiary's common stock.

                                        36
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

RECENT EVENTS

     Since the fourth quarter 2001 events surrounding the Enron bankruptcy
filing, Williams has been engaged in various discussions with investors,
analysts, rating agencies and financial institutions regarding the liquidity
implications of such to the business strategy of Williams' energy trading
activities. More recently, Williams has also been evaluating its contingent
obligations regarding guarantees and payment obligations with respect to certain
financial obligations of Williams Communications Group, Inc. (WCG) because of
uncertainty regarding its ability to perform. In addition, WCG has also
announced that it is considering reorganizing under Chapter 11 bankruptcy laws.
Both of these situations have resulted in rating agencies issuing statements in
February 2002 confirming investment grade ratings, but with certain negative
implications. Williams has announced that it is committed to strengthen its
balance sheet and retain investment grade ratings and has taken significant
steps since the first of the year to ensure that this occurs. Williams has a
substantial and diverse asset base that provides strong support for its credit.

     Following is a summary of the steps that are in progress which Williams
believes will strengthen its balance sheet and ensure retention of its
investment grade ratings.

     - A $1 billion reduction in planned capital expenditures

     - Generate proceeds from sales of assets during 2002

     - Initiation of action to eliminate ratings triggers on certain obligations
       and contingencies that do not appear as debt on the Consolidated Balance
       Sheet, including the guarantees and payment obligations for WCG's debt

     - A $50 million reduction from the company's cost structure pursuant to
       right-sizing the organization as an energy-only business

     Each of these are discussed in more detail within the Liquidity and Other
sections that follow.

GENERAL

     On March 30, 2001, the board of directors of Williams approved a tax-free
spinoff of Williams' communications business, WCG, to Williams' shareholders. On
April 23, 2001, Williams distributed 398.5 million shares, or approximately 95
percent of the WCG common stock held by Williams, to holders of record of
Williams common stock. As a result, the consolidated financial statements
reflect WCG as discontinued operations.

     In December 2001 and January 2002, the Securities and Exchange Commission
(SEC) issued statements regarding disclosures by companies within their
Management's Discussion & Analysis of Financial Condition and Results of
Operations for 2001. In those statements, the SEC cited certain items that
companies should consider including in the 2001 Form 10-Ks, including
identification of critical accounting policies and expanded disclosure of
certain liquidity matters, certain energy trading activities and transactions
similar to related party activities. The following discussions include items
that the SEC has encouraged companies to disclose.

     Unless otherwise indicated, the following discussion and analysis of
results of operations, financial condition and liquidity relates to the
continuing operations of Williams and should be read in conjunction with the
consolidated financial statements and notes thereto included in Item 8.

CRITICAL ACCOUNTING POLICIES & ESTIMATES

     Our financial statements reflect the selection and application of
accounting policies which require management to make significant estimates and
assumptions. We believe that the following are some of the more critical
judgment areas in the application of our accounting policies that currently
affect our financial condition and results of operations.

                                        37
<PAGE>

  Revenue Recognition -- Gas Pipeline

     Most of Gas Pipeline's businesses are regulated by the Federal Energy
Regulatory Commission (FERC). The FERC regulatory processes and procedures
govern the tariff rates that the Gas Pipeline subsidiaries are permitted to
charge customers for natural gas sales and services, including the interstate
transportation and storage of natural gas. Accordingly, certain revenues are
collected by Gas Pipeline which may be subject to refunds upon final orders in
pending rate cases with the FERC. In recording estimates of refund obligations,
Gas Pipeline takes into consideration Gas Pipeline's and other third-parties
regulatory proceedings, advice of counsel and estimated total exposure, as
discounted and risk weighted, as well as collection and other risks. At December
31, 2001, approximately $96 million was recorded as subject to refund,
reflecting management's estimate of amounts invoiced to customers that may
ultimately require refunding. Currently, certain of the Gas Pipeline
subsidiaries are involved in rate case proceedings. Depending on the results of
these proceedings, the actual amounts allowed to be collected from customers
could differ from management's estimate.

  Revenue Recognition -- Energy Marketing & Trading

     Energy Marketing & Trading has energy risk management and trading
operations that enter into energy contracts to provide price-risk management
services to its customers. Energy and energy-related contracts utilized in
energy risk management trading activities are recorded at fair value with the
net change in fair value of those contracts representing unrealized gains and
losses recognized in income currently. The fair value of energy and
energy-related contracts is determined based on the nature of the transaction
and the market in which transactions are executed. Certain contracts are
executed in markets exchange traded or over-the-counter where quoted prices in
active markets exist. Transactions are also executed in exchange-traded or
over-the-counter markets for which market prices may exist however, the market
may be inactive and price transparency is limited. Transactions are also
executed for which quoted market prices are not available. Determining fair
value for certain contracts involves complex assumptions and judgments when
estimating prices at which market participants would transact if a market
existed for the contract or transaction.

     Certain energy-related contracts such as transportation, storage, load
servicing and tolling arrangements require Energy Marketing & Trading to assess
whether these contracts are executory service arrangements or leases pursuant to
Statement of Financial Accounting Standards (SFAS) No. 13, "Accounting for
Leases." Energy-related contracts that are determined to be executory contracts
are accounted for at fair value. Currently, Williams does not account for any of
the energy-related contracts as leases. There currently is not extensive
authoritative guidance for determining when an arrangement is a lease or an
executory service arrangement. As a result, Williams assesses each of its
energy-related contracts and makes the determination based on the substance of
each contract focusing on factors such as physical and operational control of
the related asset, risks and rewards of owning, operating and maintaining the
related asset and other contractual terms. The issue of whether contracts such
as these energy-related contracts are an executory contract or a lease is
currently being discussed by the Financial Accounting Standards Board's Emerging
Issues Task Force. The discussions surrounding this issue are in the early
stages of development and any consensus reached on these issues could ultimately
impact Williams' accounting for these contracts.

     Additional discussion of the accounting for energy and energy-related
contracts at fair value is included in Note 1 of the Notes to Consolidated
Financial Statements and pages 53 through 59 of Management's Discussion &
Analysis of Financial Condition and Results of Operations.

  Valuation of Deferred Tax Assets

     Williams is required to assess the ultimate realization of deferred tax
assets generated from the basis difference in certain investments and
businesses. This assessment takes into consideration tax planning strategies,
including assumptions regarding the availability and character of future taxable
income. At December 31, 2001, Williams maintains $173.3 million of valuation
allowances for deferred tax assets from basis differences in investments for
which the ultimate realization of the tax asset may be dependent on the
availability of future capital gains. The ultimate amount of deferred tax assets
realized could be materially

                                        38
<PAGE>

different from those recorded, as influenced by potential changes in federal
income laws and the circumstances upon the actual realization of related tax
assets.

  Impairment of Long-Lived Assets

     Williams evaluates the long-lived assets, including other intangibles and
related goodwill, of identifiable business activities for impairment when events
or changes in circumstances indicate, in management's judgment, that the
carrying value of such assets may not be recoverable. In addition to those
long-lived assets for which impairment charges were recorded (see Note 5),
others were reviewed for which no impairment was required under a "held for use"
computation. These computations utilized judgments and assumptions inherent in
management's estimate of undiscounted future cash flows to determine
recoverability of an asset. It is possible that a computation under a "held for
sale" situation for certain of these long-lived assets could result in a
significantly different assessment because of market conditions, specific
transaction terms and a buyer's different viewpoint of future cash flows.

  Contingent Liabilities

     Williams establishes reserves for estimated loss contingencies when it is
management's assessment that a loss is probable and the amount of the loss can
be reasonably estimated. Revisions to contingent liabilities are reflected in
income in the period in which different facts or information become known or
circumstances change that affect the previous assumptions with respect to the
likelihood or amount of loss. Reserves for contingent liabilities are based upon
management's assumptions and estimates, advice of legal counsel or other third
parties regarding the probable outcomes of the matter. Should the outcome differ
from the assumptions and estimates, revisions to the estimated reserves for
contingent liabilities would be required.

RESULTS OF OPERATIONS

  CONSOLIDATED OVERVIEW

     The following table and discussion is a summary of Williams' consolidated
results of operations. The results of operations by segment are discussed in
further detail beginning on page 42.

<Table>
<Caption>
                                                           YEARS ENDED DECEMBER 31,
                                                        -------------------------------
                                                          2001        2000       1999
                                                        ---------   --------   --------
                                                                  (MILLIONS)
<S>                                                     <C>         <C>        <C>
Revenues..............................................  $11,034.7   $9,591.9   $6,629.4
                                                        =========   ========   ========
Operating income......................................  $ 2,450.0   $2,206.0   $1,166.6
Interest accrued -- net...............................     (746.8)    (659.1)    (555.7)
Investing income (loss)...............................     (198.4)     106.1       25.1
Preferred returns and minority interest in income of
  consolidated subsidiaries...........................      (67.5)     (58.0)     (38.2)
Other income (expense) -- net.........................       28.3         .3      (12.1)
                                                        ---------   --------   --------
Income from continuing operations before income taxes
  and extraordinary gain..............................    1,465.6    1,595.3      585.7
Provision for income taxes............................     (630.2)    (629.9)    (230.8)
                                                        ---------   --------   --------
Income from continuing operations.....................      835.4      965.4      354.9
Loss from discontinued operations.....................   (1,313.1)    (441.1)    (198.7)
                                                        ---------   --------   --------
Income (loss) before extraordinary gain...............     (477.7)     524.3      156.2
Extraordinary gain....................................         --         --       65.2
                                                        ---------   --------   --------
Net income (loss).....................................  $  (477.7)  $  524.3   $  221.4
                                                        =========   ========   ========
</Table>

                                        39
<PAGE>

  2001 vs. 2000

     Consolidated Overview.  Williams' revenues increased $1.4 billion, or 15
percent, due primarily to higher gas and electric power trading and services
margins, a full year of Canadian operations within Midstream Gas & Liquids
acquired in fourth-quarter 2000, higher petroleum products revenues, higher
natural gas sales prices and revenues from Barrett Resources Corporation
(Barrett) acquired in third-quarter 2001. In addition, the revenue increase
includes the $582 million effect of reporting certain revenues net of the
related costs in 2000 related to sales activity surrounding certain terminals.
The revenues related to the sales activity around certain terminals are reported
"gross" subsequent to the transfer of management over the sales activity from
Energy Marketing & Trading to Petroleum Services effective February 2001 (see
Note 1 of the Notes to Consolidated Financial Statements). Partially offsetting
these increases was a decrease of $283 million in revenues related to the 198
convenience stores sold in May 2001, $116 million decrease in domestic natural
gas liquids revenues and the effect in 2000 of a $74 million reduction of Gas
Pipeline's rate refund liabilities.

     Segment costs and expenses increased $1.2 billion, or 16 percent, due
primarily to higher petroleum product costs, costs for a full year of Canadian
operations acquired in fourth-quarter 2000, operating costs associated with
Barrett acquired in third-quarter 2001 and the impact of reporting certain sales
activity costs net with related revenues in 2000 (discussed above).
Additionally, the increase reflects a $170 million impairment charge related to
the Colorado soda ash mining facility within International. These increases were
partially offset by a $286 million decrease in costs as a result of the sale of
198 convenience stores in May 2001 and the $75.3 million gain on the sale of
these convenience stores.

     Operating income increased $244.0 million, or 11 percent, due primarily to
higher gas and electric power service margins, the $75.3 million pre-tax gain on
the sale of the convenience stores in May 2001, higher margins at refining and
marketing operations, increased realized natural gas sales prices, the impact of
Barrett and the effect in 2000 of $63.8 million in guarantee loss accruals and
impairment charges at Energy Marketing & Trading. Partially offsetting these
increases were lower per-unit natural gas liquids margins at Midstream Gas &
Liquids, the $170 million impairment charge within International, the $74
million effect in 2000 of reduction to rate refund liabilities and approximately
$41 million of impairment charges and loss accruals within Energy Services.
Included in operating income are general corporate expenses which increased
$27.1 million, or 28 percent, due primarily to an increase in advertising costs
(which includes a branding campaign of $12 million) and higher charitable
contributions.

     Interest accrued -- net increased $87.7 million, or 13 percent, due
primarily to the $72 million effect of higher borrowing levels offset by the $48
million effect of lower average interest rates, $19 million in interest expense
related to an unfavorable court decision involving Transcontinental Gas Pipe
Line (Transco), a $14 million increase in interest expense related to deposits
received from customers relating to energy risk management and trading and
hedging activities, a $14 million increase in amortization of debt expense and a
$4 million increase in interest expense on rate refund liabilities. The increase
in long-term debt includes the $1.1 billion of senior unsecured debt securities
issued in January 2001 and $1.5 billion of long-term debt securities issued in
August 2001 related to the cash portion of the Barrett acquisition.

     Investing income decreased $304.5 million, due primarily to fourth-quarter
2001 charges for a $103 million provision for doubtful accounts related to the
minimum lease payments receivable from WCG, an $85 million provision for
doubtful accounts related to a $106 million deferred payment for services
provided to WCG and a $25 million write-down of the remaining investment basis
in WCG common stock (see Note 3). In addition, the decrease also reflects a
$94.2 million charge in third-quarter 2001, representing declines in the value
of certain investments, including $70.9 million related to Williams' investment
in WCG and $23.3 million related to losses from other investments, which were
deemed to be other than temporary (see Note 4). In addition, the decrease in
investing income reflects a $13 million decrease in dividend income due to the
sale of the Ferrellgas Partners L.P. (Ferrellgas) senior common units in
second-quarter 2001. The decreases to investing income (loss) were slightly
offset by increased interest income of $17 million related to margin deposits.
Preferred returns and minority interest in income of consolidated subsidiaries
increased $9.5 million, or 16 percent, due primarily to preferred returns of
Snow Goose LLC, formed in December 2000, and minority interest in income of
Williams Energy Partners L.P., partially offset by a $10 million decrease of

                                        40
<PAGE>

preferred returns related to the second-quarter 2001 redemption of Williams
obligated mandatorily redeemable preferred securities of Trust.

     Other income (expense) -- net increased $28 million due primarily to a $12
million increase in capitalization of interest on internally generated funds
related to various capital projects at certain FERC regulated entities and $6
million lower losses from the sales of receivables to special purpose entities
(see Note 18).

     The provision for income taxes is comparable for both years. The effective
income tax rate for 2001 is greater than the federal statutory rate due
primarily to valuation allowances associated with the investing losses, for
which no tax benefits were provided plus the effects of state income taxes. The
effective income tax rate for 2000 is greater than the federal statutory rate
due primarily to the effects of state income taxes.

     Loss from discontinued operations for 2001 includes a $1.17 billion
after-tax charge related to accruals for contingent obligations related to
guarantees and payment obligations related to WCG and a $147.5 million after-tax
loss from operations of WCG (see Note 3). The $441.1 million loss from
discontinued operations for 2000 represents the after-tax losses from the
operations of WCG.

  2000 vs. 1999

     Consolidated Overview.  Williams' revenues increased $3 billion, or 45
percent, due primarily to higher revenues from natural gas and electric power
services, increased petroleum products and natural gas liquids average sales
prices and sales volumes and the contribution from Canadian operations within
Midstream Gas & Liquids acquired in fourth-quarter 2000. Partially offsetting
these increases were lower fleet management, retail natural gas, electric and
propane revenues following the 1999 sales of these businesses.

     Segment costs and expenses increased $1.9 billion, or 35 percent, due
primarily to higher costs related to increased petroleum products and natural
gas liquids average purchase prices and volumes purchased and costs related to
the Canadian operations acquired in fourth-quarter 2000. Also contributing to
the increases were higher variable compensation levels associated with improved
performance and higher impairment charges and guarantee loss accruals at Energy
Marketing & Trading. Partially offsetting these increases were lower fleet
management, retail natural gas, electric and propane costs following the sales
of these businesses in 1999.

     Operating income increased $1.0 billion, or 89 percent, primarily
reflecting improved natural gas and electric power services margins and higher
per-unit natural gas liquids margins at Midstream Gas & Liquids, increased
transportation demand revenues and the net effect of reductions to rate refund
liabilities in 2000 over 1999, partially offset by higher variable compensation
levels and the higher impairment charges and guarantee loss accruals in 2000.
Included in operating income are general corporate expenses, which increased
$20.3 million, or 26 percent, and include $15.2 million and $9.0 million in 2000
and 1999, respectively, of general corporate costs that would have otherwise
been allocated to discontinued operations.

     Interest accrued -- net increased $103.4 million, or 19 percent, due
primarily to the $71 million effect of higher borrowing levels combined with the
$49 million effect of higher average interest rates. These increases reflect the
higher levels of short-term borrowing towards the end of 2000. Investing income
(loss) increased $81 million due primarily to $33 million higher interest
income, $28 million from higher net earnings from equity investments and $18
million higher dividend income associated primarily with the Ferrellgas senior
common units.

     Preferred returns and minority interest in income of consolidated
subsidiaries increased $19.8 million. The change is due primarily to the
preferred returns related to Williams obligated mandatorily redeemable preferred
securities of Trust issued in December 1999.

     The provision for income taxes increased $399.1 million primarily due to
higher pre-tax income. The effective income tax rate in 2000 and 1999 exceeds
the federal statutory rate due primarily to the effects of state income taxes.

                                        41
<PAGE>

     Loss from discontinued operations includes the results of WCG in 2000 and
1999. WCG's losses in 2000 include a $323.9 million estimated pre-tax loss on
disposal of a WCG segment that installs and maintains communications equipment
and network services. In January 2001, WCG approved a plan for the disposal of
its Solutions segment. Excluding the loss on disposal, WCG's pre-tax loss
decreased $19.6 million as compared to 1999. Revenues increased over 1999 due
primarily to growth in voice and data services partially offset by lower dark
fiber revenue. WCG's expenses increased due primarily to the growth of network
operations and infrastructure. WCG had increased operating losses as a result of
providing customer services prior to completion of the new network, higher
depreciation and network lease expense as the network is brought into service
and higher selling, general and administrative expenses including costs
associated with infrastructure growth and improvement. WCG also had higher
interest expense as a result of increased debt levels in support of continued
expansion and new projects. WCG's increased operating losses were substantially
offset by higher investing income including a $214.7 million gain from the
conversion of WCG's common stock investment in Concentric Network Corporation
for common stock of XO Communications, Inc. (formerly Nextlink Communications,
Inc.) pursuant to a merger of those companies in June 2000, net gains totaling
$93.7 million from the sale of certain marketable equity securities, a $16.5
million gain on the sale of a portion of the investment in ATL-Algar Telecom
Leste S.A. (ATL) and higher interest income. These were partially offset by
$34.5 million of losses related to write-downs of certain cost basis and equity
investments.

     The $65.2 million 1999 extraordinary gain results from the sale of
Williams' retail propane business (see Note 7).

     Williams is organized into three industry groups: Energy Marketing &
Trading, Gas Pipeline and Energy Services (includes Exploration & Production,
International, Midstream Gas & Liquids, Petroleum Services, and Williams Energy
Partners). Williams evaluates performance based upon segment profit (loss) from
operations (see Note 22). The following discussions relate to the results of
operations of Williams' segments.

ENERGY MARKETING & TRADING

<Table>
<Caption>
                                                            YEARS ENDED DECEMBER 31,
                                                          ----------------------------
                                                            2001       2000      1999
                                                          --------   --------   ------
                                                                   (MILLIONS)
<S>                                                       <C>        <C>        <C>
Segment revenues........................................  $1,871.8   $1,572.6   $662.3
Segment profit..........................................  $1,271.5   $1,007.9   $104.0
</Table>

  2001 vs. 2000

     Energy Marketing & Trading's revenues increased by $299.2 million or 19
percent in 2001, due to a $411 million increase in risk management and trading
revenues, partially offset by a $112 million decrease in non-trading revenues.

     The $411 million increase in risk management and trading revenues results
primarily from an increase in risk management activities surrounding Energy
Marketing & Trading's power tolling portfolio. As further discussed in Note 18
of the Notes to Consolidated Financial Statements, power tolling agreements
provide Energy Marketing & Trading the right, but not the obligation, to call on
the counterparty to convert natural gas to electricity at a predefined heat
conversion rate. Energy Marketing & Trading benefited from higher natural gas
and electric power services margins through the first quarter of 2001 from power
tolling agreements previously recognized in 2000. Energy Marketing & Trading,
through its origination of new contracts, executed several offsetting positions
throughout the year to mitigate declines in these margins that occurred
subsequent to the first quarter 2001. These new contracts consisted of full
requirements, load serving and power supply agreements and typically have terms
of up to 15 years (see Note 18). Execution of these contracts has the effect of
reducing the risk of future changes in natural gas and power prices within the
portfolio and also provides further insight into the prices for which third
parties are willing to exchange in illiquid periods. This additional insight
provides better information for the valuation of other existing contracts which
generally has the effect of increasing the value recognized on these existing
contracts. Subsequent to the

                                        42
<PAGE>

execution of these origination transactions, natural gas and power prices
declined dramatically. As a result of Energy Marketing & Trading's management
strategies, this reduction had minimal impact to the overall portfolio fair
value. Also contributing to the increase in the risk management and trading
revenues during 2001 is an increase in successful forward natural gas financial
trading.

     Through a variety of energy commodity and derivative contracts, Energy
Marketing & Trading has credit exposure to Enron and certain of its subsidiaries
which have sought protection from creditors under Chapter 11 of the U.S.
Bankruptcy Code. During fourth-quarter 2001, Energy Marketing & Trading recorded
a reduction in trading revenues of approximately $130 million through the
valuation of contracts with Enron. Approximately $91 million of this reduction
in value was recorded pursuant to events immediately proceeding and following
Enron's announced bankruptcy. At December 31, 2001, Williams has reduced its
exposure to accounts receivable from Enron, net of margin deposits, to expected
recoverable amounts.

     Additional discussion of the accounting for energy risk management and
trading activities at fair value is included in Note 1 of the Notes to
Consolidated Financial Statements and pages 53 through 59 of Management's
Discussion & Analysis of Financial Condition and Results of Operations.

     The $112 million decrease in non-trading revenues is due primarily to
declining prices on ethane and lower ethylene volumes and prices related to
marketing of products of a petrochemical plant acquired by Williams in early
1999. These decreases were partially offset by a $4 million increase in
non-trading power services revenues.

     Costs and operating expenses decreased by $95 million, or 32 percent, due
primarily to lower ethane, propane, and olefin prices in 2001, partially offset
by higher cost of sales and operating expenses relating to the non-trading power
services activities. These variances are associated with the corresponding
changes in non-trading revenues discussed above.

     Other (income) expense -- net in 2000 includes $47.5 million in guarantee
loss accruals and impairment charges (see Note 5), a $16.3 million impairment of
assets related to a distributed power generation business, and a $12.4 million
gain on the sale of certain natural gas liquids contracts. Included in 2001, is
a $13.3 million impairment of assets related to a terminated expansion project.

     Segment profit increased $263.6 million due primarily to the $411 million
higher trading revenues discussed above and the effect of the $63.8 million of
guarantee loss accruals and impairment charges in 2000. Partially offsetting
these increases were $141 million higher selling, general and administrative
costs, $27 million lower margins from non-trading natural gas liquids
operations, a $23.3 million loss from the write-downs of marketable equity
securities and a cost-based investment (see Note 4), the $13.3 million
impairment of assets related to a terminated expansion project, and the $12.4
million effect of the 2000 gain on sale of certain natural gas liquids
contracts. The higher selling, general and administrative costs primarily
reflect $40 million of higher variable compensation levels associated with
improved operating performance, increased outside service costs, increased costs
as a result of additional staff, as well as $13 million of increased charitable
contributions to state universities, and $19 million of costs related to a
European trading and marketing office in London which began operations in 2001.

  2000 vs. 1999

     Energy Marketing & Trading's revenues increased $910.3 million, or 137
percent, due to a $1,071 million increase in trading revenues partially offset
by a $161 million decrease in non-trading revenues. The $1,071 million increase
in trading revenues is due primarily to higher natural gas and electric power
services margins. The higher gas and electric power services margins reflect the
benefit of price volatility and increased demand for ancillary services,
primarily in the western region of the United States, expanded price risk
management services including higher structured transactions margins, increased
overall market demand and increased trading volumes. The increased trading
volumes and price risk management services reflect the expansion of the power
trading portfolio to include an additional 2,350 megawatts from contracts giving
Energy Marketing & Trading the right to market combined capacity from three
power generating plants which were signed in late 1999 and early 2000. At
December 31, 2000, Energy Marketing & Trading had rights to

                                        43
<PAGE>

market 7,000 megawatts of electric generation capacity for periods ranging from
15 to 20 years. Of the 7,000 megawatts, approximately 4,000 megawatts are from
facilities in California.

     The $161 million decrease in non-trading revenues is due primarily to $226
million lower revenues following the sale of retail natural gas, electric and
propane businesses in 1999, partially offset by $19 million higher revenues from
a distributed power generation business that was transferred from Petroleum
Services during 2000 and $33 million higher natural gas liquids revenues
resulting from higher average sales prices and volumes attributable to marketing
the products of a petrochemical plant that was acquired by Williams in early
1999.

     Costs and operating expenses decreased $129 million, or 30 percent, due
primarily to lower natural gas, electric and propane cost of sales and operating
expenses of $112 million and $91 million, respectively, partially offset by $20
million higher cost of sales and operating expenses relating to the distributed
power generation business and $25 million higher natural gas liquids cost of
sales attributable to the petrochemical plant. These variances are associated
with the corresponding changes in non-trading revenues discussed above.

     Other (income) expense -- net changed unfavorably from income of $23
million in 1999 to expense of $48 million in 2000. The expense for 2000 includes
$47.5 million of guarantee loss and impairment accruals (see Note 5) and a $16.3
million impairment of assets to fair value based on expected net proceeds
related to management's decision and commitment to sell its distributed power
generation business. Partially offsetting these 2000 charges was a $12.4 million
gain on the sale of certain natural gas liquids contracts. Other (income)
expense -- net in 1999 includes a $22.3 million gain on the sale of retail
natural gas and electric operations.

     Segment profit increased $903.9 million, from $104 million in 1999 to
$1,007.9 million in 2000, due primarily to $1,073 million higher trading margins
primarily related to natural gas and electric power services. Partially
offsetting the higher margins were $66 million higher selling, general and
administrative costs, the $47.5 million guarantee loss and impairment accruals,
the $16.3 million impairment of the distributed power generation business, the
$22.3 million gain in 1999 on sale of retail natural gas and electric operations
and a $23 million lower contribution from retail natural gas, electric and
propane following the sale of those businesses in 1999. The higher selling,
general and administrative costs primarily reflect higher variable compensation
levels associated with improved operating performance, partially offset by $40
million of selling, general and administrative costs related to the retail
natural gas, electric and propane businesses sold in 1999.

  Potential Impact of California Power Regulation and Litigation

     At December 31, 2001, Energy Marketing & Trading had net accounts
receivable recorded of approximately $388 million for power sales to the
California Independent System Operator and the California Power Exchange
Corporation (CPEC). While the amount recorded reflects management's best
estimate of collectibility, future events or circumstances could change those
estimates. In March and April of 2001, two California power-related entities,
the CPEC and Pacific Gas and Electric Company (PG&E), filed for bankruptcy under
Chapter 11. On September 20, 2001, PG&E filed a reorganization plan as part of
its Chapter 11 bankruptcy proceeding that seeks to pay all of its creditors in
full. California utility regulators agreed on October 2, 2001, to a settlement
in which a Edison International unit, Southern California Edison, will repay its
back debt out of existing rates by 2005. The agreement settles a federal-court
lawsuit in which the utility sought to force the California Public Utilities
Commission to raise rates and allows the utility to recover an estimated $3
billion in back debt. Both the reorganization plan and the settlement agreement
are subject to current challenges, further legal proceedings and regulatory
approvals. Williams does not believe its credit exposure to these utilities will
result in a materially adverse effect on its results of operations or financial
condition.

     As discussed in Rate and Regulatory Matters and Related Litigation in Note
19 of the Notes to Consolidated Financial Statements, the FERC and the DOJ have
issued orders or initiated actions which involve Williams Energy Marketing &
Trading related to California and the western states electric power industry. In
addition to these federal agency actions, a number of federal and state
initiatives addressing the issues of the California electric power industry are
also ongoing and may result in restructuring of various
                                        44
<PAGE>

markets in California and elsewhere. Discussions in California and other states
have ranged from threats of re-regulation to suspension of plans to move forward
with deregulation. Allegations have also been made that the wholesale price
increases resulted from the exercise of market power and collusion of the power
generators and sellers, such as Williams. These allegations have resulted in
multiple state and federal investigations as well as the filing of class-action
lawsuits in which Williams is a named defendant (see Other Legal Matters in Note
19). Most of these initiatives, investigations and proceedings are in their
preliminary stages and their likely outcome cannot be estimated. There can be no
assurance that these initiatives, investigations and proceedings will not have
an adverse effect on Williams' results of operations or financial condition.

GAS PIPELINE

<Table>
<Caption>
                                                            YEARS ENDED DECEMBER 31,
                                                         ------------------------------
                                                           2001       2000       1999
                                                         --------   --------   --------
                                                                   (MILLIONS)
<S>                                                      <C>        <C>        <C>
Segment revenues.......................................  $1,748.8   $1,879.2   $1,822.6
Segment profit.........................................  $  720.1   $  741.5   $  697.3
</Table>

  2001 vs. 2000

     Gas Pipeline's revenues decreased $130.4 million, or 7 percent, due
primarily to the effect of a $74 million reduction of rate refund liabilities in
2000 following the settlement of prior rate proceedings, $72 million lower gas
exchange imbalance settlements (offset in costs and operating expenses), $15
million lower recovery of tracked costs which are passed through to customers
(offset in general and administrative expenses), and $10 million lower
transportation revenues at Texas Gas due primarily to turnback capacity
remarketed at discounted rates and for shorter contracted terms. Partially
offsetting these decreases were $25 million higher gas transportation demand
revenues as a result of new expansion projects and new rates on the Transco
system and the California Action Project on the Kern River system and $9 million
higher revenues from a liquefied natural gas storage facility acquired in June
2000.

     Costs and operating expenses decreased $66 million, or 7 percent, due
primarily to the $72 million lower gas exchange imbalance settlements (offset in
revenues), $15 million resulting from the FERC's approval for recovery of fuel
costs incurred in prior periods by Transco, and $6 million of accruals for gas
exchange imbalances in 2000. Partially offsetting these decreases was $36
million in higher depreciation expense due to increased property, plant &
equipment placed into service during 2001, which includes $16 million
attributable to the California Action Project.

     General and administrative costs decreased $22 million resulting primarily
from lower tracked costs which are passed through to customers (offset in
revenues) and costs in 2000 related to the headquarters consolidation of two of
the gas pipelines, partially offset by higher charitable contributions.

     Other (income) expense -- net for the year ended December 31, 2001, within
segment costs and expenses includes a $27.5 million pre-tax gain from the sale
of Williams' limited partnership interest in Northern Border Partners L.P. and a
$3 million insurance settlement in 2001 for storage gas losses. Also included is
an $18 million charge resulting from an unfavorable court decision in one of
Transco's royalty claims proceedings (an additional $19 million is included in
interest expense).

     Segment profit decreased $21.4 million due primarily to the lower revenues
discussed previously, partially offset by the lower costs and operating
expenses, the items discussed previously in other (income) expense -- net, a $19
million increase in equity investment earnings from pipeline joint venture
projects and the lower general and administrative expenses. The increase in
equity investment earnings reflects $13 million from new projects which are
primarily comprised of interest capitalized on internally generated funds as
allowed by the FERC and a $6 million increase from earnings on existing
projects.

                                        45
<PAGE>

  2000 vs. 1999

     Gas Pipeline's revenues increased $56.6 million, or 3 percent, due
primarily to $74 million of rate refund liability reductions associated mainly
with a favorable FERC order received in March 2000 by Transco related to the
rate-of-return and capital structure issues in a regulatory proceeding. Revenues
also increased due to $68 million higher gas exchange imbalance settlements
(offset in costs and operating expenses), $23 million higher transportation
demand revenues at Transco and $14 million higher storage revenues. Partially
offsetting these increases were $66 million of reductions to rate refund
liabilities in 1999 by four of the gas pipelines resulting primarily from second
and fourth-quarter 1999 regulatory proceedings and $57 million lower
reimbursable costs passed through to customers (offset in costs and operating
expenses).

     Segment profit increased $44.2 million, or 6 percent, due to $23 million
higher transportation demand revenues at Transco, $18 million higher equity
investment earnings from pipeline joint venture projects, the $8 million net
effect of rate refund liability reductions discussed above and $3 million lower
general and administrative expenses. The lower general and administrative costs
reflect lower professional services costs associated with year 2000 compliance
work, efficiencies realized from the headquarters consolidation of two of the
pipelines and other cost reduction initiatives and the effect of a $2.3 million
accrual in 1999 for damages associated with two pipeline ruptures in the
northwest, partially offset by expenses related to the headquarters
consolidation and higher charitable contributions in 2000. Partially offsetting
the segment profit increases were $10 million higher depreciation expense
primarily due to increased property, plant and equipment, and $6 million of
accruals for gas exchange imbalances.

ENERGY SERVICES

  EXPLORATION & PRODUCTION

<Table>
<Caption>
                                                             YEARS ENDED DECEMBER 31,
                                                             ------------------------
                                                              2001     2000     1999
                                                             ------   ------   ------
                                                                    (MILLIONS)
<S>                                                          <C>      <C>      <C>
Segment revenues...........................................  $579.6   $294.2   $190.1
Segment profit.............................................  $218.7   $ 62.4   $ 39.8
</Table>

  2001 vs. 2000

     Exploration & Production's revenues increased $285.4 million, or 97
percent, due primarily to $263 million higher production revenues including $119
million from increased net realized prices for production (including the effect
of hedge positions) and $144 million associated with an increase in net volumes
from production. Approximately $115 million of the $144 million increase relates
to volumes associated with Barrett, which became a consolidated entity on August
2, 2001. Approximately 75 percent of production in 2001 was hedged. Exploration
& Production has entered into contracts that hedge approximately 79 percent of
projected 2002 natural gas production. These hedges are entered into with Energy
Marketing & Trading which in turn, enters into offsetting derivative contracts
with unrelated third parties. Energy Marketing & Trading bears the counterparty
performance risks associated with unrelated third parties. During 2001, a
portion of the external derivative contracts were with Enron, which filed for
bankruptcy in December 2001. As a result, the contracts were effectively
liquidated as a result of contractual terms about bankruptcy and Energy
Marketing & Trading recorded estimated charges for the credit exposure. Under
accounting guidance, the other comprehensive income related to a terminated
contract remains in accumulated other comprehensive income and is recognized as
the underlying volumes are produced. At December 31, 2001, approximately $80
million related to Enron was reflected in accumulated other comprehensive
income. Energy Marketing & Trading has entered into derivative contracts to
replace those contracts that were terminated during the year. At December 31,
2001, the contracted future hedges are at prices that averaged above the spot
market, resulting in an unrealized gain of $331 million (including the $80
million previously discussed) reflected in other comprehensive income. Revenues
from gas management activities increased $14 million. Gas management revenues
consist primarily of marketing activities within the Exploration & Production
segment that are not a direct part of the results of operations for producing
activities. Those non-producing activities include

                                        46
<PAGE>

acquisition and disposition of other working interest and royalty interest gas
and the movement of gas from the wellhead to the tailgate of the respective
plants for sale to Energy Marketing & Trading or third parties.

     Segment costs and operating expenses increased $138 million, including a
$22 million increase in selling, general and administrative expense. Segment
costs and operating expenses increased due primarily to costs related to Barrett
operations, comprised primarily of depreciation, depletion and amortization,
lease operating expenses and gas management costs. In addition to the increase
as a result of the Barrett acquisition, the higher segment costs and operating
expenses reflect $10 million higher lease operating expenses, $8 million higher
depreciation, depletion and amortization expenses and $6 million higher
production-related taxes. Other income (expense) -- net in 2000 includes a $6
million impairment charge for certain gas producing properties. The charge
represented the impairment of these held for sale assets to fair value based on
expected net proceeds. These properties were sold in March 2001.

     Segment profit increased $156.3 million due primarily to the higher
production revenues in excess of costs. A major portion of this increase can be
attributed to the Barrett acquisition. In addition, segment profit included $9
million in equity earnings from the 50 percent investment in Barrett held by
Williams for the period from June 11, 2001 through August 2, 2001.

  2000 vs. 1999

     Exploration & Production's revenues increased $104.1 million, or 55
percent, due primarily to $65 million from increased average natural gas sales
prices (net of the effect of hedge positions), $35 million associated with
increases in both company-owned production volumes and marketing volumes from
the Williams Coal Seam Gas Royalty Trust and royalty interest owners and an $8
million contribution in first-quarter 2000 of oil and gas properties acquired in
April 1999. Exploration & Production hedged approximately 50 percent of
production in 2000.

     Other (income) expense -- net in 2000 includes a $6 million impairment
charge relating to management's decision to sell certain gas producing
properties. The charge represents the impairment of the assets to fair value
based on expected net proceeds. Other (income) expense -- net in 1999 includes a
$14.7 million gain from the sale of certain interests in gas producing
properties which contributed $2 million to segment profit in 1999 and a $7.7
million gain from the sale of certain other properties.

     Segment profit increased $22.6 million, or 57 percent, due primarily to the
higher revenues discussed previously, partially offset by $43 million higher gas
purchase costs related to the marketing of natural gas from the Williams Coal
Seam Gas Royalty Trust and royalty interest owners, $22 million of gains on
sales of assets in 1999, $10 million higher production-related taxes and the $6
million impairment charge in 2000.

 INTERNATIONAL

<Table>
<Caption>
                                                             YEARS ENDED DECEMBER 31,
                                                             ------------------------
                                                              2001      2000    1999
                                                             -------   ------   -----
                                                                    (MILLIONS)
<S>                                                          <C>       <C>      <C>
Segment revenues...........................................  $ 159.0   $104.1   $72.5
Segment profit (loss)......................................  $(172.8)  $ 14.1   $(3.9)
</Table>

  2001 vs. 2000

     International's revenues increased $54.9 million, or 53 percent, due
primarily to $32 million of revenue from a new gas compression facility in
Venezuela which began operations in August 2001 and $21 million of revenue from
Colorado soda ash mining operations which began production in fourth-quarter
2000.

     Costs and operating expenses increased $61 million, due primarily to $52
million related to soda ash mining operations and $13 million related to the new
gas compression facility in Venezuela.

     In fourth-quarter 2001, a $170 million impairment charge was recorded
related to the Colorado soda ash mining operations. The facility experienced
higher than expected construction costs and implementation

                                        47
<PAGE>

difficulties through December 2001. As a result, an impairment of the assets
based on management's estimate of the fair value was recorded in fourth-quarter
2001. Management's estimate was based on the present value of discounted future
cash flows. In addition, management engaged an outside business consulting firm
during fourth-quarter 2001 to provide further information to be utilized in
management's estimation. Future events and the use of different judgments and/or
assumptions could result in the recognition of a different level of impairment
charge.

     Segment profit decreased $186.9 million and is substantially related to the
$170 million impairment of the soda ash mining facility mentioned above as well
as additional losses from soda ash mining operations of $31 million, both of
which are attributable to the operational and implementation complications since
production began in late 2000. Equity losses increased $11 million due to an $8
million increase in equity losses from the Lithuanian refinery, pipeline and
terminal investment and $6 million lower equity earnings from an Argentina oil
and gas investment, partially offset by $3 million of equity earnings on an
investment in a natural gas liquids (NGL) extraction and processing joint
venture acquired in 2001. The Lithuanian refinery, pipeline and terminal
investment continued to be challenged by a lack of market-priced crude oil
supplies in the first-half of 2001. Additionally, a decrease in refinery crack
spreads on the world market significantly contributed to the losses in 2001.
Slightly offsetting these losses was an $18 million increase from a new
Venezuelan gas compression facility which began operations in third-quarter
2001.

  2000 vs. 1999

     International's revenues increased $31.6 million, or 44 percent, due
primarily to $17 million higher Venezuelan gas compression revenues reflecting
higher volumes in 2000 following operational problems experienced in
first-quarter 1999 and $11 million of higher revenues from oil and gas
exploration operations in Argentina.

     Costs and operating expenses increased $18 million due primarily to $8
million related to soda ash mining operations which began in fourth-quarter
2000, $5 million higher costs related to a Venezuelan gas compression facility
and $3 million higher costs from oil and gas exploration operations in
Argentina.

     Segment profit increased $18 million due primarily to $14 million from
increased operating income from Venezuelan gas compression operations, $8
million higher operating income from oil and gas exploration operations in
Argentina and $5 million lower international equity investment losses, partially
offset by a $7 million operating loss related to soda ash mining operations. The
$5 million lower international equity investment losses reflect the change in
accounting for an equity investment to a cost basis investment following a
reduction of management influence and higher equity earnings from a South
American equity investment. Partially offsetting these increases to equity
earnings were higher equity losses from a Lithuanian refinery, pipeline and
terminal investment acquired in fourth-quarter 1999, which continued to be
challenged in obtaining market-priced crude oil supplies and had not yet
consummated any long-term contracts.

 MIDSTREAM GAS & LIQUIDS

<Table>
<Caption>
                                                            YEARS ENDED DECEMBER 31,
                                                         ------------------------------
                                                           2001       2000       1999
                                                         --------   --------   --------
                                                                   (MILLIONS)
<S>                                                      <C>        <C>        <C>
Segment revenues.......................................  $1,922.4   $1,514.7   $1,030.4
Segment profit.........................................  $  221.6   $  297.9   $  223.9
</Table>

  2001 vs. 2000

     Midstream Gas & Liquids' revenues increased $407.7 million, or 27 percent,
due primarily to $564 million in revenues for the first three quarters of 2001
from Canadian operations that were acquired in October 2000. The $564 million of
increased revenues from Canadian operations consists primarily of $270 million
of natural gas liquids sales from processing activities, $205 million of natural
gas liquids sales from fractionation activities, and $81 million of processing
revenues. Canadian revenues decreased $57 million for the comparable periods of
2001 and 2000 due primarily to natural gas liquids product sales price decline.

                                        48
<PAGE>

Domestic natural gas liquids revenues decreased $116 million including $78
million from 15 percent lower volumes sold and $38 million due to lower average
natural gas liquids sales prices. The 15 percent decrease in volumes sold is due
primarily to less favorable processing economics. Domestic gathering revenues
increased $11 million due primarily to higher volumes related to recent asset
acquisitions in the Gulf Coast area.

     Costs and operating expenses increased $456 million to $1.6 billion, due
primarily to $549 million of costs and operating expenses related to the
Canadian operations for the first three quarters of 2001 and $26 million higher
domestic general operating and maintenance cost, partially offset by $58 million
lower Canadian costs and operating expenses for the comparable periods of 2001
and 2000 due to lower shrink gas replacement costs, $38 million lower domestic
shrink gas replacement costs, the effect in 2000 of $12 million of losses
associated with certain propane storage transactions and $6 million lower
domestic power costs related to the natural gas liquids pipelines.

     General and administrative expenses decreased $2 million, or 2 percent, due
primarily to $12 million of reorganization and early retirement costs incurred
in 2000, substantially offset by $11 million of general and administrative
expenses related to the Canadian operations for the first three quarters of
2001.

     Included in other (income) expense -- net within segment costs and expenses
for 2001 is $13.8 million of impairment charges related to management's 2001
decisions and commitments to sell certain south Texas non-regulated gathering
and processing assets. The $13.8 million in impairment charges represent the
impairment of the assets to fair value based on expected proceeds from the
sales. These sales closed during first-quarter 2002.

     Segment profit decreased $76.3 million, or 26 percent, due primarily to $54
million from lower average per-unit domestic natural gas liquids margins and $22
million from decreased domestic natural gas liquids volumes sold, $26 million
higher domestic operating and maintenance costs, $13.8 million due to the
impairment charge discussed above and $13 million higher losses from equity
investments. Partially offsetting these decreases to segment profit were $14
million lower domestic general and administrative expenses, $11 million higher
domestic gathering revenues, $12 million of losses associated with certain
propane storage transactions during 2000 and $6 million lower domestic power
costs related to the natural gas liquids pipelines.

  2000 vs. 1999

     Midstream Gas & Liquids' revenues increased $484.3 million, or 47 percent,
due primarily to $267 million higher natural gas liquids sales from processing
activities and $183 million in revenues from Canadian operations purchased in
October 2000. The liquids sales increase reflects $172 million from a 49 percent
increase in average natural gas liquids sales prices and $95 million from a 37
percent increase in volumes sold. The increase in natural gas liquids sales
volumes result from improved liquids market conditions in 2000 and a full year
of results from a plant that became operational in June 1999. The $183 million
of revenues from the Canadian operations consist primarily of $165 million in
natural gas liquids sales and $15 million of processing revenues. In addition,
revenues increased due to $25 million higher natural gas liquids pipeline
transportation revenues associated with increased shipments following improved
market conditions and the completion of the Rocky Mountain liquids pipeline
expansion in November 1999.

     Costs and operating expenses increased $412 million, or 60 percent, due
primarily to the $183 million of expenses related to the Canadian operations,
$147 million higher liquids fuel and replacement gas purchases, $17 million
higher power costs related to the natural gas liquids pipeline, $17 million in
higher gathering and processing fuel costs due to increased natural gas prices
and a full year of operation for two processing facilities, $15 million higher
transportation, fractionation, and marketing expenses related to the higher
natural gas liquid sales, $14 million higher depreciation expense, and $12
million of losses associated with certain propane storage transactions.

     General and administrative expenses increased $11 million, or 11 percent,
due primarily to $12 million of reorganization costs and $3 million associated
with the Canadian operations purchased in 2000. The $12 million of
reorganization costs relate to the reorganization of Midstream's operations
including the consolidation in Tulsa of certain support functions previously
located in Salt Lake City and Houston. In

                                        49
<PAGE>

connection with this, Williams offered certain employees enhanced retirement
benefits under an early retirement incentive program in first-quarter 2000, and
incurred severance, relocation and other exit costs.

     Segment profit increased $74 million, or 33 percent, due primarily to $81
million from higher per-unit natural gas liquids margins, $24 million from
increased natural gas liquids volumes sold, $8 million lower equity investment
losses mainly from the Discovery Pipeline project and $6 million from the
natural gas liquids pipeline. Partially offsetting these increases to segment
profit were $14 million higher depreciation expense, $17 million higher
gathering and processing fuel costs, $12 million of propane storage losses and
$11 million higher general and administrative expenses.

  PETROLEUM SERVICES

<Table>
<Caption>
                                                            YEARS ENDED DECEMBER 31,
                                                         ------------------------------
                                                           2001       2000       1999
                                                         --------   --------   --------
                                                                   (MILLIONS)
<S>                                                      <C>        <C>        <C>
Segment revenues.......................................  $5,407.9   $4,605.0   $2,987.8
Segment profit.........................................  $  286.9   $  175.8   $  157.8
</Table>

     Effective February 2001, management of refined product sales activities
surrounding certain terminals throughout the United States was transferred to
Petroleum Services from Energy Marketing & Trading (see Note 1). The sales
activity was previously included in the trading portfolio of Energy Marketing &
Trading and was therefore reported net of related cost of sales along with other
refined product trading gains and losses within Energy Marketing & Trading prior
to February 2001. After the transfer of management of these activities to
Petroleum Services, these sales activities are reported "gross" within the
Petroleum Services segment. Energy Marketing & Trading's revenues for the year
ended December 31, 2000 includes approximately $582 million for both the sales
and cost of sales related to this activity.

  2001 vs. 2000

     Petroleum Services' revenues increased $802.9 million, or 17 percent, and
includes an increase to Petroleum Services' total revenues of $184 million as a
result of lower intra-segment sales, which are eliminated, by refining and
marketing to the travel centers/convenience stores. Additionally, revenues
increased due to $596 million higher refining and marketing revenues partially
offset by $60 million lower travel center/convenience store sales. The $596
million increase in refining and marketing revenues includes the $582 million
impact discussed above and $340 million resulting from a 9 percent increase in
refined product volumes sold, partially offset by $325 million from 8 percent
lower average refined product sales prices. The $60 million decrease in travel
center/convenience store sales reflects $223 million increase in revenues
related to travel centers and Alaska convenience stores offset by a $283 million
decrease in revenues related to the 198 convenience stores sold in May 2001. The
$223 million increase in revenues of the travel centers and Alaska convenience
stores reflects $243 million from a 31 percent increase in gasoline and diesel
sales volumes and $41 million higher merchandise sales, partially offset by $61
million lower average diesel and gasoline sales prices. During 2001, Williams
opened 12 travel centers. Previously announced plans to add 12 additional stores
were deferred while a focus is placed on improving operating efficiencies and
profitability at existing stores. In addition, revenues increased due to $99
million higher bio-energy sales reflecting increases in ethanol volumes sold and
average ethanol sales prices and $28 million higher revenues from Williams' 3.1
percent undivided interest in Trans-Alaska Pipeline System (TAPS) acquired in
late June 2000. Slightly offsetting these increases were $15 million lower
revenues related to the petrochemical plant (Olefins) due to a plant turnaround
in first-quarter 2001 and curtailed production.

     Costs and operating expenses increased $757 million, or 18 percent, and
include a $184 million increase in costs due to lower intra-segment purchases,
which are eliminated. Additionally costs and operating expenses increased due to
$526 million higher refining and marketing costs, partially offset by $29
million lower travel center/convenience store costs. The $526 million increase
in refining and marketing costs includes the $582 million impact of the transfer
of management from Energy Marketing & Trading to Petroleum Services discussed
above, a $296 million increase in the cost of refined product purchased for
resale and $17 million

                                        50
<PAGE>

increase in other operating costs at the refineries, partially offset by a $369
million decrease from lower crude supply cost and other per unit cost of sales
from the refineries. The refining and marketing costs include the impact of
price risk management activities that are used to manage the economic exposure
of fluctuations in commodity prices of crude oil and refined products. The $29
million decrease in travel center/convenience store costs reflects a $282
million decrease in costs related to the 198 convenience stores sold in May
2001, partially offset by a $253 million increase in costs related to travel
centers and Alaska convenience stores. The $253 million increase in costs for
the travel centers and Alaska convenience stores reflect $230 million from
increased diesel and gasoline sales volumes, $60 million from higher store
operating costs and $26 million higher merchandise costs, partially offset by
$63 million lower gasoline and diesel purchase prices. In addition, costs and
operating expenses increased due to $95 million higher bio-energy costs of
sales.

     Included in other (income) expense -- net within segment costs and expenses
for 2001, is a $75.3 million gain from the sale of 198 convenience stores,
primarily in the Tennessee metropolitan areas of Memphis and Nashville. Also
included in other (income) expense -- net within segment costs and expenses in
2001 is a total of $14.7 million in loss accruals and impairment charges related
to certain travel centers. This amount includes the estimated liability
associated with the residual value guarantee of certain travel centers under an
operating lease and the impairment of certain other travel centers to fair value
based on management's estimate. Assessments for potential impairments are done
on a store by store basis. Also included in other (income) expense -- net within
segment costs and expenses in 2001 and 2000 are impairment charges of $12.1
million and $11.9 million, respectively, related to an end-to-end mobile
computing systems business. The impairment charges result from management's
decision in 2000 to sell certain of its end-to-end mobile computing systems and
represents the impairment of the assets to fair value based on expected net
sales proceeds, as revised. Other (income) expense -- net within segment costs
and expenses in 2000 also included a $7 million write-off of a retail software
system.

     Segment profit increased $111.1 million, or 63 percent, due primarily to an
increase of $71 million from refining and marketing operations and $17 million
from Williams interest in TAPS acquired in late June 2000. In addition, segment
profit increased due to a $75.3 million gain on the sale of convenience stores
in May 2001. Partially offsetting these increases were a $32 million increase in
operating losses from the travel centers and Alaska convenience stores, the
$14.7 million in loss accruals and impairment charges related to certain travel
centers and $17 million lower operating profit from activities at the
petrochemical plant as revenues decreased due to plant turnaround and curtailed
production without a corresponding decrease in cost.

  2000 vs. 1999

     Petroleum Services' revenues increased $1,617.2 million, or 54 percent, due
primarily to $1,376 million higher refinery revenues (including $240 million
higher intra-segment sales to the travel centers/convenience stores which are
eliminated) and $455 million higher travel center/convenience store sales. The
$1,376 million increase in refinery revenues reflects $1,113 million from 59
percent higher average refined product sales prices and $263 million from a 16
percent increase in refined product volumes sold. The increase in refined
product volumes sold follows refinery expansions and improvements in mid-to-late
1999 and May 2000 which increased capacity. The $455 million increase in travel
center/convenience store sales reflects $260 million from 32 percent higher
average gasoline and diesel sales prices, $171 million primarily from a 64
percent increase in diesel sales volumes and $24 million higher merchandise
sales. The increase in diesel sales volumes and the higher merchandise sales
reflect the opening of eight new travel centers since fourth-quarter 1999.
Slightly offsetting these increases were $91 million lower fleet management
revenues following the sale of a portion of such operations in late 1999, $21
million lower distribution revenues due to a reduction of a propane trucking
operation and $16 million lower pipeline construction revenues following
substantial completion of the Longhorn pipeline project.

     In December 2000, Williams signed an agreement to sell 198 of its
convenience stores, primarily in the Tennessee metropolitan areas of Memphis and
Nashville. Revenues related to these convenience stores for 2000 and 1999 were
$466 million and $453 million, respectively. The sale closed in May 2001.

                                        51
<PAGE>

     Costs and operating expenses increased $1,568 million, or 58 percent, due
primarily to $1,349 million higher refining costs and $470 million higher travel
center/convenience store costs (including $240 million higher intra-segment
purchases from the refineries which are eliminated). The $1,349 million increase
in refining costs reflects $1,088 million from higher crude supply costs and
other related per-unit cost of sales, $221 million associated with increased
volumes sold and $40 million higher operating costs at the refineries. The $470
million increase in travel center/convenience store costs includes $273 million
from higher average gasoline and diesel purchase prices, $159 million primarily
from increased diesel sales volumes and $38 million higher store operating
costs. Slightly offsetting these increases were $101 million lower fleet
management operating costs following the sale of a portion of such operations in
late 1999, $18 million lower cost of distribution activities following a
reduction of a propane trucking operation and $14 million lower pipeline
construction costs following substantial completion of the Longhorn pipeline
project.

     Other (income) expense -- net for 2000 includes a $11.9 million impairment
charge related to end-to-end mobile computing systems and a $7 million write-off
of a retail software system. The impairment charge results from management's
decision to sell certain of its end-to-end mobile computing systems and
represents the impairment of the assets to fair value based on expected net
sales proceeds. The primary component in other (income) expense -- net for 1999
was a $6.5 million favorable effect of settlement of transportation pipeline
rate case issues.

     Segment profit increased $18 million, or 11 percent, due primarily to $42
million from increased refined product volumes sold and $25 million from
increased per-unit refinery margins, partially offset by $40 million higher
operating costs at the refineries. In addition, segment profit increased $18
million from bio-energy operations primarily reflecting increased ethanol sales
prices and volumes, $10 million from the absence of certain fleet management
losses in 2000, $8 million from Williams' interest in the TAPS acquired in late
June 2000 and $8 million from activities at the petrochemical plant acquired in
March 1999. Partially offsetting these increases to segment profit were a $6
million lower contribution from transportation activities and a lower
contribution from the travel centers/convenience stores which had $38 million
higher operating costs partially offset by a $24 million increase in gross
profit on merchandise sales. In addition, segment profit in 2000 was decreased
by $6 million higher selling, general and administrative expense and the $25
million unfavorable change in other (income) expense -- net discussed
previously.

  WILLIAMS ENERGY PARTNERS

<Table>
<Caption>
                                                              YEARS ENDED DECEMBER 31,
                                                              ------------------------
                                                               2001     2000     1999
                                                              ------   ------   ------
                                                                     (MILLIONS)
<S>                                                           <C>      <C>      <C>
Segment revenues............................................  $86.2    $73.5    $43.6
Segment profit..............................................  $17.0    $21.8    $16.3
</Table>

  2001 vs. 2000

     Williams Energy Partners' revenues increased $12.7 million due primarily to
the acquisition of a marine terminal facility in September 2000 and higher
revenues and rates from the storage of petroleum products at the Gulf Coast
marine facilities. Segment profit decreased $4.8 million due primarily to higher
operating costs related to the marine facilities discussed above and higher
general and administrative expenses.

  2000 vs. 1999

     Williams Energy Partners' revenues increased $29.9 million due primarily to
the acquisition of three Gulf Coast marine facilities in August 1999, one inland
terminal in March 2000, and another marine terminal in September 2000. Operating
costs and selling, general and administrative expenses increased $18.1 million
and $6.3 million respectively, due to the five terminals acquired above. Segment
profit increased $5.5 million due primarily to the profit generated from the new
terminals.

                                        52
<PAGE>

FAIR VALUE OF ENERGY RISK MANAGEMENT AND TRADING ACTIVITIES

     As more thoroughly described in Note 1 of the Notes to Consolidated
Financial Statements, energy and energy-related contracts are valued at fair
value and, with the exception of certain commodity inventories, are recorded in
current and noncurrent energy risk management and trading assets and liabilities
in the Consolidated Balance Sheet. Fair value of energy and energy-related
contracts is determined based on the nature of the transaction and market in
which transactions are executed. Certain transactions are executed in
exchange-traded or over-the-counter markets for which quoted prices in active
periods exist. Transactions are also executed in exchange-traded or
over-the-counter markets for which quoted market prices may exist, however, the
market may be inactive and price transparency is limited. Certain transactions
are executed for which quoted market prices are not available.

  METHODS OF ESTIMATING FAIR VALUE

  Quoted prices in active markets

     Quoted market prices for varying periods in active markets are readily
available for valuing forward contracts, futures contracts, swap agreements and
purchase and sales transactions in the commodity markets in which Energy
Marketing & Trading transacts. These prices reflect the economic and regulatory
conditions that currently exist in the market place and are subject to change in
the near term due to changes in future market conditions. The availability of
quoted market prices in active markets varies between periods and commodities
based upon changes in market conditions.

  Quoted prices and other external factors in less active markets

     For contracts or transactions extending into periods for which actively
quoted prices are not available, Energy Marketing & Trading estimates energy
commodity prices in these illiquid periods by incorporating information about
commodity prices in actively quoted markets, quoted prices in less active
markets, and other market fundamental analysis. While an active market may not
exist for the entire period, quoted prices can generally be obtained for natural
gas and power through 2008, crude and refined products through 2004, and natural
gas liquids through 2003. Prices reflected in current transactions executed by
Energy Marketing & Trading are used to further validate the estimates of these
prices.

  Models and other valuation techniques

     Contracts for which quoted market prices are not available primarily
include transportation, storage, full requirements, load serving and power
tolling contracts (energy-related contracts). A description of these contracts
is included in Note 18 of the Notes to Consolidated Financial Statements. Energy
Marketing & Trading estimates fair value using models and other valuation
techniques that reflect the best available information under the circumstances.
The valuation techniques incorporate option pricing theory, statistical and
simulation analysis, present value concepts incorporating risk from uncertainty
of the timing and amount of estimated cash flows and specific contractual terms.
Factors utilized in the valuation techniques include quoted energy commodity
market prices, estimates of energy commodity market prices in the absence of
quoted market prices, the risk-free market discount rate, volatility factors
underlying the positions, estimated correlation of energy commodity prices,
contractual volumes, estimated volumes, liquidity of the market in which the
contract is transacted and a risk premium that market participants would
consider in their determination of fair value. Although quoted market prices are
not available for these energy-related contracts themselves, quoted market
prices for the underlying energy commodities are a significant component in the
valuation of these contracts.

     Each of the methods discussed above also include counterparty performance
and credit consideration in the estimation of fair value.

                                        53
<PAGE>

     The chart below reflects the fair value of Energy Marketing & Trading's
energy risk management and trading contracts at December 31, 2001 by valuation
methodology and the year in which the recorded fair value is expected to be
realized.

<Table>
<Caption>
                                    PERIOD FAIR VALUE IS EXPECTED TO BE REALIZED IN CASH
                                  ---------------------------------------------------------
VALUATION METHOD:                 2002   2003-2004   2005-2006   2007-2011   2012+   TOTAL
- -----------------                 ----   ---------   ---------   ---------   -----   ------
                                                         (MILLIONS)
<S>                               <C>    <C>         <C>         <C>         <C>     <C>
Based upon quoted prices in
  active markets and quoted
  prices and other external
  factors in less active
  markets(1)....................  $757     $316        $345        $363      $ 18    $1,799
Based upon models and other
  valuation techniques(2).......   231       12         (19)         50       188       462
                                  ----     ----        ----        ----      ----    ------
Total(3)........................  $988     $328        $326        $413      $206    $2,261
                                  ====     ====        ====        ====      ====    ======
% of fair value to be realized
  by period.....................  44%     15%         14%         18%         9%      100%
</Table>

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

(1) A significant portion of the value expected to be realized relates to a
    contract within the California power market. The terms of this contract
    provide for the sale of power at prices ranging from $62.50 to $87.00 per
    megawatt hour over a ten-year period at variable volumes up to 1,400
    megawatts per hour.

(2) Quoted market prices of the underlying commodities are a significant factor
    in the estimate of fair value.

(3) Approximately $1.1 billion of the value expected to be realized through 2010
    has been managed in a manner whereby offsetting fixed price energy and
    energy-related contracts mitigate the exposure to changes in fair value
    resulting from future changes in commodity prices.

  SIGNIFICANT ESTIMATES AND ASSUMPTIONS USED IN THE VALUATION ESTIMATION PROCESS

     Estimates of fair value for long-term energy and energy-related contracts
are most significantly impacted by management's estimates and assumptions in the
illiquid periods. However, the impact of these estimates and assumptions on the
fair value of contracts is reduced to the extent Energy Marketing & Trading has
managed the portfolio by executing offsetting fixed price energy and
energy-related contracts to mitigate exposure in the portfolio to changes in
fair value resulting from future changes in commodity prices.

     The most significant estimates and assumptions include:

     - Estimates of natural gas and power market prices in illiquid periods;

     - Estimates of volatility and correlation of natural gas and power prices;

     - Estimates of risk inherent in estimating cash flows; and

     - Estimates and assumptions regarding counterparty performance and credit
       considerations.

  Estimates of natural gas and power market prices in illiquid periods

     Natural gas and power prices are the most significant commodity prices
impacting the fair value of Energy Marketing & Trading contracts at December 31,
2001. In estimating natural gas and power prices during illiquid periods, Energy
Marketing & Trading includes factors such as quoted market prices, prices of
current market transactions and market fundamental analysis. Market fundamental
analysis incorporates the most recent market data from industry publications,
regulatory publications, existing and forecasted electricity generation
capacity, natural gas reserve data, alternative fuel source availability,
weather patterns and other indicative information supporting supply and demand
relationships. These estimated market prices are highly dependent upon actively
quoted market prices for natural gas and power, current economic and regulatory
conditions, as well as, information supporting future conditions that would
affect the supply and demand relationships.

                                        54
<PAGE>

     As new information is obtained about market prices during illiquid periods,
Energy Marketing & Trading incorporates this information in its estimates of
market prices. Such new information includes additional executed transactions
extending into these periods. These transactions give insight into the market
prices for which market participants are willing to buy or sell in arms-length
transactions.

  Estimation of volatility and correlation of natural gas and power prices

     Volatility of natural gas and power prices represents a significant
assumption in the determination of fair value of contracts that contain
optionality and whose fair value is estimated using option-pricing models.
Correlation of natural gas and power prices represents a significant assumption
in the determination of fair value of contracts that contain optionality and
involve multiple commodities and whose fair value is estimated using
option-pricing models. Volatility and correlation can be implied from option
based market transactions during periods when quoted market prices exist for
natural gas and power. Volatility and correlation is estimated in periods during
which quoted market prices are not available through quantitative analysis of
historical volatility patterns of the commodities, expected future changes in
estimated natural gas and power prices, and market fundamental analysis.
Estimates of volatility and correlation significantly impact the estimation of
fair value for all periods in which the contract is valued using option-pricing
models.

  Estimates of risk inherent in estimating cash flows

     Risk inherent in estimating cash flows represents the uncertainty of events
occurring in the future which could ultimately affect the realization of cash
flows. Energy Marketing & Trading estimates the risk active market participants
would include in the price exchanged in an arms-length transaction in the
estimation of fair value for each contract. Energy Marketing & Trading estimates
risk utilizing the capital asset pricing theory in the estimation of fair value
of energy-related contracts. The capital asset pricing theory considers that
investors require a higher return for contracts perceived to embody higher risk
of uncertainty in the market. This risk is most significant in illiquid periods
and markets. Factors affecting the estimate of risk include liquidity of the
market in which the contract is executed, ability to transact in future periods,
existence of similar transactions in the market, uncertainty of timing and
amounts of cash flows, and market fundamental analysis.

  Estimates and assumptions regarding counterparty performance and credit
  considerations

     Energy Marketing & Trading includes in its estimate of fair value for all
contracts an assessment of the risk of counterparty non-performance. Such
assessment considers the credit rating of each counterparty as represented by
public rating agencies such as Standard & Poor's and Moody's Investor's Service,
the inherent default probabilities within these ratings, the regulatory
environment that the contract is subject to, as well as the terms of each
individual contract.

                                        55
<PAGE>

     The counterparties associated with assets from energy trading and
price-risk management activities as of December 31, 2001, are summarized as
follows:

<Table>
<Caption>
                                                              INVESTMENT
                                                               GRADE(A)      TOTAL
                                                              ----------   ---------
                                                                    (MILLIONS)
<S>                                                           <C>          <C>
Gas and electric utilities..................................  $ 4,253.9    $ 4,924.5
Energy marketers and traders................................    5,645.5      6,058.2
Financial institutions......................................      249.8        341.7
Other.......................................................       16.4         47.3
                                                              ---------    ---------
  Total.....................................................  $10,165.6     11,371.7
                                                              =========
Credit reserves.............................................                  (648.2)
                                                                           ---------
Assets from energy risk management and trading
  activities(b).............................................               $10,723.5
                                                                           =========
</Table>

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

(a)  "Investment Grade" is primarily determined using publicly available credit
     ratings along with consideration of cash, standby letters of credit, parent
     company guarantees, and property interests, including oil and gas reserves.
     Included in "Investment Grade" are counterparties with a minimum Standard &
     Poor's and Moody's Investor's Service rating of BBB- or Baa3, respectively.

(b)  One counterparty within the California power market represents greater than
     ten percent of assets from energy risk management and trading activities
     and is included in "investment grade." Standard & Poor's and Moody's
     Investor's Service do not rate this counterparty. This counterparty has
     been included in the "investment grade" column as a result of the manner in
     which it was established by the State of California.

     As further discussed in Note 19 of the Notes to Consolidated Financial
Statements, the electricity markets in California continue to be subject to
numerous and wide-ranging regulatory proceedings and investigations, regarding
among other things, market structure, behavior of market participants and market
prices. Energy Marketing & Trading has considered counterparty performance as a
result of ongoing issues in the California power industry that could result in a
restructuring of the California markets. The risk of non-performance surrounding
this issue is updated as new information regarding the status of these issues
occurs.

  CONTROLS AROUND VALUATION ESTIMATION PROCESS

     Information used in determining the significant estimates and assumptions
utilized in the determination of fair value of energy-related contracts is
derived from market fundamental analysis. Interpreting this data requires
judgement and Energy Marketing & Trading recognizes that others in the market
place might interpret this data differently. It is reasonably possible that
different interpretations of this data could result in a different estimation of
fair value in periods for which estimates and assumptions are significant
components of estimating fair value. In estimating fair value, Energy Marketing
& Trading considers how we believe others in the market place would interpret
this information in order to further validate that the estimates and assumptions
used in estimating fair value provides the best estimate of the amount that
active market participants would exchange in an arms-length transaction. Once
offsetting contracts are entered into to mitigate commodity price risk, the
reliance on management's assumptions and estimates utilized in the estimation of
the fair value of each contract becomes less significant. However, the
assumptions and estimates surrounding counterparty performance and credit are
still an integral component in the estimation of fair value for these contracts.
Energy Marketing & Trading enhances its valuation techniques, models and
significant estimates and assumptions as better information about the markets in
which Energy Marketing & Trading transacts becomes available.

     Energy Marketing & Trading maintains a control environment surrounding the
operational and valuation processes through its trading policy, credit policy,
and general controls involved in the daily operations of the business. These
policies provide limits on the types of transactions that can be executed,
including term of the contract, the volumetric size of the contract and
commodities underlying the contract. The policies also provide limits on the
amount of credit extended to a single counterparty, the gross value at risk of
the overall
                                        56
<PAGE>

portfolio and the maximum daily loss permitted within the portfolio. These
policies have been approved by Williams' Board of Directors and are administered
through the Williams Risk Management Committee consisting of Energy Marketing &
Trading's Risk Control Officer and other members of Williams' senior management.
The Risk Control Officer is responsible for Energy Marketing & Trading's Risk
Control Group who monitors the compliance with these policies and controls on a
daily basis. The Risk Control Group reports instances in which limits are
exceeded or other significant exceptions to the policies occur to members of the
Risk Management Committee. A notification of noncompliance also includes a plan
to remedy the exception in order to bring the portfolio back into the approved
limits and standards.

     Energy Marketing & Trading's Risk Control Group also performs validations
of the valuation techniques, models and significant estimates and assumption on
a quarterly basis in order to provide additional assurance that the estimates of
fair value provide the best determination of how others in the market might
value the contracts. Validations include functions such as comparing third party
market quotes against estimated prices, comparing contractual terms to those
input into the models, reviewing the market fundamental analysis for
reasonableness and recalculating the significant computations.

  MANAGEMENT OF RISK IN PORTFOLIO

     Energy Marketing & Trading manages the risk assumed from providing energy
risk management services to its customers. This risk results from exposure to
energy commodity prices, volatility and correlation of commodity prices, the
portfolio position of the contracts, liquidity of the market in which the
contract is transacted, interest rates, and counterparty performance and credit.
Energy Marketing & Trading actively seeks to diversify its portfolio in managing
the commodity price risk in the transactions that it executes in various markets
and regions by executing offsetting contracts to manage the commodity price risk
in accordance with parameters established in its trading policy. As of December
31, 2001, approximately $1.1 billion of the value expected to be realized
through 2010 has been managed in a manner whereby fixed-price energy and
energy-related contracts mitigate the exposure in the portfolio to changes in
fair value resulting from future changes in commodity prices.

     Risks surrounding counterparty performance and credit could ultimately
impact the amount and timing of the cash flows expected to be realized. Energy
Marketing & Trading continually assesses this risk and has credit protection
within various agreements to call on additional collateral support in the event
of changes in the creditworthiness of the counterparty. Additional collateral
support could include letters of credit, payment under margin agreements,
guarantees of payment by creditworthy parties, or in some instances, transfers
of the ownership interest in natural gas reserves or power generation assets. In
addition, Energy Marketing & Trading enters into netting agreements to mitigate
counterparty performance and credit risk. Credit default swaps may also be used
to manage the counterparty credit exposure in the energy risk management and
trading portfolio. Under these agreements, Energy Marketing & Trading pays a
fixed rate premium for a notional amount of risk coverage associated with
certain credit events on a referenced obligation. The covered credit events are
bankruptcy, obligation acceleration, failure to pay, and restructuring.

     Energy Marketing & Trading, through Williams, also enters into interest
rate swaps to mitigate the associated interest rate risk from the fair value of
the long dated energy and energy-related contracts by fixing the interest rate
inherent in the portfolio of contracts. At December 31, 2001, Energy Marketing &
Trading had executed interest rate swaps to offset potential interest rate
changes for approximately $1 billion of the expected future cash flows in its
portfolio.

                                        57
<PAGE>

  CHANGES IN FAIR VALUE DURING 2001

     The following table reflects the changes in fair value between December 31,
2000 and 2001.

<Table>
<Caption>
                                                                (MILLIONS)
                                                              --------------
<S>                                                           <C>     <C>
Fair value of contracts outstanding at December 31, 2000....          $  811
  Fair value of contracts outstanding at December 31, 2000
     expected to be realized during 2001....................  $(282)
  Initial recorded value of new contracts entered into
     during 2001............................................    360
  Changes in fair values attributable to change in valuation
     techniques.............................................     77
  Change in net option premiums paid and received...........    733
  Changes attributable to market movements..................    562
                                                              -----
          Total change in fair value during 2001............           1,450
                                                                      ------
Fair value of contracts outstanding at December 31, 2001....          $2,261
                                                                      ======
</Table>

     The following table reconciles the changes in fair value of energy risk
management and trading contracts during 2001 to energy risk management trading
revenues for the period ending December 31, 2001.

<Table>
<Caption>
                                                               (MILLIONS)
                                                               ----------
<S>                                                            <C>
Change in fair value during 2001............................     $1,450
  Change in net option premiums paid and received...........       (733)
  Fair value of contracts outstanding at December 31, 2000
     expected to be realized during 2001....................        282
                                                                 ------
  Net change in fair value impacting revenues...............        999
  Revenues recognized and realized during 2001(1)...........        697
                                                                 ------
Energy risk management and trading revenues during
  2001(2)...................................................     $1,696
                                                                 ------
</Table>

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

(1) Represents the change in fair value of energy and energy-related contracts
    outstanding at December 31, 2000 that were realized during 2001, as well as,
    contracts entered into during 2001 and settled prior to December 31, 2001.

(2) Reflects only revenues from energy risk management and trading activities
    accounted for on a fair value basis. This amount excludes approximately $176
    million of non-trading related revenues accounted for on an accrual basis.

     Changes in fair value during 2001 include the realization of cash flows on
contracts outstanding at December 31, 2000 that were expected to be realized
during 2001. These amounts may have differed from the values that were actually
realized during 2001 due to changes in market prices and other factors that
occurred during 2001 prior to the realization of those cash flows.

     During 2001, Energy Marketing & Trading recognized revenues resulting from
the execution of new long-term contracts providing for energy price risk
management services to customers. See Energy Marketing & Trading's 2001 Results
of Operations for a discussion of the type of contracts executed during the
year. The fair value of new contracts at the time they are executed reflect the
prices negotiated in long-term contracts which includes the premium Energy
Marketing & Trading receives for managing the energy price risk of its
customers. Additionally, as further discussed in Note 1 of the Notes to
Consolidated Financial Statements, Energy Marketing & Trading does not recognize
revenue on contracts until all requirements for revenue recognition have been
achieved. As a result, the fair value of these contracts at the time they were
executed is likely to differ from the fair value of the contracts at the time
they were initially recorded in the financial statements due to changes in
market prices and other factors which may have occurred during such period.

     Energy Marketing & Trading continuously evaluates the valuation techniques
and models used in estimating fair value and modifies and implements new
valuation techniques based upon emerging financial theory in order to provide a
better estimate of fair value.

                                        58
<PAGE>

     A component of the fair value of energy risk management and trading assets
and liabilities includes the amount of cash received and cash paid for premiums
on option contracts. Premiums for options contracts impact energy trading
revenues over the life of the option contract. At December 31, 2001,
approximately $881 million of the net energy risk management and trading assets
and liabilities included cash payments for premiums on option contracts
purchased by Energy Marketing & Trading in excess of cash received for options
sold.

     Changes attributable to market movements reflect the change in fair value
of contracts resulting from changes in quoted market prices of commodities,
interest rates, volatility and correlation of commodity prices. This also
includes improvements in the estimates and assumptions Energy Marketing &
Trading uses in estimating fair value based upon new information and data
available in the marketplace. The most significant component of these changes
during 2001 occurred during the first quarter and prior to the execution of
certain offsetting contracts mitigating the exposure in the portfolio to changes
in fair value from future changes in commodity prices.

FINANCIAL CONDITION AND LIQUIDITY

  LIQUIDITY

     Williams considers its liquidity to come from both internal and external
sources. Certain of those sources are available to Williams (parent) and certain
of its subsidiaries. Williams' unrestricted sources of liquidity, which Williams
believes can be utilized without limitation under existing loan covenants,
consist primarily of the following:

     - Available cash equivalent investments of $1.1 billion at December 31,
       2001, as compared to $854 million at December 31, 2000.

     - $700 million available under Williams' $700 million bank-credit facility
       at December 31, 2001, as compared to $350 million at December 31, 2000.

     - $769 million available under Williams' $2.2 billion commercial paper
       program (or the related bank-credit facility) at December 31, 2001, as
       compared to $4 million at December 31, 2000 under a $1.7 billion
       commercial paper program.

     - Cash generated from operations.

     - Short-term uncommitted bank lines of credit may also be used in managing
       liquidity.

     The availability of borrowings under Williams' $700 million bank-credit
facility and Williams' $2.2 billion bank credit facility which supports the $2.2
billion commercial paper program is subject to specified conditions, which
Williams believes are currently met. These conditions include compliance with
the financial covenants and ratios as defined in the agreements (see Note 13),
absence of default as defined in the agreements, and continued accuracy of
representations and warranties made in the agreements.

     At December 31, 2001, Williams had a $2.5 billion shelf registration
statement effective with the SEC to issue a variety of debt or equity
securities. Subsequent to the issuance of the $1.1 billion of FELINE PACS in
January 2002 as discussed below, the remaining availability on the shelf
registration is approximately $300 million, because Williams registered both the
FELINE PACS and the related common stock to be issued subsequently. In addition,
there are other outstanding registration statements filed with the SEC for
Northwest Pipeline, Texas Gas Transmission and Transcontinental Gas Pipe Line
(each a wholly owned subsidiary of Williams). At March 1, 2002, approximately
$450 million of shelf availability remains under these outstanding registration
statements and may be used to issue a variety of debt securities. Interest rates
and market conditions will affect amounts borrowed, if any, under these
arrangements. Williams believes additional financing arrangements, if required,
can be obtained on reasonable terms.

     Terms of certain borrowing agreements limit transfer of funds to Williams
from its subsidiaries. The restrictions have not impeded, nor are they expected
to impede, Williams ability to meet its cash requirements in the future.

                                        59
<PAGE>

     During 2002, Williams expects to fund capital and investment expenditures,
debt payments and working-capital requirements of its continuing operations
through (1) cash generated from operations, (2) the use of the available portion
of Williams' $700 million bank-credit facility, (3) commercial paper (or the
related bank-credit facility), (4) short-term uncommitted bank lines, (5)
private borrowings, (6) sale or disposal of existing businesses and/or (7) debt
or equity public offerings.

  Credit Ratings

     Williams maintains certain preferred interest and debt obligations that
contain provisions requiring accelerated payment of the related obligations or
liquidation of the related assets in the event of specified levels of declines
in Williams' credit ratings given by Moody's Investor's Service, Standard &
Poor's and Fitch Ratings (rating agencies). Performance by Williams under these
terms include potential acceleration of debt payment and redemption of preferred
interests totaling $816 million at December 31, 2001.

     During the fourth quarter of 2001, Williams announced its intentions to
eliminate its exposure to the "ratings trigger" clauses incorporated in the
above agreements. At the time of this filing, negotiations had commenced with
the respective financial institutions with an objective of completing such
changes during the first half of 2002.

     At December 31, 2001, Williams' credit ratings were above "trigger" levels
by a range of two or more levels. On February 1, 2002, Williams' credit ratings
were maintained by each of the rating agencies, although Standard & Poor's
placed Williams on "negative watch." On February 27, 2002, Moody's Investor's
Service confirmed the investment grade rating of Williams and changed the
outlook from stable to negative. On February 28, 2002, Fitch Ratings affirmed
its investment grade rating of Williams and also changed the outlook from stable
to negative. Standard & Poor's also announced it was maintaining its previous
rating from February 1, 2002.

     In addition to the factors noted above, Williams' energy marketing and
trading business relies upon the investment grade rating of Williams senior
unsecured long-term debt to satisfy credit support requirements of many
counterparties. If Williams' credit ratings were to decline below investment
grade, its ability to participate in energy marketing and trading activity could
be significantly limited. Alternate credit support would be required under
certain existing agreements and would be necessary to support future
transactions. Without an investment grade rating, Williams would be required to
fund margining requirements pursuant to industry standard derivative agreements
with cash, letters of credit or other negotiable instruments. At December 31,
2001, the total notional amounts that could require such funding, in the event
of a credit rating decline of Williams to below investment grade, is
approximately $500 million, before consideration of offsetting positions and
margin deposits from the same counterparties.

     At December 31, 2001, Williams maintained the following credit ratings on
its senior unsecured long-term debt, which are considered to be investment
grade:

<Table>
<S>                                                            <C>
Moody's Investor's Service..................................   Baa2
Standard & Poor's...........................................   BBB
Fitch Ratings...............................................   BBB
</Table>

  Off-Balance Sheet Financing Arrangements and Guarantees of Debt or Other
  Commitments to Third Parties

     During 2000, Williams entered into operating lease agreements with two
special purpose entities (SPE's) and provides a financial guarantee to a third
SPE. The operating lease agreements are with respect to certain Williams travel
center stores, offshore oil and gas pipelines and an onshore gas processing
plant (see Note 13), while the guarantee is with respect to gas turbines under
construction. The SPE's are not consolidated by Williams since their equity is
provided by non-related parties. The sole purpose of these entities is to
facilitate financing for construction and acquisition of the related assets. The
only assets of the SPE's are the constructed or acquired assets, which serve as
collateral for the SPE's liabilities, which are in the form of financing
obligations. The lease terms include a five-year base term with a renewal option
for an additional

                                        60
<PAGE>

five-year term. The funding obligations, if any, of Williams with respect to
these entities occurs solely through the lease commitments and the financial
guarantee. Williams has an option to purchase the leased assets during the lease
terms at amounts approximating the lessor's cost and has an option to acquire
the gas turbines at actual cost of construction. For the operating leases,
Williams provides residual value guarantees equal to 85 percent of the lessor's
cost on the completed travel center stores and 89.9 percent of the lessor's
cost, less the present value of actual lease payments, on the offshore oil and
gas pipelines and the onshore gas processing plant. The financial guarantee with
respect to the gas turbines is also a residual value guarantee equal to a
maximum of 89.9 percent of the actual cost of construction. In the event that
Williams does not exercise its purchase option, Williams expects the fair market
value of the covered assets to substantially reduce its obligation under the
residual value guarantees. If these SPE's were consolidated into Williams'
Consolidated Balance Sheet at December 31, 2001, they would increase assets and
long-term debt by approximately $364 million.

     Williams provides a guarantee of approximately $127 million towards project
financing of energy assets owned and operated by an entity in which Williams
owns an interest of 50 percent. This obligation or guarantee is not consolidated
in Williams' balance sheet as Williams does not maintain a controlling interest
in the entity and therefore follows equity accounting for its interest.
Performance on the guarantees generally would occur upon a failure of payment by
the financed entity or certain events of default related to the guarantors.
These events of default primarily relate to bankruptcy and/or insolvency of the
guarantors. At December 31, 2001, there were no events of default by the
guarantors or delinquent payments by the financed entity with respect to the
project financings.

     Williams is a party to a put agreement arising from its sale of Ferrellgas
senior common units in April 2001 (see Note 4) whereby the purchaser's lenders
can require Williams to repurchase the units upon certain events of default by
the purchaser or the failure or default by the seller (Williams) under any of
its debt obligations greater than $60 million. The total outstanding under the
put agreement at December 31, 2001 was $99.6 million. Williams' contingent
obligation reduces as purchaser's payments are made to the lender. The
purchaser's agreement is for a five year term, expiring December 30, 2005. The
put agreement represents a contingent liability and is not reflected on
Williams' balance sheet. At December 31, 2001, there have been no events of
default and the purchaser has performed as required under payment terms with the
lender.

     For each of the Williams' guarantees discussed above, Williams has
currently assessed that its future performance under each of the agreements as
less than probable for purposes of SFAS No. 5, "Accounting for Contingencies."
This assessment is based on information available at December 31, 2001 affirming
there are no events of default on behalf of Williams as a guarantor and none of
the related entities are delinquent with respect to the supported obligations.

     Williams has agreements to sell, on an ongoing basis, certain of its
accounts receivable to qualified special-purpose entities ("QSPE"). Under these
agreements, Williams is able to sell up to $450 million of accounts receivables.
These QSPEs are not consolidated; however, if these QSPEs were consolidated at
December 31, 2001, assets and debt would increase by $420 million.

  WCG Separation

     Since the initial equity offering by WCG in October 1999, the sources of
liquidity for WCG had been separate from Williams' sources of liquidity. The
reduction to Williams' stockholders' equity as a result of the separation in
April 2001 was approximately $2.0 billion. Williams, with respect to shares of
WCG's common stock that Williams retained, has committed to the Internal Revenue
Service (IRS) to dispose of all of the WCG shares that it retains as soon as
market conditions allow, but in any event not longer than five years after the
spinoff. As part of a separation agreement and subject to a favorable ruling by
the IRS that such a limitation is not inconsistent with any ruling issued to
Williams regarding the tax-free treatment of the spinoff, Williams has agreed
not to dispose of the retained WCG shares for three years from the date of
distribution and must notify WCG of an intent to dispose of such shares.
However, on February 28, 2002, Williams filed with the IRS a request to withdraw
its request for a ruling that the agreement between Williams and WCG that
Williams would not transfer any retained WCG stock for a three-year period from
the spinoff would not

                                        61
<PAGE>

be inconsistent with the favorable tax-free treatment ruling issued to Williams.
Williams represented in the withdrawal request that it had abandoned its intent
to make the lock-up effective, thereby making the ruling request moot. For
further discussion of separation agreements and potential tax exposure as a
result of the WCG separation, see Note 3 of the Notes to Consolidated Financial
Statements.

     Additionally, Williams, prior to the spinoff and in an effort to strengthen
WCG's capital structure, entered into an agreement under which Williams
contributed an outstanding promissory note from WCG of approximately $975
million and certain other assets, including a building under construction and a
commitment to complete the construction. In return, Williams received 24.3
million newly issued common shares of WCG.

     Williams, prior to the spinoff, provided indirect credit support for $1.4
billion of WCG's Note Trust Notes through a commitment to make available
proceeds of a Williams equity issuance or other permitted redemption sources in
the event any one of the following were to occur: (1) a WCG default; (2)
downgrading of Williams' senior unsecured debt to Ba1 or below by Moody's
Investor's Service, BB or below by Standard & Poor's, or BB+ or below by Fitch
Ratings if Williams' common stock closing price is below $30.22 for ten
consecutive trading days while such downgrade is in effect; or (3) to the extent
proceeds from WCG's refinancing or remarketing of the WCG Note Trust Notes prior
to March 2004 produces proceeds of less than $1.4 billion.

     On March 5, 2002, Williams received the requisite approvals on its consent
solicitation to amend the terms of the WCG Note Trust Notes. The amendment,
among other things, eliminates acceleration of the Notes due to a WCG bankruptcy
or a Williams credit rating downgrade. The amendment also affirms Williams'
obligations for all payments due with respect to the WCG Note Trust Notes, which
are due March 2004, and allows Williams to fund such payments from any available
sources. With the exception of the March and September 2002 interest payments,
totaling $115 million, WCG remains indirectly obligated to reimburse Williams
for any payments Williams is required to make in connection with the WCG Note
Trust Notes.

     Williams has provided a guarantee of WCG's obligations under a 1998
transaction in which WCG entered into an operating lease agreement covering a
portion of its fiber-optic network. The total cost of the network assets covered
by the lease agreement is $750 million. The lease term initially totaled five
years and, if renewed, could extend to seven years. WCG has an option to
purchase the covered network assets during the lease term at an amount
approximating lessor's cost. On March 6, 2002, a representative of WCG notified
Williams that WCG intends to issue a notice so as to be able to purchase the
assets in the immediate future. As a result of an agreement between Williams and
WCG's revolving credit facility lenders, if Williams gains control of the
network assets covered by the lease, Williams may be obligated to return the
assets to WCG and the obligation of WCG to compensate Williams for such property
may be subordinated to the interests of WCG's revolving credit facility lenders
and may not mature any earlier than one year after the maturity of WCG's
revolving credit facility.

     Williams has also provided guarantees on certain performance obligations of
WCG totaling approximately $57 million.

     In third-quarter 2001, Williams purchased the Williams Technology Center
and other ancillary assets (Technology Center) and three corporate aircraft from
WCG for $276 million which represents the approximate actual cost of
construction of the Williams Technology Center and the acquisition cost of the
ancillary assets and aircraft. Williams then entered into long-term lease
arrangements under which WCG is the sole lessee of the Technology Center and
aircraft (see Note 13). As a result of this transaction, Williams' Consolidated
Balance Sheet includes $28.8 million in current accounts and notes receivable
and $137.2 million in noncurrent other assets and deferred charges, net of
allowance of $103.2 million, relating to amounts due from WCG. Additionally,
receivables include amounts due from WCG of approximately $27 million at
December 31, 2001 which includes a $21 million deferred payment (net of
allowance of $85 million) for services provided to WCG due March 15, 2002. In
February 2002, the deferred payment for services provided to WCG was extended to
September 15, 2002.

                                        62
<PAGE>

     Recent disclosures and announcements by WCG, including WCG's recent
announcement that it might seek to reorganize under the U.S. Bankruptcy Code,
have resulted in Williams concluding that it is probable that it will not fully
realize the $375 million of receivables from WCG at December 31, 2001 nor
recover its remaining $25 million investment in WCG common stock. In addition,
Williams has determined that it is probable that it will be required to perform
under the $2.21 billion of guarantees and payment obligations discussed above.
Other events that have affected Williams' assessment include the credit
downgrades of WCG, the bankruptcy of a significant competitor announced on
January 28, 2002, and public statements by WCG regarding an ongoing
comprehensive review of its bank secured credit arrangements. As a result of
these factors, Williams, using the best information available at the time and
under the circumstances, has developed an estimated range of loss related to its
total WCG exposure. Management utilized the assistance of external legal counsel
and an external financial and restructuring advisor in making estimates related
to its guarantees and payment obligations and ultimate recovery of the
contractual amounts receivable from WCG. At this time, management believes that
no loss within the range is more probable than another. Accordingly, Williams
has recorded the $2.05 billion minimum amount of the range of loss which is
reported in the Consolidated Statement of Operations as a $1.84 billion pre-tax
charge to discontinued operations and a $213 million pre-tax charge to
continuing operations. Williams recognized a related deferred tax benefit in the
Consolidated Statement of Operations of $742.5 million ($68.9 million in
continuing operations and $673.6 million in discontinued operations). The
ultimate amount of tax benefit realized could be different from the deferred tax
benefit recorded, as influenced by potential changes in federal income tax laws
and the circumstances upon the actual realization of the tax benefits from WCG's
balance sheet restructuring program.

     The charge to discontinued operations of $1.84 billion includes the minimum
amount of the estimated range of loss from performance on $2.21 billion of
guarantees and payment obligations and approximately $16 million in expenses.
With the exception of the interest on the Note Trust Notes and the expenses,
Williams has assumed for purposes of this estimated loss that it will become an
unsecured creditor of WCG for all or part of the amounts paid under the
guarantees and payment obligations. However, it is probable that Williams will
not be able to recover a significant portion of the receivables. The estimated
loss from the performance of the guarantees and payment obligations is based on
the overall estimate of recoveries on amounts receivable discussed below. Due to
the amendment of the WCG Note Trust Notes discussed above, $1.1 billion of the
accrued loss will be classified as a long-term liability in the Consolidated
Balance Sheet.

     The charge to continuing operations of $213 million includes estimated
losses from an assessment of the recoverability of carrying amounts of the $106
million deferred payment for services provided to WCG, the $269 million minimum
lease payments receivable from WCG, and a remaining $25 million investment in
WCG common stock. The $85 million provision on the deferred payment is based on
the overall estimate of recoveries on amounts receivable using the same
assumptions on collectibility as discussed below. The $103 million provision on
the minimum lease payments receivable is based on an estimate of the fair value
of the leased assets. The $25 million write-off of the WCG investment is based
on management's assessment of realization as a result of WCG's balance sheet
restructuring program.

     The estimated range of loss assumes that Williams, as a creditor of WCG,
will recover only a portion of its claims against WCG. Such claims include a
$2.21 billion receivable from performance on guarantees and payment obligations
and a $106 million deferred payment for services provided to WCG. With the
assistance of external legal counsel and an external financial and restructuring
advisor, and considering the best information available at the time and under
the circumstances, management developed a range of loss on these receivables
with a minimum loss of 80 percent on claims in a bankruptcy of WCG. Estimating
the range of loss as a creditor involves making complex judgments and
assumptions about uncertain outcomes. The actual loss may ultimately differ from
the recorded loss due to changes in numerous factors, which include, but are not
limited to, the future demand for telecommunications services and the state of
the telecommunications industry, WCG's individual performance, and the nature of
the restructuring of WCG's balance sheet. There could be additional losses
recognized in the future, a portion of which may be reflected as discontinued
operations.

                                        63
<PAGE>

     The minimum amount of loss in the range is estimated based on recoveries
from a successful reorganization process under Chapter 11 of the U.S. Bankruptcy
Code. Recoveries after a successful reorganization process depend, among other
things, on the impact of a bankruptcy on WCG's financial performance and WCG's
ability to continue uninterrupted business services to its customers and to
maintain relationships with vendors. To estimate recoveries of the unsecured
creditors, Williams estimated an enterprise value of WCG using a present value
analysis and reduced the enterprise value by the level of secured debt which may
exist in WCG's restructured balance sheet. In its estimate of WCG's enterprise
value, Williams considered a range of cash flow estimates based on information
from WCG and from other external sources. Future cash flow projections are
valued using discount rates ranging from 17 percent to 25 percent. The range of
cash flows is based on different scenarios related to the growth, if any, of
WCG's revenues and the impact that a bankruptcy may have on revenue growth. The
range of discount rates considers WCG's assumed restructured capital structure
and the market return that equity investors may require to invest in a
telecommunications business operating in the current distressed industry
environment. The range of loss also considers recoveries based on transaction
values from recent telecommunications restructurings and from a liquidation of
WCG's assets.

     Should WCG go into bankruptcy under Chapter 7 of the U.S. Bankruptcy Code,
recoveries under a liquidation include factors such as the nature of WCG's
assets, the value of operating assets in a distressed telecommunications market,
the cost of liquidation, operating losses during the period of liquidation, the
length of liquidation period and claims of creditors superior to those of
Williams' unsecured claims.

     Significant items reflected as discontinued operations in the Consolidated
Statement of Cash Flows include the following:

     - In 2000, WCG issued $1 billion in long-term debt obligations consisting
       of $575 million in 11.7 percent notes due 2008 and $425 million in 11.875
       percent notes due 2010. In October 1999, WCG completed an initial public
       equity offering, private equity offerings and public debt offerings that
       yielded total net proceeds of approximately $3.5 billion. The initial
       public equity offering yielded net proceeds of approximately $738 million
       (see Note 3). In concurrent investments by SBC Communications Inc., Intel
       Corporation and Telefonos de Mexico, additional shares of common stock
       were privately sold for proceeds of $738.5 million. Concurrent with these
       equity transactions, WCG issued high-yield public debt of approximately
       $2 billion. Proceeds from the 1999 equity and debt transactions were used
       to repay WCG's 1999 borrowings under an interim short-term bank-credit
       facility and the $1.05 billion bank-credit agreement. The remaining
       proceeds from the 1999 transactions and the 2000 debt proceeds were used
       to fund 2000 WCG's operating losses, continued construction of WCG's
       national fiber-optic network and other capital and investment expansion
       opportunities. During 2000, WCG received net proceeds of approximately
       $240.5 million from the issuance of five million shares of 6.75 percent
       redeemable cumulative preferred stock.

     - Capital expenditures of WCG, primarily for the construction of the
       fiber-optic network, were $3.4 billion in 2000, $1.7 billion in 1999 and
       $304 million in 1998.

     - In 1999, WCG paid $265 million in cash to increase its investment in ATL
       (a Brazilian telecommunications business).

  OPERATING ACTIVITIES

     Cash provided by continuing operating activities was:  2001 -- $1.8
billion; 2000 -- $594 million; and 1999 -- $1.5 billion. The 2001 $517.1 million
decrease in margin deposits is due primarily to lower deposits required by
counterparties related to trading activities at Energy Marketing & Trading. The
2001 $201.4 million increase in other current assets is due primarily to
increases associated with current derivative assets. The 2001 increase in other
assets and deferred charges of $455.0 million is due primarily to the increases
associated with noncurrent derivative assets and the minimum lease payments
receivable (net of an allowance for doubtful accounts) due from WCG related to
the long-term lease arrangement with WCG (see Note 3). The increase in
derivative assets reflects the impact of SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," which requires these contracts
to be recorded at fair value.
                                        64
<PAGE>

  FINANCING ACTIVITIES

     Net cash provided by financing activities of continuing operations was:
2001 -- $2.0 billion; 2000 -- $2.0 billion; and 1999 -- $880 million. Long-term
debt proceeds, net of principal payments, were $1.9 billion, $235 million and
$682 million, during 2001, 2000 and 1999, respectively. Notes payable payments,
net of notes payable proceeds, were $801 million in 2001. Notes payable
proceeds, net of notes payable payments were $1.5 billion and $210 million
during 2000 and 1999, respectively. The increase in net new borrowings during
2001, 2000 and 1999 reflects borrowings to fund capital expenditures,
investments and acquisitions of businesses.

     The proceeds from issuance of Williams common stock in 2001 reflect $1.3
billion in net proceeds from approximately 38 million shares of common stock
issued by Williams in January 2001 in a public offering at $36.125 per share.
Additionally, the proceeds from issuance of Williams common stock in 2001, 2000
and 1999 reflect exercise of stock options under the plans providing for
common-stock-based awards to employees and to non-employee directors.

     Dividends paid on common stock increased $75.2 million in 2001 reflecting
an increase in the number of shares outstanding and an increase in the per share
dividends. The number of shares increased due primarily to the 38 million shares
issued in January 2001 and the 29.6 million shares issued in the Barrett
acquisition. Third-quarter 2001 and fourth-quarter 2001 dividends increased to
18 cents per share and 20 cents per share, respectively, up from the quarterly
dividend of 15 cents per share in 2000.

     Proceeds from sale of limited partners units of consolidated partnership
reflect an initial public offering of Williams Energy Partners L.P. (WEP), a
wholly owned partnership which owns and operates a diversified portfolio of
energy assets, of approximately 4.6 million common units at $21.50 per unit for
net proceeds of approximately $92 million. The initial public offering
represents 40 percent of the units, and Williams retained a 60 percent interest
in the partnership, including its general partner interest.

     In December 2001, Williams received net proceeds of $95.3 million from sale
of a non-controlling preferred interest in Piceance Production Holdings LLC to
an outside investor (see Note 14). During 2000, Williams received net proceeds
totaling $546.8 million from the sale of a limited liability company member
interest to an outside investor (see Note 14).

     In April 2001, Williams redeemed the Williams obligated mandatorily
redeemable preferred securities of Trust holding only Williams indentures for
$194 million. Proceeds from the sale of the Ferrellgas senior common units held
by Williams were used for this redemption. In 1999, Williams received proceeds
of $175 million from the sale of the Williams obligated mandatorily redeemable
preferred securities.

     In connection with the Barrett acquisition, Williams' Consolidated Balance
Sheet includes $150 million of 7.55 percent notes due 2007, which are debt
obligations guaranteed by Williams (parent). For further discussion of the
Barrett Resources Corporation acquisition, see Note 2.

     Long-term debt at December 31, 2001 was $9.5 billion, compared with $6.8
billion at December 31, 2000 and $7.2 billion at December 31, 1999. At December
31, 2001 and 2000, $844 million and $800 million, respectively, of current debt
obligations were classified as noncurrent obligations based on Williams' intent
and ability to refinance on a long-term basis. The 2001 increase in long-term
debt is due primarily to the $1.1 billion of senior unsecured debt securities
issued in January 2001 and the $1.5 billion of long-term debt securities issued
in August 2001 primarily to replace $1.2 billion borrowed under a $1.5 billion
short-term agreement originated in June 2001 related to the cash portion of the
Barrett acquisition. The long-term debt to debt-plus-equity ratio (including
consolidated WCG debt for 2000 and 1999) was 61.1 percent at December 31, 2001,
compared to 63.7 percent and 62.3 percent at December 31, 2000 and 1999,
respectively. If short-term notes payable and long-term debt due within one year
were included in the calculations, these ratios would be 66.4 percent, 70.5
percent and 65.9, respectively. Additionally, the long-term debt to debt plus
equity as calculated for covenants under certain debt agreements was 61.5
percent at December 31, 2001.

     In January 2002, Williams issued 44 million publicly traded units, more
commonly known as FELINE PACS, that include a senior debt security and an equity
purchase contract. The debt has a term of five years,

                                        65
<PAGE>

and the equity purchase contract will require the company to deliver Williams
common stock to holders after three years based on a previously agreed rate. Net
proceeds from this issuance were approximately $1.1 billion (see Note 23).

  INVESTING ACTIVITIES

     Net cash used by investing activities of continuing operations was:
2001 -- $3.5 billion; 2000 -- $2.3 billion; and 1999 -- $2.0 billion. Capital
expenditures of Energy Marketing & Trading, primarily to construct power
generation plants, were $104 million in 2001, $64 million in 2000 and $83
million in 1999. Capital expenditures of Energy Services, primarily to carry out
drilling programs and acquire, expand and modernize gathering and processing
facilities, terminals and refineries, were $931 million in 2001, $813 million in
2000 and $1.3 billion in 1999. Capital expenditures of Gas Pipeline, primarily
to expand deliverability into the east and west coast markets and upgrade
current facilities, were $855 million in 2001, $512 million in 2000 and $360
million in 1999. Budgeted capital expenditures and investments for continuing
operations for 2002 are estimated to be approximately $3.2 billion, including
expansion and modernization of pipeline systems, gathering and processing
facilities, refineries and international investment activities. Williams stated
in December 2001 that it had reduced its planned 2002 capital expenditure
program in an effort to maintain its investment grade rating. Additional
reductions may be necessary to maintain its investment grade rating, however,
Williams will evaluate other alternatives in order to maintain their capital
expenditure program including sales of additional assets.

     On June 11, 2001, Williams acquired 50 percent of Barrett's outstanding
common stock in a cash tender offer of $73 per share for a total of
approximately $1.2 billion. On August 2, 2001, Williams completed the
acquisition of Barrett by issuing 29.6 million shares of Williams common stock
in exchange for the remaining Barrett shares.

     The increase in investments is due primarily to the development of
Williams' joint interest in the Gulfstream project. The increase in proceeds
received from disposition of investments and other assets reflects Williams'
sale of the Ferrellgas senior common units to an affiliate of Ferrellgas for
proceeds of $199 million in April 2001 and the sale of certain convenience
stores for approximately $150 million in May 2001. The purchase of assets
subsequently leased to seller reflects Williams' purchase of the Williams
Technology Center, other ancillary assets and three corporate aircraft for $276
million.

     In October 2000, Williams acquired various energy-related operations in
Canada for approximately $540 million. Included in the purchase were interests
in several NGL extraction and fractionation plants, NGL transportation pipeline
and storage facilities, and a natural gas processing plant.

     During 1999, Williams purchased a business which includes a petrochemical
plant and natural gas liquids transportation, storage and other facilities for
$163 million in cash. Also during 1999, Williams made various cash investments
and advances totaling $347 million including a $75 million equity investment in
and a $75 million loan to AB Mazeikiu Nafta, Lithuania's national oil company,
$78 million in various natural gas and petroleum products pipeline joint
ventures, and other joint ventures and investments. In addition, Williams made
$139 million of investments in the Alliance natural gas pipeline and processing
plant during 1999 of which $93.5 million was financed with a note payable which
was paid in 2000. In December 1999, Williams sold its retail propane business to
Ferrellgas for $268.7 million in cash and $175 million in senior common units of
Ferrellgas.

                                        66
<PAGE>

  COMMITMENTS

     The table below summarizes some of the more significant contractual
obligations and commitments by period. This table does not include obligations
related to guarantees or payment obligations related to WCG (see Note 3).

<Table>
<Caption>
                                        2002     2003     2004     2005     2006    THEREAFTER    TOTAL
                                       ------   ------   ------   ------   ------   ----------   -------
                                                                  (MILLIONS)
<S>                                    <C>      <C>      <C>      <C>      <C>      <C>          <C>
Notes payable........................  $1,425   $   --   $   --   $   --   $   --    $    --     $ 1,425
Long-term debt, including current
  portion............................   1,037      732    1,562      282    1,156      5,759      10,528
Operating leases.....................      82       58       47       37       29        176         429
Preferred interest in consolidated
  subsidiaries(1)....................     200      135       --      560      100         --         995
Fuel conversion and other service
  contracts(2).......................     344      420      443      446      449      5,926       8,028
                                       ------   ------   ------   ------   ------    -------     -------
Total................................  $3,088   $1,345   $2,052   $1,325   $1,734    $11,861     $21,405
                                       ======   ======   ======   ======   ======    =======     =======
</Table>

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

(1) Amount relates to that invested by an outside investor for which the end of
    the initial priority return period is shown.

(2) Energy Marketing & Trading has entered into certain contracts giving
    Williams the right to receive fuel conversion services as well as certain
    other services associated with electric generation facilities that are
    either currently in operation or are to be constructed at various locations
    throughout the continental United States. These contracts are included at
    fair value within energy risk management and trading assets and liabilities.

     Additionally, at December 31, 2001, commitments for construction and
acquisition of property, plant and equipment are approximately $771 million. At
December 31, 2001, commitments for additional investments in Gulfstream
Pipeline, LLC, certain international cost investments and advances to Longhorn
Partners Pipeline, L.P. are $233 million.

  RECENTLY ISSUED ACCOUNTING STANDARDS AND POTENTIAL NEW ACCOUNTING STANDARDS

     See Note 1 for a discussion of SFAS No. 141, "Business Combinations," SFAS
No. 142, "Goodwill and Other Intangible Assets," SFAS No. 143, "Accounting for
Asset Retirement Obligations" and SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets."

     The accounting for Energy Marketing & Trading's energy-related contracts,
which include contracts such as transportation, storage, load servicing and
tolling agreements, requires Williams to assess whether certain of these
contracts are executory service arrangements or leases pursuant to SFAS No. 13,
"Accounting for Leases." There currently is not extensive authoritative guidance
for determining when an arrangement is a lease or an executory service
arrangement. As a result, Williams assesses each of its energy-related contracts
and makes the determination based on the substance of each contract focusing on
factors such as physical and operational control of the related asset, risks and
rewards of owning, operating and maintaining the related asset and other
contractual terms. The Emerging Issues Task Force of the Financial Accounting
Standards Board is in the preliminary stage of addressing Issue No. 01-8,
"Determining Whether an Arrangement is a Lease," and has assigned the Issue to a
Working Group for further consideration. As the Issue is in the preliminary
phase, the outcome and related impact to Williams is not yet determinable.

  EFFECTS OF INFLATION

     Williams' cost increases in recent years have benefited from relatively low
inflation rates during that time. Approximately 43 percent of Williams'
property, plant and equipment is at Gas Pipeline and approximately 55 percent is
at Energy Services. Approximately 87 percent of Gas Pipeline's and 60 percent of
Energy Services' property, plant and equipment has been acquired or constructed
since 1995, a period of relatively low

                                        67
<PAGE>

inflation. Approximately 17 percent of Energy Services' increase was the result
of the 2001 Barrett acquisition. Gas Pipeline is subject to regulation, which
limits recovery to historical cost. While amounts in excess of historical cost
are not recoverable under current FERC practices, Williams believes it will be
allowed to recover and earn a return based on increased actual cost incurred to
replace existing assets. Cost-based regulation along with competition and other
market factors may limit the ability to recover such increased costs. Within
Energy Services, operating costs are influenced to a greater extent by specific
price changes in oil and gas and related commodities than by changes in general
inflation. Crude, refined product, natural gas and natural gas liquids prices
are particularly sensitive to OPEC production levels and/or the market
perceptions concerning the supply and demand balance in the near future.

  ENVIRONMENTAL

     Williams is a participant in certain environmental activities in various
stages involving assessment studies, cleanup operations and/or remedial
processes. The sites, some of which are not currently owned by Williams (see
Note 19), are being monitored by Williams, other potentially responsible
parties, the U.S. Environmental Protection Agency (EPA), or other governmental
authorities in a coordinated effort. In addition, Williams maintains an active
monitoring program for its continued remediation and cleanup of certain sites
connected with its refined products pipeline activities. Williams has both joint
and several liability in some of these activities and sole responsibility in
others. Current estimates of the most likely costs of such cleanup activities
are approximately $98 million, all of which is accrued at December 31, 2001.
Williams expects to seek recovery of approximately $42 million of the accrued
costs through future natural gas transmission rates. Williams will fund these
costs from operations and/or available bank-credit facilities. Estimates of the
most likely costs of cleanup are generally based on completed assessment
studies, preliminary results of studies or other similar cleanup operations. At
December 31, 2001, certain assessment studies were still in process for which
the ultimate outcome may yield significantly different estimates of most likely
costs. Therefore, the actual costs incurred will depend on the final amount,
type and extent of contamination discovered at these sites, the final cleanup
standards mandated by the EPA or other governmental authorities, and other
factors.

     Williams is subject to the federal Clean Air Act and to the federal Clean
Air Act Amendments of 1990 which require the EPA to issue new regulations.
Williams is also subject to certain states' regulations. In September 1998, the
EPA promulgated rules designed to mitigate the migration of ground-level ozone
in certain states. Williams estimates that capital expenditures necessary to
install emission control devices over the next five years to comply with rules
will be between $186 million and $206 million. The actual costs incurred will
depend on the final implementation plans developed by each state to comply with
these regulations. In December 1999, standards promulgated by the EPA for
tailpipe emissions and the content of sulfur in gasoline were announced.
Williams estimates that capital expenditures necessary to bring its two
refineries into compliance over the next five years will be approximately $385
million. The actual costs incurred will depend on the final implementation
plans. In addition to the above mentioned capital expenditures pertaining to the
Clean Air Act and amendments, estimated future capital expenditures as of
December 31, 2001, for various compliance issues across the company are
approximately $202 million.

     On July 2, 2001, the EPA issued an information request asking for
information on oil releases and discharges in any amount from Williams'
pipelines, pipeline systems, and pipeline facilities used in the movement of oil
or petroleum products, during the period July 1, 1998 through July 2, 2001. In
November 2001, Williams furnished its response.

     In July 1999, Transco received a letter stating that the U.S. Department of
Justice (DOJ), at the request of the EPA, intends to file a civil action against
Transco arising from its waste management practices at Transco's compressor
stations and metering stations in 11 states from Texas to New Jersey. Transco,
the EPA and the DOJ agreed to settle this matter by signing a Consent Decree
that provides for a civil penalty of $1.4 million.

     Williams Field Services (WFS), an Energy Services subsidiary, received a
Notice of Violation (NOV) from the EPA in February 2000. WFS received a
contemporaneous letter from the DOJ indicating that the DOJ will also be
involved in the matter. The NOV alleged violations of the Clean Air Act at a gas

                                        68
<PAGE>

processing plant. WFS, the EPA and the DOJ agreed to settle this matter for a
penalty of $850,000. In the course of investigating this matter, WFS discovered
a similar potential violation at the plant and disclosed it to the EPA and the
DOJ. In December 2001, the EPA, the DOJ and WFS agreed to settle this
self-reported matter by signing a Consent Decree that provides for a penalty of
$950,000.

     OTHER

     In January, 2002, Williams announced the goal to reduce the company's
annual operating expenses based on the company's current cost structure by $50
million, effective 2003. Management is evaluating its organizational structure
to determine effective and efficient ways to align services to meet Williams'
current business requirements as an energy-only company. In conjunction with
this goal, Williams is offering an enhanced-benefit early retirement option to
certain employee groups. The potential impact to 2002 expense, assuming election
by 100 percent of those eligible for the early retirement option, would be
approximately $80 million. Williams does not anticipate that all eligible
employees will elect the option. Additionally, Williams also will offer
severance and redeployment services to employees whose positions are eliminated
as a result of the organizational changes.

     Williams has also announced plans to sell its midwest petroleum products
pipeline and on-system terminals. A potential buyer would be Williams Energy
Partners L.P., a consolidated entity.

                                        69
<PAGE>

ITEM 7A.  MARKET RISK DISCLOSURES

  Interest Rate Risk

     Williams' current interest rate risk exposure is related primarily to its
debt portfolio and its energy risk management and trading portfolio. In 2000,
Williams' interest rate exposure also related to an investment in Ferrellgas
Partners L.P. senior common units and Williams obligated mandatorily redeemable
preferred securities of Trust.

     Williams' interest rate risk exposure resulting from its debt portfolio is
influenced by short-term rates, primarily LIBOR-based borrowings from commercial
banks and the issuance of commercial paper, and long-term U.S. Treasury rates.
To mitigate the impact of fluctuations in interest rates, Williams targets to
maintain a significant portion of its debt portfolio in fixed rate debt.
Williams has also utilized interest-rate swaps to change the ratio of its fixed
and variable rate debt portfolio based on management's assessment of future
interest rates, volatility of the yield curve and Williams' ability to access
the capital markets in a timely manner. Williams periodically enters into
interest-rate forward contracts to establish an effective borrowing rate for
anticipated long-term debt issuances. The maturity of Williams' long-term debt
portfolio is partially influenced by the expected life of its operating assets.

     At December 31, 2001 and 2000, the amount of Williams' fixed and variable
rate debt was at targeted levels. Williams has traditionally maintained an
investment grade credit rating as one aspect of managing its interest rate risk.
In order to fund its 2002 capital expenditure plan, Williams will need to access
various sources of liquidity, which will likely include traditional borrowing
and leasing markets.

     Williams also has interest rate risk in long-dated energy-related contracts
included in its energy risk management and trading portfolio. The value of these
transactions can fluctuate daily based on movements in the underlying interest
rate curves used to assign value to the transactions. Williams strives to
mitigate the associated interest rate risk from the value of these transactions
by fixing the underlying interest rate inherent in the energy risk management
and trading portfolio. During 2001, Williams began actively managing this
exposure as a component of its targeted levels of fixed to floating obligations.
Williams uses both floating to fixed interest rate swaps and other derivative
transactions to manage this variable rate exposure.

     The tables on the following page provide information as of December 31,
2001 and 2000, about Williams' interest rate risk sensitive instruments. For
investment in Ferrellgas Partners L.P. senior common units, notes payable,
long-term debt and Williams obligated mandatorily redeemable preferred
securities of Trust, the table presents principal cash flows and
weighted-average interest rates by expected maturity dates. For interest-rate
swaps, the table presents notional amounts and weighted-average interest rates
by contractual maturity dates. Notional amounts are used to calculate the
contractual cash flows to be exchanged under the interest-rate swaps.

                                        70
<PAGE>

<Table>
<Caption>
                                                                                        FAIR VALUE
                                                                                       DECEMBER 31,
                           2002    2003   2004   2005    2006    THEREAFTER   TOTAL        2001
                          ------   ----   ----   ----   ------   ----------   ------   ------------
                                                    (DOLLARS IN MILLIONS)
<S>                       <C>      <C>    <C>    <C>    <C>      <C>          <C>      <C>
Notes payable...........  $1,425   $ --   $ --   $ --   $   --     $   --     $1,425      $1,425
Interest rate...........     3.3%
Long-term debt,
  including current
  portion:
  Fixed rate............  $  833   $330   $621   $282   $1,156     $5,759     $8,981      $9,164
  Interest rate.........     7.2%   7.3%   7.3%   7.3%     7.4%       7.6%
  Variable rate.........  $  204   $402   $941   $ --   $   --     $   --     $1,547      $1,547
  Interest rate(1)
Interest rate swaps(2)
</Table>

<Table>
<Caption>
                                                                                        FAIR VALUE
                                                                                       DECEMBER 31,
                           2001     2002    2003   2004   2005   THEREAFTER   TOTAL        2000
                          ------   ------   ----   ----   ----   ----------   ------   ------------
                                                    (DOLLARS IN MILLIONS)
<S>                       <C>      <C>      <C>    <C>    <C>    <C>          <C>      <C>
Assets:
Investment -- Ferrellgas
  Partners L.P. senior
  common units..........  $   --   $  194   $ --   $ --   $ --     $   --     $  194      $  194
  Fixed rate............    10.0%    10.0%    --     --     --         --
Liabilities:
  Notes payable.........  $2,037   $   --   $ --   $ --   $ --     $   --     $2,037      $2,037
  Interest rate.........     7.2%      --     --     --     --         --
  Long-term debt,
     including current
     portion:
     Fixed rate.........  $1,115   $1,032   $306   $356   $254     $2,972     $6,035      $6,092
     Interest rate......     7.1%     7.2%   7.3%   7.3%   7.3%       7.6%
     Variable rate......  $  524   $  154   $402   $201   $350     $  799     $2,430      $2,430
     Interest rate(1)
Williams obligated
  mandatorily redeemable
  preferred securities
  of Trust..............  $   --   $  190   $ --   $ --   $ --     $   --     $  190      $  192
Fixed rate..............     7.9%     7.9%    --     --     --         --
Interest rate swaps:
Pay variable/receive
  fixed.................  $  461   $   --   $ --   $ --   $ --     $   --     $  461      $   (3)
Pay rate(3)
Receive rate............     6.0%      --     --     --     --         --
Pay fixed/receive
  variable..............  $   53   $   59   $ 65   $ 72   $ 79     $  133     $  461      $  (30)
Pay rate................     7.8%     8.0%   8.0%   8.0%   8.0%       8.0%
Receive rate(3)
</Table>

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

(1) 2001 -- Weighted average interest rate is LIBOR plus one percent for all
    years; 2000 -- Weighted average interest rate is LIBOR plus .70 percent for
    all years.

(2) The interest rate swaps which are outstanding at December 31, 2001 are
    reflected at fair value within energy risk management and trading assets and
    liabilities in the Consolidated Balance Sheet as these swaps are entered
    into to mitigate the interest rate risk inherent in the energy risk
    management and trading portfolio. Notional amounts total approximately $1
    billion at December 31, 2001.

(3) LIBOR

                                        71
<PAGE>

COMMODITY PRICE RISK

     Energy Marketing & Trading has trading operations that incur commodity
price risk as a consequence of providing price-risk management services to
third-party customers. The most significant exposure to commodity price-risk is
associated with the natural gas and electricity markets in the United States.
This exposure is primarily within the portfolio of transportation, storage,
full-requirements, load serving and power tolling contracts. Energy Marketing &
Trading also has commodity price-risk exposure to crude oil, refined products,
electricity, natural gas and natural gas liquids markets in the United States
and the natural gas markets in Canada through other energy contracts such as
forward, futures, options, swaps, and purchase and sale contracts. These energy
and energy-related contracts are valued at fair value and unrealized gains and
losses from changes in fair value are recognized in income. These energy and
energy-related contracts are subject to risk from changes in energy commodity
market prices, volatility and correlation of those commodity prices, the
portfolio position of its contracts, the liquidity of the market in which the
contract is transacted and changes in interest rates. Energy Marketing & Trading
actively seeks to diversify its portfolio in managing the commodity price risk
in the transactions that it executes in various markets and regions by executing
offsetting contracts to manage this risk in accordance with parameters
established in its trading policy. Energy Marketing & Trading's Risk Control
Group monitors compliance with the established trading policy and measures the
risk associated with the trading portfolio.

     Energy Marketing & Trading measures the market risk in its trading
portfolio utilizing a value-at-risk methodology to estimate the potential
one-day loss from adverse changes in the fair value of its trading operations.
At December 31, 2001 and 2000, the value at risk for the trading operations was
$92.7 million and $90.1 million, respectively. As supplemental quantitative
information to further understand the general risk levels of the trading
portfolio, the average of the actual monthly changes in the fair value of the
trading portfolio for 2001 was an increase of $120 million. Value at risk
requires a number of key assumptions and is not necessarily representative of
actual losses in fair value that could be incurred from the trading portfolio.
Energy Marketing & Trading's value-at-risk model includes all financial
instruments and physical positions and commitments in its trading portfolio and
assumes that as a result of changes in commodity prices, there is a 95 percent
probability that the one-day loss in the fair value of the trading portfolio
will not exceed the value at risk. The value-at-risk model uses historical
simulations to estimate hypothetical movements in future market prices assuming
normal market conditions based upon historical market prices. Value at risk does
not consider that changing the energy risk management and trading portfolio in
response to market conditions could affect market prices and could take longer
to execute than the one-day holding period assumed in the value-at-risk model.
Through risk management practices and policies, Energy Marketing & Trading was
able to minimize the increase in value at risk while growing the net energy risk
management and trading assets 179 percent. This was accomplished primarily
through the execution of offsetting contracts, which has the effect of
mitigating the commodity price risk exposure within the portfolio of energy and
energy-related contracts.

FOREIGN CURRENCY RISK

     Williams has international investments that could affect the financial
results if the investments incur a permanent decline in value as a result of
changes in foreign currency exchange rates and the economic conditions in
foreign countries.

     International investments accounted for under the cost method totaled $143
million and $144 million at December 31, 2001 and 2000, respectively. The fair
value of these investments is deemed to approximate their carrying amount as the
investments are primarily in non-publicly traded companies for which it is not
practicable to estimate the fair value of these investments. Williams continues
to believe that it can realize the carrying value of these investments
considering the status of the operations of the companies underlying these
investments. If a 20 percent change occurred in the value of the underlying
currencies of these investments against the U.S. dollar, the fair value of these
investments at December 31, 2001, could change by approximately $29 million
assuming a direct correlation between the currency fluctuation and the value of
the investments.

                                        72
<PAGE>

     The net assets of foreign operations which are consolidated are located
primarily in Canada and approximate 11 percent of Williams' net assets at
December 31, 2001. These foreign operations, whose functional currency is the
local currency, do not have significant transactions or financial instruments
denominated in other currencies. However, these investments do have the
potential to impact Williams' financial position, due to fluctuations in these
local currencies arising from the process of re-measuring the local functional
currency into the U.S. dollar. As an example, a 20 percent change in the
respective functional currencies against the U.S. dollar could have changed
stockholders' equity by approximately $155 million at December 31, 2001.

     Williams historically has not utilized derivatives or other financial
instruments to hedge the risk associated with the movement in foreign currencies
with the exception of a Canadian dollar-denominated note receivable (see Note
18). However, Williams evaluates currency fluctuations and will consider the use
of derivative financial instruments or employment of other investment
alternatives if cash flows or investment returns so warrant.

EQUITY PRICE RISK

     Equity price risk primarily arises from investments in publicly traded
energy-related companies. The investments in the energy-related companies are
carried at fair value and totaled approximately $8 million and $22 million at
December 31, 2001 and 2000, respectively.

                                        73
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                         REPORT OF INDEPENDENT AUDITORS

To the Stockholders of
The Williams Companies, Inc.

     We have audited the accompanying consolidated balance sheet of The Williams
Companies, Inc. as of December 31, 2001 and 2000, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended December 31, 2001. Our audits also included the
financial statement schedule listed in the Index at Item 14(a). These financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
The Williams Companies, Inc. at December 31, 2001 and 2000, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.

                                                               ERNST & YOUNG LLP

Tulsa, Oklahoma
March 6, 2002

                                        74
<PAGE>

                          THE WILLIAMS COMPANIES, INC.

                      CONSOLIDATED STATEMENT OF OPERATIONS

<Table>
<Caption>
                                                                 YEARS ENDED DECEMBER 31,
                                                              -------------------------------
                                                                2001        2000       1999
(MILLIONS, EXCEPT PER-SHARE AMOUNTS)                          ---------   --------   --------
<S>                                                           <C>         <C>        <C>
Revenues:
  Energy Marketing & Trading................................  $ 1,871.8   $1,572.6   $  662.3
  Gas Pipeline..............................................    1,748.8    1,879.2    1,822.6
  Energy Services*..........................................    8,155.1    6,591.5    4,324.4
  Other.....................................................       76.3       66.8       65.4
  Intercompany eliminations.................................     (817.3)    (518.2)    (245.3)
                                                              ---------   --------   --------
        Total revenues......................................   11,034.7    9,591.9    6,629.4
                                                              ---------   --------   --------
Segment costs and expenses:
  Costs and operating expenses*.............................    7,384.6    6,441.8    4,730.4
  Selling, general and administrative expenses..............      934.9      771.5      686.2
  Impairment of soda ash mining facility....................      170.0         --         --
  Other (income) expense -- net.............................      (29.1)      75.4      (30.7)
                                                              ---------   --------   --------
        Total segment costs and expenses....................    8,460.4    7,288.7    5,385.9
                                                              ---------   --------   --------
General corporate expenses..................................      124.3       97.2       76.9
                                                              ---------   --------   --------
Operating income:
  Energy Marketing & Trading................................    1,296.1    1,005.5      104.5
  Gas Pipeline..............................................      673.8      714.5      688.3
  Energy Services...........................................      591.5      571.7      439.6
  Other.....................................................       12.9       11.5       11.1
  General corporate expenses................................     (124.3)     (97.2)     (76.9)
                                                              ---------   --------   --------
        Total operating income..............................    2,450.0    2,206.0    1,166.6
                                                              ---------   --------   --------
Interest accrued............................................     (786.8)    (708.5)    (590.3)
Interest capitalized........................................       40.0       49.4       34.6
Investing income (loss).....................................     (198.4)     106.1       25.1
Preferred returns and minority interest in income of
  consolidated subsidiaries.................................      (67.5)     (58.0)     (38.2)
Other income (expense) -- net...............................       28.3         .3      (12.1)
                                                              ---------   --------   --------
Income from continuing operations before income taxes and
  extraordinary gain........................................    1,465.6    1,595.3      585.7
Provision for income taxes..................................      630.2      629.9      230.8
                                                              ---------   --------   --------
Income from continuing operations...........................      835.4      965.4      354.9
Loss from discontinued operations...........................   (1,313.1)    (441.1)    (198.7)
                                                              ---------   --------   --------
Income (loss) before extraordinary gain.....................     (477.7)     524.3      156.2
Extraordinary gain..........................................         --         --       65.2
                                                              ---------   --------   --------
Net income (loss)...........................................     (477.7)     524.3      221.4
Preferred stock dividends...................................         --         --        2.8
                                                              ---------   --------   --------
Income (loss) applicable to common stock....................  $  (477.7)  $  524.3   $  218.6
                                                              =========   ========   ========
Basic earnings (loss) per common share:
  Income from continuing operations.........................  $    1.68   $   2.17   $    .81
  Loss from discontinued operations.........................      (2.64)      (.99)      (.46)
                                                              ---------   --------   --------
  Income (loss) before extraordinary gain...................       (.96)      1.18        .35
  Extraordinary gain........................................         --         --        .15
                                                              ---------   --------   --------
        Net income (loss)...................................  $    (.96)  $   1.18   $    .50
                                                              =========   ========   ========
Diluted earnings (loss) per common share:
  Income from continuing operations.........................  $    1.67   $   2.15   $    .79
  Loss from discontinued operations.........................      (2.62)      (.98)      (.44)
                                                              ---------   --------   --------
  Income (loss) before extraordinary gain...................       (.95)      1.17        .35
  Extraordinary gain........................................         --         --        .15
                                                              ---------   --------   --------
        Net income (loss)...................................  $    (.95)  $   1.17   $    .50
                                                              =========   ========   ========
</Table>

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

* Includes consumer excise taxes of $308.9 million, $287.6 million and $229.0
  million in 2001, 2000 and 1999, respectively.

                            See accompanying notes.

                                        75
<PAGE>

                          THE WILLIAMS COMPANIES, INC.

                           CONSOLIDATED BALANCE SHEET

<Table>
<Caption>
                                                                  DECEMBER 31,
                                                              ---------------------
                                                                2001        2000
(DOLLARS IN MILLIONS, EXCEPT PER-SHARE AMOUNTS)               ---------   ---------
<S>                                                           <C>         <C>
                                      ASSETS
Current assets:
  Cash and cash equivalents.................................  $ 1,301.1   $   996.8
  Accounts and notes receivable less allowance of $256.6
    ($9.8 in 2000)..........................................    3,133.9     3,357.3
  Inventories...............................................      813.8       848.4
  Energy risk management and trading assets.................    6,514.1     7,879.8
  Margin deposits...........................................      213.8       730.9
  Deferred income taxes.....................................      440.6        64.9
  Other.....................................................      520.7       319.3
                                                              ---------   ---------
         Total current assets...............................   12,938.0    14,197.4
Net assets of discontinued operations.......................         --     2,290.2
Investments.................................................    1,563.1     1,368.6
Property, plant and equipment -- net........................   17,719.2    14,205.9
Energy risk management and trading assets...................    4,209.4     1,831.1
Goodwill and other intangible assets, net...................    1,180.6        42.5
Other assets and deferred charges less allowance of $103.2
  (none in 2000)............................................    1,295.9       840.9
                                                              ---------   ---------
         Total assets.......................................  $38,906.2   $34,776.6
                                                              =========   =========

                       LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Notes payable.............................................  $ 1,424.5   $ 2,036.7
  Accounts payable..........................................    2,896.7     3,088.0
  Accrued liabilities.......................................    1,965.2     1,387.4
  Energy risk management and trading liabilities............    5,525.7     7,597.3
  Guarantees and payment obligations related to Williams
    Communications Group, Inc. .............................      645.6          --
  Long-term debt due within one year........................    1,036.8     1,634.1
                                                              ---------   ---------
      Total current liabilities.............................   13,494.5    15,743.5
Long-term debt..............................................    9,500.7     6,830.5
Deferred income taxes.......................................    3,689.9     2,863.9
Energy risk management and trading liabilities..............    2,936.6     1,302.8
Guarantees and payment obligations related to Williams
  Communications Group, Inc. ...............................    1,120.0          --
Other liabilities and deferred income.......................      943.1       978.0
Contingent liabilities and commitments (Note 19)............
Minority interests in consolidated subsidiaries.............      201.0        98.1
Preferred interests in consolidated subsidiaries............      976.4       877.9
Williams obligated mandatorily redeemable preferred
  securities of Trust holding only Williams indentures......         --       189.9
Stockholders' equity:
  Preferred stock, $1 per share, 30 million shares
    authorized..............................................         --          --
  Common stock, $1 per share par value, 960 million shares
    authorized, 518.9 million issued in 2001, 447.9 million
    issued in 2000..........................................      518.9       447.9
  Capital in excess of par value............................    5,085.1     2,473.9
  Retained earnings.........................................      199.6     3,065.7
  Accumulated other comprehensive income....................      345.1        28.2
  Other.....................................................      (65.0)      (81.2)
                                                              ---------   ---------
                                                                6,083.7     5,934.5
  Less treasury stock (at cost), 3.4 million shares of
    common stock in 2001 and 3.6 million in 2000............      (39.7)      (42.5)
                                                              ---------   ---------
         Total stockholders' equity.........................    6,044.0     5,892.0
                                                              ---------   ---------
         Total liabilities and stockholders' equity.........  $38,906.2   $34,776.6
                                                              =========   =========
</Table>

                            See accompanying notes.

                                        76
<PAGE>

                          THE WILLIAMS COMPANIES, INC.

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

<Table>
<Caption>
                                                           CAPITAL IN                ACCUMULATED
                                                           EXCESS OF                    OTHER
                                      PREFERRED   COMMON      PAR       RETAINED    COMPREHENSIVE            TREASURY
                                        STOCK     STOCK      VALUE      EARNINGS       INCOME       OTHER     STOCK       TOTAL
                                      ---------   ------   ----------   ---------   -------------   ------   --------   ---------
(DOLLARS IN MILLIONS, EXCEPT PER-SHARE AMOUNTS)
<S>                                   <C>         <C>      <C>          <C>         <C>             <C>      <C>        <C>
BALANCE, DECEMBER 31, 1998..........   $ 102.2    $432.3    $  982.4    $ 2,849.5      $ 16.7       $(78.5)   $(47.2)   $ 4,257.4
Comprehensive income:
  Net income -- 1999................        --       --           --        221.4          --           --        --        221.4
  Other comprehensive income:
    Unrealized appreciation on
      marketable equity
      securities....................        --       --           --           --       104.2           --        --        104.2
    Foreign currency translation
      adjustments...................        --       --           --           --       (18.0)          --        --        (18.0)
                                                                                                                        ---------
  Total other comprehensive
    income..........................                                                                                         86.2
                                                                                                                        ---------
Total comprehensive income..........                                                                                        307.6
Cash dividends --
  Common stock ($.60 per share).....        --       --           --       (260.9)         --           --        --       (260.9)
  $3.50 preferred stock ($2.04 per
    share)..........................        --       --           --         (2.8)         --           --        --         (2.8)
Stockholders' notes issued..........        --       --           --           --          --         (9.7)       --         (9.7)
Stockholders' notes repaid..........        --       --           --           --          --          3.3        --          3.3
Conversion of preferred stock - 1.8
  million shares....................    (102.2)     8.4         93.8           --          --           --        --           --
Issuance of equity of consolidated
  subsidiary........................        --       --      1,170.2           --        (3.4)          --        --      1,166.8
Stock award transactions (including
  4.0 million common shares)........        --      3.8         78.7           --          --           .4       2.1         85.0
Tax benefit of stock-based awards...        --       --         31.6           --          --           --        --         31.6
ESOP loan repayment.................        --       --           --           --          --          6.9        --          6.9
                                       -------    ------    --------    ---------      ------       ------    ------    ---------
BALANCE, DECEMBER 31, 1999..........        --    444.5      2,356.7      2,807.2        99.5        (77.6)    (45.1)     5,585.2
Comprehensive income:
  Net income -- 2000................        --       --           --        524.3          --           --        --        524.3
  Other comprehensive loss:
    Net unrealized depreciation on
      marketable equity
      securities....................        --       --           --           --       (47.4)          --        --        (47.4)
    Foreign currency translation
      adjustments...................        --       --           --           --       (23.9)          --        --        (23.9)
                                                                                                                        ---------
  Total other comprehensive loss....                                                                                        (71.3)
                                                                                                                        ---------
Total comprehensive income..........                                                                                        453.0
Cash dividends -- ($.60 per
  share)............................        --       --           --       (265.8)         --           --        --       (265.8)
Stockholders' notes issued..........        --       --           --           --          --        (18.0)       --        (18.0)
Stockholders' notes repaid..........        --       --           --           --          --          6.6        --          6.6
Stock award transactions (including
  3.6 million common shares)........        --      3.4         88.3           --          --           .3       2.6         94.6
Tax benefit of stock-based awards...        --       --         25.6           --          --           --        --         25.6
ESOP loan repayment.................        --       --           --           --          --          7.5        --          7.5
Other...............................        --       --          3.3           --          --           --        --          3.3
                                       -------    ------    --------    ---------      ------       ------    ------    ---------
BALANCE, DECEMBER 31, 2000..........        --    447.9      2,473.9      3,065.7        28.2        (81.2)    (42.5)     5,892.0
Comprehensive loss:
  Net loss -- 2001..................        --       --           --       (477.7)         --           --        --       (477.7)
  Other comprehensive income:
    Net unrealized gains on cash
      flow hedges...................        --       --           --           --       370.2           --        --        370.2
    Net unrealized depreciation on
      marketable equity
      securities....................        --       --           --           --       (35.3)          --        --        (35.3)
    Foreign currency translation
      adjustments...................        --       --           --           --       (37.1)          --        --        (37.1)
    Minimum pension liability
      adjustment....................        --       --           --           --        (2.2)          --        --         (2.2)
                                                                                                                        ---------
  Total other comprehensive
    income..........................                                                                                        295.6
                                                                                                                        ---------
Total comprehensive loss............                                                                                       (182.1)
Issuance of common stock (38 million
  shares)...........................        --     38.0      1,295.4           --          --           --        --      1,333.4
Issuance of common stock for
  acquisition of business (29.6
  million shares)...................        --     29.6      1,206.1           --          --           --        --      1,235.7
Cash dividends -- ($.68 per
  share)............................        --       --           --       (341.0)         --           --        --       (341.0)
Stockholders' notes issued..........        --       --           --           --          --         (8.8)       --         (8.8)
Stockholders' notes repaid..........        --       --           --           --          --          6.3        --          6.3
Stock award transactions (including
  3.6 million common shares)........        --      3.4         72.6           --          --           .7       2.8         79.5
Tax benefit of stock-based awards...        --       --         26.0           --          --           --        --         26.0
Distribution of Williams
  Communications Groups' common
  stock.............................        --       --           --     (2,047.4)       21.3         18.0        --     (2,008.1)
Other...............................        --       --         11.1           --          --           --        --         11.1
                                       -------    ------    --------    ---------      ------       ------    ------    ---------
BALANCE, DECEMBER 31, 2001..........   $    --    $518.9    $5,085.1    $   199.6      $345.1       $(65.0)   $(39.7)   $ 6,044.0
                                       =======    ======    ========    =========      ======       ======    ======    =========
</Table>

                            See accompanying notes.
                                        77
<PAGE>

                          THE WILLIAMS COMPANIES, INC.

                      CONSOLIDATED STATEMENT OF CASH FLOWS

<Table>
<Caption>
                                                                  YEARS ENDED DECEMBER 31,
                                                              ---------------------------------
                                                                2001        2000        1999
(MILLIONS)                                                    ---------   ---------   ---------
<S>                                                           <C>         <C>         <C>
OPERATING ACTIVITIES:
  Income from continuing operations.........................  $   835.4   $   965.4   $   354.9
  Adjustments to reconcile to cash provided from operations:
    Depreciation, depletion and amortization................      797.7       646.8       605.5
    Provision for deferred income taxes.....................      346.2       440.5       486.0
    Impairment of soda ash mining facility..................      170.0          --          --
    Provision for loss on property and other assets.........      163.7        57.3        21.5
    Net gain on dispositions of assets......................      (92.4)      (14.7)      (34.1)
    Provision for uncollectible accounts....................      203.2         4.7         (.1)
    Preferred returns and minority interest in income of
     consolidated subsidiaries..............................       67.5        58.0        38.2
    Tax benefit of stock-based awards.......................       26.0        25.6        76.1
    Cash provided (used) by changes in assets and
     liabilities:
      Accounts and notes receivable.........................      191.4    (1,558.2)     (632.8)
      Inventories...........................................       43.1      (293.7)     (102.9)
      Margin deposits.......................................      517.1      (671.7)      (56.5)
      Other current assets..................................      121.4       (28.7)      (62.1)
      Accounts payable......................................     (289.3)    1,279.1       898.3
      Accrued liabilities...................................      287.2       259.7      (158.7)
  Changes in current energy risk management and trading
    assets and liabilities..................................     (742.9)     (218.8)         .8
  Changes in noncurrent energy risk management and trading
    assets and liabilities..................................     (806.1)     (485.2)      (59.1)
  Changes in noncurrent deferred income.....................       (4.1)       28.2        91.1
  Other, including changes in non-current assets and
    liabilities.............................................      (52.4)       99.5        67.4
                                                              ---------   ---------   ---------
        Net cash provided by operating activities...........    1,782.7       593.8     1,533.5
                                                              ---------   ---------   ---------
FINANCING ACTIVITIES:
  Proceeds from notes payable...............................    1,830.0     2,190.4       939.6
  Payments of notes payable.................................   (2,631.4)     (723.9)     (729.8)
  Proceeds from long-term debt..............................    4,035.1       984.6     1,696.4
  Payments of long-term debt................................   (2,139.0)     (749.5)   (1,014.0)
  Proceeds from issuance of common stock....................    1,410.9        75.2        65.2
  Dividends paid............................................     (341.0)     (265.8)     (263.7)
  Proceeds from sale of limited partner units of
    consolidated partnership................................       92.5          --          --
  Net proceeds from issuance of preferred interests of
    consolidated subsidiaries...............................       95.3       546.8          --
  Proceeds (payments) from issuance (redemption) of Williams
    obligated mandatorily redeemable preferred securities of
    Trust holding only Williams indentures..................     (194.0)         --       175.0
  Payments/dividends to preferred and minority interests....      (59.5)      (42.0)      (27.4)
  Payments for debt issuance costs..........................      (51.5)       (4.0)      (12.1)
  Other -- net..............................................        (.1)         .2        50.8
                                                              ---------   ---------   ---------
        Net cash provided by financing activities...........    2,047.3     2,012.0       880.0
                                                              ---------   ---------   ---------
INVESTING ACTIVITIES:
  Property, plant and equipment:
    Capital expenditures....................................   (1,922.2)   (1,513.2)   (1,794.9)
    Proceeds from dispositions..............................       37.3        38.5        27.4
  Acquisitions of businesses (primarily property, plant and
    equipment), net of cash acquired........................   (1,343.1)     (726.4)     (162.9)
  Purchases of investments/advances to affiliates...........     (574.0)     (183.2)     (347.2)
  Proceeds from dispositions of investments and other
    assets..................................................      407.6        47.2       307.4
  Proceeds received on advances to affiliates...............       95.0          --          --
  Purchase of assets subsequently leased to seller..........     (276.0)         --          --
  Other -- net..............................................       32.1         (.2)       11.1
                                                              ---------   ---------   ---------
        Net cash used by investing activities...............   (3,543.3)   (2,337.3)   (1,959.1)
                                                              ---------   ---------   ---------
DISCONTINUED OPERATIONS:
  Net cash provided (used) by operating activities..........        7.6       (45.7)      (49.5)
  Net cash provided by financing activities.................    1,343.4     1,774.7     3,496.9
  Net cash used by investing activities.....................   (1,450.8)   (1,868.4)   (3,316.9)
  Cash of discontinued operations at spinoff................      (96.5)         --          --
                                                              ---------   ---------   ---------
        Net cash provided (used) by discontinued
        operations..........................................     (196.3)     (139.4)      130.5
                                                              ---------   ---------   ---------
Increase in cash and cash equivalents.......................       90.4       129.1       584.9
Cash and cash equivalents at beginning of year..............    1,210.7     1,081.6       496.7
                                                              ---------   ---------   ---------
Cash and cash equivalents at end of year*...................  $ 1,301.1   $ 1,210.7   $ 1,081.6
                                                              =========   =========   =========
</Table>

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

* Includes cash and cash equivalents of discontinued operations of $213.9
  million and $483.9 million for 2000 and 1999, respectively.

                            See accompanying notes.

                                        78
<PAGE>

                          THE WILLIAMS COMPANIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

     Operations of The Williams Companies, Inc. (Williams) are located
principally in the United States and are organized into three industry groups:
Energy Marketing & Trading, Gas Pipeline and Energy Services.

     Energy Marketing & Trading is a fully integrated energy marketer which
offers price-risk management services and buys, sells and arranges for
transportation/transmission of energy commodities -- including natural gas and
gas liquids, crude oil and refined products, and electricity -- to local
distribution companies, utilities, municipalities, rural electric cooperatives
and large industrial customers in North America. Additionally, Energy Marketing
& Trading commenced operations in Europe in 2001.

     Gas Pipeline is comprised primarily of five interstate natural gas
pipelines located throughout the majority of the United States as well as
investments in North American natural gas pipeline-related companies. The five
Gas Pipeline operating segments have been aggregated for reporting purposes and
include Williams Gas Pipelines Central, Kern River Gas Transmission, Northwest
Pipeline, Texas Gas Transmission and Transcontinental Gas Pipe Line.

     Energy Services includes five operating segments: Exploration & Production,
International, Midstream Gas & Liquids, Petroleum Services and Williams Energy
Partners. Exploration & Production includes natural gas exploration, production
and marketing activities primarily in the Rocky Mountain, Midwest and Gulf Coast
regions. During 2001, Exploration & Production acquired Barrett Resources
Corporation (Barrett) which was an independent natural gas and oil exploration
and production company with producing properties located principally in the
Rocky Mountain and Mid-Continent regions of the United States. International
includes direct investments in projects in Argentina, Brazil, Venezuela and
Lithuania, investments in energy and infrastructure development funds in Asia
and South America and soda ash mining operations in Colorado. Midstream Gas &
Liquids is comprised of natural gas gathering and processing and treating
facilities in the Rocky Mountain, Midwest and Gulf Coast regions of the United
States, natural gas liquids pipelines in the Rocky Mountain, Southwest, Midwest
and Gulf Coast regions of the United States and assets in Canada including
several natural gas liquids extraction and fractionation plants, natural gas
liquids pipeline, storage facilities, and a natural gas processing plant.
Petroleum Services includes petroleum refining and marketing in Alaska and the
Southeast, a petroleum products pipeline and ethanol production and marketing
operations in the Midwest region, and retail travel centers concentrated in the
Midsouth and along the United States interstate highway system and convenience
stores in Alaska. Williams Energy Partners includes a network of storage,
transportation and distribution assets for crude petroleum products and ammonia.

BASIS OF PRESENTATION

     Effective February 2001, management of certain operations, previously
conducted by Energy Marketing & Trading, was transferred to Petroleum Services.
These operations included the procurement of crude oil and marketing of refined
products produced from the Memphis refinery, for which prior year segment
information reflects the transfer. Additionally, the refined product sales
activities surrounding certain terminals located throughout the United States
were transferred. This sales activity was previously included in the trading
portfolio of Energy Marketing & Trading and was therefore reported net of
related cost of sales. Following the transfer, these sales are reported on a
"gross" basis.

     During first-quarter 2001, Williams Energy Partners L.P. completed an
initial public offering of approximately 4.6 million common units at $21.50 per
unit for net proceeds of approximately $92 million. The initial public offering
represents 40 percent of the units, and Williams retains a 60 percent interest
in the partnership, including its general partner interest. Williams Energy
Partners L.P. and Williams' general partnership interest is reported as Williams
Energy Partners, a separate segment within Energy Services, and consists
primarily of certain terminals and an ammonia pipeline previously reported
within Petroleum Services

                                        79
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

and Midstream Gas & Liquids, respectively. Also during first-quarter 2001,
management of international activities, previously reported in Other, was
transferred and the international activities are reported as a separate segment
within Energy Services.

     On April 23, 2001, Williams distributed 398.5 million shares, or
approximately 95 percent, of Williams' communications business, Williams
Communications Group, Inc. (WCG), to Williams' shareholders. WCG has been
accounted for as discontinued operations, and, accordingly, the accompanying
consolidated financial statements and notes reflect the results of operations,
net assets and cash flows of WCG as discontinued operations. For information
relating to litigation involving the distribution of WCG shares, see Note 19.
Unless indicated otherwise, the information in the Notes to Consolidated
Financial Statements relates to the continuing operations of Williams (see Note
3).

     Certain prior year amounts have been reclassified to conform to current
year classifications.

PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements include the accounts of Williams and
its majority-owned subsidiaries and investments. Companies in which Williams and
its subsidiaries own 20 percent to 50 percent of the voting common stock, or
otherwise exercise significant influence over operating and financial policies
of the company, are accounted for under the equity method.

USE OF ESTIMATES

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the consolidated
financial statements and accompanying notes. Actual results could differ from
those estimates.

     Estimates and assumptions which, in the opinion of management, are
significant to the underlying amounts included in the financial statements and
for which it would be reasonably possible that future events or information
could change those estimates include: 1) contingent obligations including
guarantees related to WCG obligations; 2) litigation-related contingencies; 3)
valuations of energy contracts, including energy-related contracts; 4)
environmental remediation obligations; 5) impairment assessments of goodwill and
long-lived assets; 6) realization of deferred income tax assets; and 7) Gas
Pipeline revenues subject to refund. These estimates are discussed further
throughout the accompanying notes.

CASH AND CASH EQUIVALENTS

     Cash and cash equivalents include demand and time deposits, certificates of
deposit and other marketable securities with maturities of three months or less
when acquired.

INVENTORY VALUATION

     Inventories are stated at cost, which is not in excess of market, except
for certain assets held for energy risk management activities by Energy
Marketing & Trading, which are primarily stated at fair value. The cost of
inventories is determined using the following methods: certain crude oil and
refined products inventories held by Petroleum Services are determined using the
first-in, first-out (FIFO) cost method as adjusted for the effects of fair value
hedges as prescribed by Statement of Financial Accounting Standards (SFAS) No.
133, "Accounting for Derivative Instruments and Hedging Activities;" certain
natural gas inventories held by Transcontinental Gas Pipe Line are determined
using the last-in, first-out (LIFO) cost method; and the cost of the remaining
inventories is primarily determined using the average-cost method or market, if
lower.

                                        80
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment is recorded at cost. Depreciation is provided
primarily on the straight-line method over estimated useful lives. Gains or
losses from the ordinary sale or retirement of property, plant and equipment for
regulated pipelines are credited or charged to accumulated depreciation; other
gains or losses are recorded in net income.

     Oil and gas exploration and production activities are accounted for under
the successful efforts method of accounting. Costs incurred in connection with
the drilling and equipping of exploratory wells are capitalized as incurred. If
proved reserves are not found, such costs are charged to expense. Other
exploration costs, including lease rentals, are expensed as incurred. All costs
related to development wells, including related production equipment and lease
acquisition costs, are capitalized when incurred. Unproved properties are
evaluated annually, or as conditions warrant, to determine any impairment in
carrying value. Depreciation, depletion and amortization are provided under the
units of production method.

     Proved properties, including developed and undeveloped, and costs
associated with probable reserves, are assessed for impairment using estimated
future cash flows. Estimating future cash flows involves the use of complex
judgments such as estimation of the proved and probable oil and gas reserve
quantities, risk associated with the different categories of oil and gas
reserves, timing of development and production, expected future commodity
prices, capital expenditures and production costs.

GOODWILL AND OTHER INTANGIBLE ASSETS

     Goodwill represents the excess of cost over fair value of assets of
businesses acquired. In accordance with SFAS No. 142, "Goodwill and Other
Intangible Assets," approximately $1 billion of goodwill acquired subsequent to
June 30, 2001, in the acquisition of Barrett (see Note 2) is not being
amortized. All other goodwill is amortized on a straight-line basis over periods
from 20 to 40 years. Other intangible assets are amortized on a straight-line
basis over periods from three to 25 years. Accumulated amortization at December
31, 2001 and 2000 was $16.3 million and $45.2 million, respectively.
Amortization expense was $7 million, $10.7 million and $20.4 million in 2001,
2000 and 1999, respectively. See RECENT ACCOUNTING STANDARDS for further
discussion of SFAS No. 142.

TREASURY STOCK

     Treasury stock purchases are accounted for under the cost method whereby
the entire cost of the acquired stock is recorded as treasury stock. Gains and
losses on the subsequent reissuance of shares are credited or charged to capital
in excess of par value using the average-cost method.

ENERGY COMMODITY RISK MANAGEMENT AND TRADING ACTIVITIES

     Energy Marketing & Trading has energy commodity risk management and trading
operations that enter into energy contracts to provide price-risk management
services to its third-party customers. Energy contracts utilized in energy
commodity risk management and trading activities are valued at fair value in
accordance with SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," and Emerging Issues Task Force Issue (EITF) No. 98-10, "Accounting
for Contracts Involved in Energy Trading and Risk Management Activities."
Williams adopted SFAS No. 133 effective January 1, 2001. Such adoption had no
impact on the accounting for energy commodity risk management and trading
activities. Prior to adopting SFAS No. 133, Energy Marketing & Trading followed
the guidance in EITF No. 98-10. Energy contracts include forward contracts,
futures contracts, option contracts, swap agreements, commodity inventories,
short-and long-term purchase and sale commitments, which involve physical
delivery of an energy commodity and energy-related contracts, such as
transportation, storage, full requirements, load serving and power tolling
contracts. In addition, Williams enters into interest rate swap agreements and
credit default swaps to manage

                                        81
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the interest rate and credit risk in its energy trading portfolio. These energy
contracts and interest rate and credit default swap agreements, with the
exception of certain commodity inventories, are recorded in current and
noncurrent energy risk management and trading assets and energy risk management
and trading liabilities in the Consolidated Balance Sheet. The classification of
current versus noncurrent is based on the timing of expected future cash flows.
In accordance with SFAS No. 133 and EITF No. 98-10, the net change in fair value
of these contracts representing unrealized gains and losses is recognized in
income currently and recorded as revenues in the Consolidated Statement of
Operations. Energy Marketing & Trading reports its trading operations' physical
sales transactions net of the related purchase costs, consistent with fair value
accounting for such trading activities. The accounting for Energy Marketing &
Trading's energy-related contracts requires Williams to assess whether certain
of these contracts are executory service arrangements or leases pursuant to SFAS
No. 13, "Accounting for Leases." There currently is not extensive authoritative
guidance for determining when an arrangement is a lease or an executory service
arrangement. As a result, Williams assesses each of its energy-related contracts
and makes the determination based on the substance of each contract focusing on
factors such as physical and operational control of the related asset, risks and
rewards of owning, operating and maintaining the related asset and other
contractual terms.

     Fair value of energy contracts is determined based on the nature of the
transaction and the market in which transactions are executed. Certain
transactions are executed in exchange-traded or over-the-counter markets for
which quoted prices in active periods exist. Transactions are also executed in
exchange-traded or over-the-counter markets for which quoted market prices may
exist; however, the markets may be relatively inactive and price transparency is
limited. Certain transactions are executed for which quoted market prices are
not available. Quoted market prices for varying periods in active markets are
readily available for valuing forward contracts, futures contracts, swap
agreements and purchase and sales transactions in the commodity markets in which
Energy Marketing & Trading transacts. For contracts or transactions that extend
into periods for which actively quoted prices are not available, Energy
Marketing & Trading estimates energy commodity prices in the illiquid periods by
incorporating information obtained from commodity prices in actively quoted
markets, prices reflected in current transactions and market fundamental
analysis. For contracts where quoted market prices are not available, primarily
transportation, storage, full requirements, load serving and power tolling
contracts, Energy Marketing & Trading estimates fair value using models and
other valuation techniques that reflect the best information available under the
circumstances. Fair value for energy-related contracts is estimated using
valuation techniques that incorporate option pricing theory, statistical and
simulation analysis, present value concepts incorporating risk from uncertainty
of the timing and amount of estimated cash flows and specific contractual terms.
These valuation techniques utilize factors such as quoted energy commodity
market prices, estimates of energy commodity market prices in the absence of
quoted market prices, volatility factors underlying the positions, estimated
correlation of energy commodity prices, contractual volumes, estimated volumes
under option and other arrangements, liquidity of the market in which the
contract is transacted, and a risk-free market discount rate. Fair value also
reflects a risk premium that market participants would consider in their
determination of fair value. Regardless of the method for which fair value is
determined, the recognized fair value of all contracts also considers the risk
of non-performance and credit considerations of the counterparty.

     In some cases, Energy Marketing & Trading enters into price-risk management
contracts that have forward start dates commencing upon completion of
construction and development of assets to be owned and operated by third
parties. Until construction commences, revenue recognition and the fair value of
these contracts is limited to the amount of any guaranty or similar form of
acceptable credit support that encourages the counterparty to perform under the
terms of the contract with appropriate consideration for any contractual
provisions that provide for contract termination by the counterparty.

     The fair value of Energy Marketing & Trading's trading portfolio is
continually subject to change due to changing market conditions and changing
trading portfolio positions. Determining fair value for these contracts also
involves complex assumptions including estimating natural gas and power market
prices in

                                        82
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

illiquid periods and markets, estimating volatility and correlation of natural
gas and power prices, evaluating risk arising from uncertainty inherent in
estimating cash flows and estimates regarding counterparty performance and
credit considerations.

GAS PIPELINE REVENUES

     Revenues for sales of products are recognized in the period of delivery,
and revenues from the transportation of gas are recognized in the period the
service is provided. Gas Pipeline is subject to Federal Energy Regulatory
Commission (FERC) regulations and, accordingly, certain revenues collected may
be subject to possible refunds upon final orders in pending rate cases. Gas
Pipeline records estimates of rate refund liabilities considering Gas Pipeline
and other third-party regulatory proceedings, advice of counsel and estimated
total exposure, as discounted and risk weighted, as well as collection and other
risks.

ENERGY SERVICES REVENUES

     Revenues generally are recorded when services have been performed or
products have been delivered. A portion of Petroleum Services is subject to FERC
regulations and, accordingly, the method of recording these revenues is
consistent with Gas Pipeline's method discussed above.

     Additionally, revenues from the production of natural gas in properties for
which Exploration & Production has an interest with other producers, are
recognized based on the actual volumes sold during the period. Any differences
between volumes sold and entitlement volumes, based on Exploration &
Production's net working interest, which are determined to be non-recoverable
through remaining production, are recognized as accounts receivable or accounts
payable, as appropriate. Cumulative differences between volumes sold and
entitlement volumes are not significant.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

     On January 1, 2001, Williams adopted SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This standard, as amended, did
not impact the accounting for derivatives within Energy Marketing & Trading's
energy commodity risk management and trading activities which are accounted for
at fair value as discussed above. All other derivatives are reflected on the
balance sheet at their fair value and are recorded in other current assets,
other assets and deferred charges, accrued liabilities and other liabilities and
deferred income in the Consolidated Balance Sheet as of December 31, 2001.

     Derivative instruments held by Williams, other than those utilized in the
energy risk management and trading activities, consist primarily of futures
contracts, swap agreements, forward contracts and option contracts. Most of
these transactions are executed in exchange-traded or over-the-counter markets
for which quoted prices in active periods exist. For contracts with lives
exceeding the time period for which quoted prices are available, fair value
determination involves estimating commodity prices during the illiquid periods
by incorporating information obtained from commodity prices in actively quoted
markets, prices reflected in current transactions and market fundamental
analysis.

     The accounting for changes in the fair value of a derivative depends upon
whether it has been designated in a hedging relationship and, further, on the
type of hedging relationship. To qualify for designation in a hedging
relationship, specific criteria must be met and the appropriate documentation
maintained. Hedging relationships are established pursuant to Williams' risk
management policies and are initially and regularly evaluated to determine
whether they are expected to be, and have been, highly effective hedges. If a
derivative ceases to be a highly effective hedge, hedge accounting is
discontinued prospectively, and future changes in the fair value of the
derivative are recognized in earnings each period. Changes in the fair value of
derivatives not designated in a hedging relationship are recognized in earnings
each period.

                                        83
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     For derivatives designated as a hedge of a recognized asset or liability or
an unrecognized firm commitment (fair value hedges), the changes in the fair
value of the derivative as well as changes in the fair value of the hedged item
attributable to the hedged risk are recognized each period in earnings. If a
firm commitment designated as the hedged item in a fair value hedge is
terminated or otherwise no longer qualifies as the hedged item, any asset or
liability previously recorded as part of the hedged item is recognized currently
in earnings.

     For derivatives designated as a hedge of a forecasted transaction or of the
variability of cash flows related to a recognized asset or liability (cash flow
hedges), the effective portion of the change in fair value of the derivative is
reported in other comprehensive income and reclassified into earnings in the
period in which the hedged item affects earnings. Amounts excluded from the
effectiveness calculation and any ineffective portion of the change in fair
value of the derivative are recognized currently in earnings. Gains or losses
deferred in accumulated other comprehensive income associated with terminated
derivatives and derivatives that cease to be highly effective hedges remain in
accumulated other comprehensive income until the hedged item affects earnings.
Forecasted transactions designated as the hedged item in a cash flow hedge are
regularly evaluated to assess whether they continue to be probable of occurring.
If the forecasted transaction is no longer probable of occurring, any gain or
loss deferred in accumulated other comprehensive income is recognized in
earnings currently.

     On January 1, 2001, Williams recorded a cumulative effect of an accounting
change associated with the adoption of SFAS No. 133, as amended, to record all
derivatives at fair value. The cumulative effect of the accounting change was
not material to net income (loss), but resulted in a $95 million reduction of
other comprehensive income (net of income tax benefits of $59 million) related
to derivatives which hedge the variable cash flows of certain forecasted energy
commodity transactions. Of the transition adjustment recorded in other
comprehensive income at January 1, 2001, net losses of approximately $90 million
(net of income tax benefits of $56 million) were reclassified into earnings
during 2001, offsetting net gains realized in earnings from favorable market
movements associated with the underlying transactions being hedged.

     With the adoption of SFAS No. 133 on January 1, 2001, the accounting for
certain aspects of derivative instruments and hedging activities was different
in periods prior to the adoption of SFAS No. 133. Prior to 2001, Williams
entered into energy derivative financial instruments and derivative commodity
instruments (primarily futures contracts, option contracts and swap agreements)
to hedge against market price fluctuations of certain commodity inventories and
sales and purchase commitments. Certain of these instruments were not required
to be recorded on the balance sheet; there was not a distinction between cash
flow and fair value hedges and no ineffectiveness was required to be recorded
currently in earnings. Unrealized and realized gains and losses on those hedge
contracts were deferred and recognized in income in the same manner as the
hedged item. No unrealized gains or losses were required to be reported in other
comprehensive income. These contracts were initially and regularly evaluated to
determine that there was high correlation between changes in the fair value of
the hedge contract and fair value of the hedged item. In instances where the
anticipated correlation of price movements did not occur, hedge accounting was
terminated and future changes in the value of the instruments were recognized as
gains or losses. If the hedged item of the underlying transaction was sold or
settled, the instrument was recognized into income (loss).

     Williams entered into interest-rate swap agreements to modify the interest
characteristics of its long-term debt. These agreements were designated with all
or a portion of the principal balance and term of specific debt obligations.
These agreements involved the exchange of amounts based on a fixed interest rate
for amounts based on variable interest rates without an exchange of the notional
amount upon which the payments are based. The difference to be paid or received
was accrued and recognized as an adjustment of interest accrued. Gains and
losses from terminations of interest-rate swap agreements were deferred and
amortized as an adjustment of the interest expense on the outstanding debt over
the remaining original term of the terminated

                                        84
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

swap agreement. In the event the designated debt was extinguished, gains and
losses from terminations of interest-rate swap agreements were recognized into
income (loss).

MAJOR MAINTENANCE COSTS

     Williams incurs planned major maintenance costs at its two refineries and
an ethylene production facility and accrues for these costs in advance of the
period in which costs are actually incurred. For the refineries, such repairs
are completed over a planned cycle of five to six years, with modular components
completed each year. For the ethylene facility, major maintenance repairs are
scheduled to occur approximately every four years. At December 31, 2001, the
total expected cost of the major maintenance projects was approximately $40
million for the refineries and approximately $6 million for the ethylene
production facility. The balance of costs to be accrued is approximately $28
million for the refineries and $5 million for the ethylene production facility
over the 2002-2005 period.

     Accruals are initiated upon completion of the most recent major maintenance
project. These projects are completed over periods of several days to several
weeks, with annual accruals in advance of costs actually being incurred expected
to total approximately $7 million for the refineries and approximately $2
million for the ethylene production facility over the 2002-2005 period.

IMPAIRMENT OF LONG-LIVED ASSETS

     Williams evaluates the long-lived assets, including other intangibles and
related goodwill, of identifiable business activities for impairment when events
or changes in circumstances indicate, in management's judgment, that the
carrying value of such assets may not be recoverable. When such a determination
has been made, management's estimate of undiscounted future cash flows
attributable to the assets is compared to the carrying value of the assets to
determine whether an impairment has occurred. If an impairment of the carrying
value has occurred, the amount of the impairment recognized in the financial
statements is determined by estimating the fair value of the assets and
recording a loss for the amount that the carrying value exceeds the estimated
fair value.

     For assets identified to be disposed of in the future, the carrying value
of these assets is compared to the estimated fair value less the cost to sell to
determine if recognition of an impairment is required. Until the assets are
disposed of, the estimated fair value is redetermined when related events or
circumstances change.

     Judgments and assumptions are inherent in management's estimate of
undiscounted future cash flows used to determine recoverability of an asset and
the estimate of an asset's fair value used to calculate the amount of impairment
to recognize. The use of alternate judgments and/or assumptions could result in
the recognition of different levels of impairment charges in the financial
statements.

CAPITALIZATION OF INTEREST

     Williams capitalizes interest on major projects during construction.
Interest is capitalized on borrowed funds and, where regulation by the FERC
exists, on internally generated funds. The rates used by regulated companies are
calculated in accordance with FERC rules. Rates used by unregulated companies
are based on the average interest rate on debt. Interest capitalized on
internally generated funds, as permitted by FERC rules, is included in
non-operating other income (expense) -- net.

EMPLOYEE STOCK-BASED AWARDS

     Employee stock-based awards are accounted for under Accounting Principles
Board Opinion (APB) No. 25, "Accounting for Stock Issued to Employees" and
related interpretations. Fixed-plan common stock options generally do not result
in compensation expense because the exercise price of the stock options equals
the market price of the underlying stock on the date of grant.

                                        85
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

INCOME TAXES

     Williams includes the operations of its subsidiaries in its consolidated
tax return. Deferred income taxes are computed using the liability method and
are provided on all temporary differences between the financial basis and the
tax basis of Williams' assets and liabilities. Management's judgment and income
tax assumptions are used to determine the levels, if any, of valuation
allowances associated with deferred tax assets.

EARNINGS PER SHARE

     Basic earnings per share are based on the sum of the average number of
common shares outstanding and issuable restricted and deferred shares. Diluted
earnings per share include any dilutive effect of stock options and, for
applicable periods presented, convertible preferred stock.

FOREIGN CURRENCY TRANSLATION

     The functional currency of Williams is the U.S. dollar. The functional
currency of certain of Williams' continuing foreign operations is the local
currency for the applicable foreign subsidiary or equity method investee. These
foreign currencies include the Canadian dollar, British pound, Euro, and
Brazilian real. Assets and liabilities of certain foreign subsidiaries and
equity investees are translated at the spot rate in effect at the applicable
reporting date, and the combined statements of operations and Williams' share of
the results of operations of its equity affiliates are translated at the average
exchange rates in effect during the applicable period. The resulting cumulative
translation adjustment is recorded as a separate component of other
comprehensive income (loss).

     Transactions denominated in currencies other than the functional currency
are recorded based on exchange rates at the time such transactions arise.
Subsequent changes in exchange rates result in transactions gains and losses
which are reflected in the Consolidated Statement of Operations.

ISSUANCE OF EQUITY OF CONSOLIDATED SUBSIDIARY

     Sales of equity, common stock or limited partnership units, by a
consolidated subsidiary are accounted for as capital transactions with the
adjustment to capital in excess of par value. No gain or loss is recognized on
these transactions.

SECURITIZATIONS AND TRANSFERS OF FINANCIAL INSTRUMENTS

     Williams has agreements to sell, on an ongoing basis, certain of its trade
accounts receivable through revolving securitization structures and retains
servicing responsibilities as well as a subordinate interest in the transferred
receivables. Williams accounts for the securitization of trade accounts
receivable in accordance with SFAS No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities." As a result,
the related receivables are removed from the Consolidated Balance Sheet and a
retained interest is recorded for the amount of receivables sold in excess of
cash received.

     Williams determines the fair value of its retained interests based on the
present value of future expected cash flows using management's best estimates of
various factors, including credit loss experience and discount rates
commensurate with the risks involved. These assumptions are updated periodically
based on actual results, thus the estimated credit loss and discount rates
utilized are materially consistent with historical performance. The fair value
of the servicing responsibility is estimated based on internal costs, which
approximate market. Costs associated with the sale of receivables are included
in nonoperating other income (expense) -- net in the Consolidated Statement of
Operations.

                                        86
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

RECENT ACCOUNTING STANDARDS

     The Financial Accounting Standards Board (FASB) issued SFAS No. 141,
"Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 141 establishes accounting and reporting standards for
business combinations and requires all business combinations to be accounted for
by the purchase method. The Statement is effective for all business combinations
initiated after June 30, 2001, and any business combinations accounted for using
the purchase method for which the date of acquisition is July 1, 2001, or later.
SFAS No. 142 addresses accounting and reporting standards for goodwill and other
intangible assets. Under the provisions of this Statement, goodwill and
intangible assets with indefinite useful lives are no longer amortized, but will
be tested annually for impairment. Williams applied the new rules on accounting
for goodwill and other intangible assets beginning January 1, 2002. Application
of the nonamortization provisions of the Statement will not materially impact
the comparability of the Consolidated Statement of Operations. During
first-quarter 2002, Williams began the initial impairment tests of goodwill as
of January 1, 2002. Preliminary results of these tests have indicated that there
will not be a significant unfavorable impact of adopting this standard; however,
all tests have not been completed. Approximately $1 billion of goodwill recorded
as a result of the Barrett acquisition completed on August 2, 2001, (see Note 2)
is not being amortized.

     The FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations." This Statement addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs and amends FASB Statement No. 19, "Financial
Accounting and Reporting by Oil and Gas Producing Companies." The Statement
requires that the fair value of a liability for an asset retirement obligation
be recognized in the period in which it is incurred if a reasonable estimate of
fair value can be made, and that the associated asset retirement costs be
capitalized as part of the carrying amount of the long-lived asset. The
Statement is effective for financial statements issued for fiscal years
beginning after June 15, 2002. The effect of this standard on Williams' results
of operations and financial position is being evaluated. While it is likely
there will ultimately be material obligations related to the future retirement
of assets such as refineries and pipelines, Williams cannot currently estimate
the financial impact at the date of adoption as Williams has not yet completed
its evaluation. However, it is Williams' belief that any such impact would be a
charge to earnings.

     The FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets." This Statement supersedes SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of,"
and amends Accounting Principles Board Opinion No. 30, "Reporting the Results of
Operations -- Reporting the Effects of Disposal of a Segment of a Business and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions." The
Statement retains the basic framework of SFAS No. 121, resolves certain
implementation issues of SFAS No. 121, extends applicability to discontinued
operations, and broadens the presentation of discontinued operations to include
a component of an entity. The Statement is being applied prospectively,
beginning January 1, 2002. Initial adoption of the Statement did not have any
impact on Williams' results of operations or financial position.

NOTE 2.  BARRETT ACQUISITION

     Through two transactions, Williams acquired all of the outstanding stock of
Barrett. On June 11, 2001, Williams acquired 50 percent of Barrett's outstanding
common stock in a cash tender offer of $73 per share for a total of
approximately $1.2 billion. Williams acquired the remaining 50 percent of
Barrett's outstanding common stock on August 2, 2001, through a merger by
exchanging each remaining share of Barrett common stock for 1.767 shares of
Williams common stock for a total of approximately 30 million shares of Williams
common stock valued at $1.2 billion. The value of the 30 million shares of
Williams common stock was based on the average market price of Williams common
stock for the 2 days before and after the May 7, 2001, announcement of the terms
of the acquisition. This acquisition has been accounted for as a purchase
business

                                        87
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

combination with a purchase price, including transaction fees and other related
costs, of approximately $2.5 billion, excluding $312 million of debt obligations
of Barrett assumed in the acquisition.

     Williams' 50 percent share of Barrett's results of operations for the
period June 11, 2001 to August 1, 2001, as well as amortization of the excess of
Williams' investment over the underlying equity in Barrett's net assets for that
period, is included in equity earnings within investing income (loss) in the
Consolidated Statement of Operations and Exploration & Production's segment
profit. Beginning August 2, 2001, 100 percent of Barrett's results of operations
is included in Exploration & Production's revenues and operating income in the
Consolidated Statement of Operations, and the majority of these assets are
included in Exploration & Production's segment assets.

     As of August 2, 2001, Barrett's estimated proved gas and oil reserves were
1.9 trillion cubic feet of gas equivalents. Barrett's assets included long-lived
reserves that Williams believes offer opportunity for long-term and steady
growth and align strategically with Williams' other assets. Williams is a major
gatherer and processor in the Rockies and has natural gas pipelines and gas
liquids pipelines that transport product out of the Rockies. In addition, these
new gas reserves help to balance the risk profile of Williams' growing power
trading portfolio by providing an additional physical and natural hedge against
a short natural gas position. As a result of the value that the Barrett
acquisition provides to Williams overall, $1.0 billion of goodwill was allocated
to Exploration & Production and $105.5 million was allocated to Energy Marketing
& Trading.

     The following unaudited pro forma information combines the results of
operations of Williams and Barrett and incorporates the impact of the Williams
shares issued as if the purchase of 100 percent of Barrett occurred at the
beginning of each year presented:

<Table>
<Caption>
                                                                 2001        2000
                                                              ----------   ---------
                                                              (MILLIONS, EXCEPT PER-
                                                                  SHARE AMOUNTS)
<S>                                                           <C>          <C>
Revenues....................................................  $11,409.3    $9,879.5
Income from continuing operations...........................      917.1       922.0
Net income (loss)...........................................     (396.0)      480.9
Basic earnings (loss) per common share:
  Income from continuing operations.........................  $    1.78    $   1.95
  Net income (loss).........................................  $    (.77)   $   1.01
Diluted earnings (loss) per common share:
  Income from continuing operations.........................  $    1.77    $   1.93
  Net income (loss).........................................  $    (.76)   $   1.00
</Table>

     Pro forma financial information is not necessarily indicative of results of
operations that would have occurred if the acquisition had occurred at the
beginning of each year presented or of future results of operations of the
combined companies.

     The following table summarizes the estimated fair values of the assets
acquired and liabilities assumed at the date of acquisition. Fair value is
determined based on the nature of the asset acquired or liability assumed and
utilizes judgments and assumptions of management. Where available, exchange
quoted energy commodity market prices and current interest rate levels were
used. When the contract life or estimated reserve life exceeds the time period
for which quoted prices are available, judgment is used to estimate the energy
commodity prices during the illiquid periods by incorporating information
obtained from commodity prices in actively quoted markets, prices reflected in
current transactions and market fundamental analysis. Complex judgments also
include estimation of the oil and gas reserve quantities, risk associated with
the different

                                        88
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

categories of oil and gas reserves, timing of development and production of oil
and gas reserves, oil and gas capital expenditures necessary to develop the
reserves, production costs and discount rate.

<Table>
<Caption>
                                                                  AT
                                                              AUGUST 2,
                                                                 2001
                                                              ----------
                                                              (MILLIONS)
<S>                                                           <C>
Current deferred income taxes...............................   $   14.4
Other current assets........................................      113.2
Property, plant and equipment...............................    2,520.4
Goodwill and other assets...................................    1,114.5
                                                               --------
          Total assets......................................    3,762.5
                                                               --------
Current liabilities.........................................      134.6
Current energy risk management and trading liabilities......       37.0
Long-term debt..............................................      312.1
Deferred income taxes.......................................      634.7
Noncurrent energy risk management and trading liabilities...       61.6
Other liabilities...........................................       65.5
                                                               --------
          Total liabilities.................................    1,245.5
                                                               --------
          Net assets acquired...............................   $2,517.0
                                                               ========
</Table>

NOTE 3.  DISCONTINUED OPERATIONS

EVENTS AROUND THE WCG SEPARATION AND OTHER RELATED INFORMATION

     On March 30, 2001, Williams' board of directors approved a tax-free spinoff
of WCG to Williams' shareholders. Williams distributed 398.5 million shares, or
approximately 95 percent of the WCG common stock held by Williams, to holders of
record on April 9, 2001, of Williams' common stock. Distribution of .822399 of a
share of WCG common stock for each share of Williams common stock occurred on
April 23, 2001.

     Williams, prior to the spinoff and in an effort to strengthen WCG's capital
structure, entered into an agreement under which Williams contributed an
outstanding promissory note from WCG of approximately $975 million and certain
other assets, including a building under construction and a commitment to
complete the construction. In return, Williams received 24.3 million newly
issued common shares of WCG.

     The WCG common stock distribution was recorded as a dividend and resulted
in a decrease to consolidated stockholders' equity of approximately $2.0
billion, which included an increase to accumulated other comprehensive income of
approximately $21.3 million. The WCG shares retained by Williams are included in
investments in the Consolidated Balance Sheet. In third-quarter 2001, Williams
recognized a $70.9 million loss related to the write-down of this investment due
to the decline in value which was determined to be other than temporary (see
Note 4). At year-end, Williams wrote off its remaining $25 million investment in
WCG common stock as discussed further below. Additionally, receivables include
amounts due from WCG of approximately $27 million, net of allowance of $85
million, at December 31, 2001. This amount includes a $21 million deferred
payment (net of allowance of $85 million) for services provided to WCG due March
15, 2002. In February 2002, the deferred payment from WCG was extended to
September 15, 2002.

     Williams, prior to the spinoff, provided indirect credit support for $1.4
billion of WCG's Note Trust Notes through a commitment to make available
proceeds of a Williams equity issuance or other permitted redemption sources in
the event any one of the following were to occur: (1) a WCG default; (2)
downgrading of Williams' senior unsecured debt to Ba1 or below by Moody's
Investor's Service, BB or below by Standard &

                                        89
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Poor's, or BB+ or below by Fitch Ratings, if Williams' common stock closing
price is below $30.22 for ten consecutive trading days while such downgrade is
in effect; or (3) to the extent proceeds from WCG's refinancing or remarketing
of certain structured notes prior to March 2004 produces proceeds of less than
$1.4 billion. On March 5, 2002, Williams received the requisite approvals on its
consent solicitation to amend the terms of the WCG Note Trust Notes. The
amendment, among other things, eliminates acceleration of the WCG Note Trust
Notes due to a WCG bankruptcy or from a Williams credit rating downgrade. The
amendment also affirms Williams' obligations for all payments due with respect
to the WCG Note Trust Notes, which are due March, 2004, and allows Williams to
fund such payments from any available sources. With the exception of the March
and September 2002 interest payments, totaling $115 million, WCG remains
indirectly obligated to reimburse Williams for any payments Williams is required
to make in connection with the Structured Notes.

     Williams has provided a guarantee of WCG's obligations under a 1998
transaction in which WCG entered into an operating lease agreement covering a
portion of its fiber-optic network. The total cost of the network assets covered
by the lease agreement is $750 million. The lease term initially totaled five
years and, if renewed, could extend to seven years. WCG has an option to
purchase the covered network assets during the lease term at an amount
approximating lessor's cost. On March 6, 2002, a representative of WCG notified
Williams that WCG intends to issue a notice so as to be able to purchase the
assets in the immediate future. As a result of an agreement between Williams and
WCG's revolving credit facility lenders, if Williams gains control of the
network assets covered by the lease, Williams may be obligated to return the
assets to WCG and the liability of WCG to compensate Williams for such property
may be subordinated to the interests of WCG's revolving credit facility lenders
and may not mature any earlier than one year after the maturity of WCG's
revolving credit facility.

     Williams has also provided guarantees on certain performance obligations of
WCG totaling approximately $57 million.

     Williams has received a private letter ruling from the Internal Revenue
Service (IRS) stating that the distribution of WCG common stock would be
tax-free to Williams and its stockholders. Although private letter rulings are
generally binding on the IRS, Williams will not be able to rely on this ruling
if any of the factual representations or assumptions that were made to obtain
the ruling are, or become, incorrect or untrue in any material respect. However,
Williams is not aware of any facts or circumstances that would cause any of the
representations or assumptions to be incorrect or untrue in any material
respect. The distribution could also become taxable to Williams, but not
Williams shareholders, under the Internal Revenue Code (IRC) in the event that
Williams' or WCG's subsequent business combinations were deemed to be part of a
plan contemplated at the time of distribution and would constitute a total
cumulative change of more than 50 percent of the equity interest in either
company.

     Under the terms of an amended tax-sharing agreement between WCG and
Williams, WCG will remain liable to Williams for federal and state income tax
audit adjustments relating to the period from October 1, 1999, through the date
of the spinoff, but will not be responsible for any interest accruing through
2005 on such tax deficiencies. With regard to the tax-free status of the
spinoff, Williams will have the overall risk that the transaction is tax free,
but WCG will have liability to Williams if WCG causes the spinoff to be taxable.
Additionally, WCG and Williams have each agreed to be separately responsible for
any tax resulting from actions taken by its respective company that violate the
IRC requirement relating to a more than 50 percent change in equity interest in
either company discussed above and to mutually monitor activities of both
companies with respect to this requirement.

     As part of the separation of Williams and WCG, both companies entered into
service agreements to support ongoing operations of WCG relating primarily to
certain human resources services, buildings and facilities, administrative and
strategic sourcing services and information technology. Many of these service
agreements expired at the end of 2001, however, certain of the agreements are
longer in term and some

                                        90
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

agreements have been amended to extend the terms into 2002. As these service
agreements expire, the fees and reimbursements that are paid by WCG will also
cease.

     Williams, with respect to shares of WCG's common stock that Williams
retained, has committed to the IRS to dispose of all of the WCG common stock
that it retains as soon as market conditions allow, but in any event not longer
than five years after the spinoff. As part of a separation agreement, but
subject to an additional favorable ruling by the IRS that such a limitation is
not inconsistent with any ruling issued to Williams regarding the tax-free
treatment of the spinoff, Williams agreed not to dispose of the retained WCG
shares for three years from the date of distribution and to notify WCG of an
intent to dispose of such shares. However, on February 28, 2002, Williams filed
with the IRS a request to withdraw its request for a ruling that the agreement
between Williams and WCG that Williams would not transfer any retained WCG stock
for a three year period from the spinoff would not be inconsistent with the
favorable tax-free treatment ruling issued to Williams. Williams represented in
the withdrawal request that it had abandoned its intent to make the lock-up
effective, thereby making the ruling request moot.

SIGNIFICANT EVENTS OCCURRING AFTER THE SEPARATION

     In third-quarter 2001, Williams purchased the Williams Technology Center
and other ancillary assets (Technology Center) and three corporate aircraft from
WCG for $276 million, which represents the approximate actual cost of
construction of the Williams Technology Center and the acquisition costs of the
ancillary assets and aircraft. Williams then entered into long-term lease
arrangements under which WCG is the sole lessee of the Technology Center and
aircraft (see Note 13). As a result of this transaction, Williams' Consolidated
Balance Sheet includes $28.8 million in current accounts and notes receivable
and $137.2 million in noncurrent other assets and deferred charges, net of
allowance of $103.2 million, relating to amounts due from WCG (see Note 13).

     For information relating to litigation involving the distribution of WCG
shares see Note 19.

     Recent disclosures and announcements by WCG, including WCG's recent
announcement that it might seek to reorganize under the U.S. Bankruptcy Code,
have resulted in Williams concluding that it is probable that it will not fully
realize the $375 million of receivables from WCG at December 31, 2001 nor
recover its remaining $25 million investment in WCG common stock. In addition,
Williams has determined that it is probable that it will be required to perform
under the $2.21 billion of guarantees and payments obligations discussed above.
Other events that have affected Williams' assessment include the credit
downgrades of WCG, the bankruptcy of a significant competitor announced on
January 28, 2002, and public statements by WCG regarding an ongoing
comprehensive review of its bank secured credit arrangements. As a result of
these factors, Williams, using the best information available at the time and
under the circumstances, has developed an estimated range of loss related to its
total WCG exposure. Management utilized the assistance of external legal counsel
and an external financial and restructuring advisor in making estimates related
to its guarantees and payment obligations and ultimate recovery of the
contractual amounts receivable from WCG. At this time, management believes that
no loss within the range is more probable than another. Accordingly, Williams
has recorded the $2.05 billion minimum amount of the range of loss which is
reported in the Consolidated Statement of Operations as a $1.84 billion pre-tax
charge to discontinued operations and a $213 million pre-tax charge to
continuing operations. Williams recognized a related deferred tax benefit in the
Consolidated Statement of Operations of $742.5 million ($68.9 million in
continuing operations and $673.6 million in discontinued operations). The
ultimate amount of tax benefit realized could be different from the deferred tax
benefit recorded, as influenced by potential changes in federal income tax laws
and the circumstances upon the actual realization of the tax benefits from WCG's
balance sheet restructuring program.

     The charge to discontinued operations of $1.84 billion includes the $1.77
billion minimum amount of the estimated range of loss from performance on $2.21
billion of guarantees and payment obligations and

                                        91
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

approximately $16 million in expenses. With the exception of the interest on the
Note Trust Notes and the expenses, Williams has assumed for purposes of this
estimated loss that it will become an unsecured creditor of WCG for all or part
of the amounts paid under the guarantees and payment obligations. However, it is
probable that Williams will not be able to recover a significant portion of the
receivables. The estimated loss from the performance of the guarantees and
payment obligations is based on the overall estimate of recoveries on amounts
receivable discussed below. Due to the amendment of the WCG Note Trust Notes
discussed above, $1.1 billion of the accrued loss will be classified as a
long-term liability in the Consolidated Balance Sheet.

     The charge to continuing operations of $213 million includes estimated
losses from an assessment of the recoverability of carrying amounts of the $106
million deferred payment for services provided to WCG, the $269 million minimum
lease payment receivable from WCG, and a remaining $25 million investment in WCG
common stock. The $85 million provision on the deferred payment is based on the
overall estimate of recoveries on amounts receivable using the same assumptions
on collectability as discussed below. The $103 million provision on the minimum
lease payments receivable is based on an estimate of the fair value of the
leased assets. The $25 million write-off of the WCG investment is based on
management's assessment of realization as a result of WCG's balance sheet
restructuring program.

     The estimated range of loss assumes that Williams, as a creditor of WCG,
will recover only a portion of its unsecured claims against WCG. Such claims
include a $2.21 billion receivable from performance on guarantees and payment
obligations and a $106 million deferred payment for services provided to WCG.
With the assistance of external legal counsel and an external financial and
restructuring advisor, and considering the best information available at the
time and under the circumstances, management developed a range of loss on these
receivables with a minimum loss of 80 percent on claims in a bankruptcy of WCG.
Estimating the range of loss as a creditor involves making complex judgments and
assumptions about uncertain outcomes. The actual loss may ultimately differ from
the recorded loss due to changes in numerous factors, which include, but are not
limited to, the future demand for telecommunications services and the state of
the telecommunications industry, WCG's individual performance, and the nature of
the restructuring of WCG's balance sheet. There could be additional losses
recognized in the future, a portion of which may be reflected as discontinued
operations.

     The minimum amount of loss in the range is estimated based on recoveries
from a successful reorganization process under Chapter 11 of the U.S. Bankruptcy
Code. Recoveries after a successful reorganization process depend, among other
things, on the impact of a bankruptcy on WCG's financial performance and WCG's
ability to continue uninterrupted business services to its customers and to
maintain relationships with vendors. To estimate recoveries of the unsecured
creditors, Williams estimated an enterprise value of WCG using a present value
analysis and reduced the enterprise value by the level of secured debt which may
exist in WCG's restructured balance sheet. In its estimate of WCG's enterprise
value, Williams considered a range of cash flow estimates based on information
from WCG and from other external sources. Future cash flow projections are
valued using discount rates ranging from 17 percent to 25 percent. The range of
cash flows is based on different scenarios related to the growth, if any, of
WCG's revenues and the impact that a bankruptcy may have on revenue growth. The
range of discount rates considers WCG's assumed restructured capital structure
and the market return that equity investors may require to invest in a
telecommunications business operating in the current distressed industry
environment. The range of loss also considers recoveries based on transaction
values from recent telecommunications restructurings and from a liquidation of
WCG's assets.

     Should WCG go into bankruptcy under Chapter 7 of the U.S. Bankruptcy Code,
recoveries under a liquidation would include factors such as the nature of WCG's
assets, the value of operating assets in a distressed telecommunications market,
the cost of liquidation, operating losses during the period of liquidation, the
length of liquidation period and claims of creditors superior to those of
Williams' unsecured claims.

                                        92
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

SUMMARIZED RESULTS OF DISCONTINUED OPERATIONS

     Summarized results of discontinued operations for the years ended December
31, 2001, 2000 and 1999, are as follows:

<Table>
<Caption>
                                                           2001       2000      1999
                                                         ---------   -------   -------
                                                                  (MILLIONS)
<S>                                                      <C>         <C>       <C>
Revenues...............................................  $   329.5*  $ 818.8   $ 575.6
Loss from operations:
  Loss before income taxes.............................     (271.3)*  (252.4)   (272.0)
  Estimated before tax loss on disposal of WCG's
     Solutions segment.................................         --    (323.9)       --
  Estimated losses attributable to probable performance
     on WCG guarantee obligations......................   (1,839.2)       --        --
  Benefit for income taxes.............................      797.4     156.8      73.3
  Cumulative effect of change in accounting
     principle.........................................         --     (21.6)       --
                                                         ---------   -------   -------
          Loss from discontinued operations............  $(1,313.1)  $(441.1)  $(198.7)
                                                         =========   =======   =======
</Table>

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

* Represents results of operations from January 1, 2001 through April 23, 2001.

     On January 25, 2001, WCG's board of directors approved a plan for WCG's
management to divest operations that previously comprised the Solutions segment.
On January 29, 2001, WCG signed an agreement to sell the domestic and Mexican
operations of Solutions to Platinum Equity, LLC. This sale closed in first-
quarter 2001. WCG divested its remaining Canadian Solutions operations in 2001.
The estimated pre-tax loss on disposal of WCG's Solutions segment in 2000
represents the pre-tax estimated loss on sale, including exit costs and the
pre-tax estimated operating losses of Solutions from January 1, 2001, to the
anticipated disposal date. The 2001 benefit for income taxes attributable to
discontinued operations includes an approximately $40 million benefit resulting
from Williams finalizing the tax basis of the businesses disposed.

     Prior to January 1, 2000, Williams' revenue recognition policy on WCG
Solutions' new system sales and upgrades had been to recognize revenues under
the percentage-of-completion method. A portion of the revenues on the contracts
was initially recognized upon delivery of equipment with the remaining revenues
under the contract being recognized over the installation period based on the
relationship of incurred labor to total estimated labor. In light of the new
guidance in SAB No. 101, effective January 1, 2000, Williams changed its method
of accounting for new systems sales and upgrades from the
percentage-of-completion method to the completed-contract method. The cumulative
effect of the accounting change resulted in a charge to the 2000 loss on
discontinued operations of $21.6 million (net of income tax benefits of $14.9
million and minority interest of $21 million).

     In October 1999, WCG completed an initial public offering of approximately
34 million shares of its common stock at $23 per share for proceeds of
approximately $738 million. In addition, approximately 34 million shares of
common stock were privately sold in concurrent investments by SBC Communications
Inc., Intel Corporation, and Telefonos de Mexico S.A. de C.V. for proceeds of
$738.5 million. These transactions resulted in a reduction of Williams'
ownership interest in WCG from 100 percent to 85.3 percent. In accordance with
Williams' policy regarding the issuance of subsidiary's common stock, Williams
recognized a $1.17 billion increase to Williams' capital in excess of par, a
$3.4 million decrease to accumulated other comprehensive income, and an initial
increase of $307 million to Williams' minority interest liability. The issuances
of stock by WCG were not subject to federal income taxes.

                                        93
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NET ASSETS OF DISCONTINUED OPERATIONS

     Net assets of discontinued operations as of December 31, 2000, are as
follows:

<Table>
<Caption>
                                                                 2000
                                                              ----------
                                                              (MILLIONS)
<S>                                                           <C>
Current assets..............................................   $1,206.4
Investments.................................................      619.9
Property, plant and equipment...............................    5,228.5
Other assets and goodwill...................................      444.0
                                                               --------
  Total assets..............................................    7,498.8
                                                               --------
Current liabilities.........................................      968.8
Long-term debt..............................................    3,511.9
Other liabilities and deferred income.......................      453.9
Minority and preferred interest in consolidated
  subsidiaries..............................................      285.8
                                                               --------
  Total liabilities and minority interest...................    5,220.4
                                                               --------
                                                                2,278.4
                                                               --------
Consolidated tax impact of discontinued operations..........      190.5
Consolidated minority interest in WCG.......................     (178.7)
                                                               --------
Net assets of discontinued operations.......................   $2,290.2
                                                               ========
</Table>

NOTE 4. INVESTING ACTIVITIES

     Investing income (loss) for the years ended December 31, 2001, 2000 and
1999, is as follows:

<Table>
<Caption>
                                                              2001      2000    1999
                                                             -------   ------   -----
                                                                    (MILLIONS)
<S>                                                          <C>       <C>      <C>
Equity earnings (losses)*..................................  $  22.7   $ 21.6   $(6.3)
Write-down of investment in WCG stock......................    (95.9)      --      --
Income (loss) from investments*............................    (23.3)     0.8      --
Loss provision for WCG receivables (see Note 3)............   (188.0)      --      --
Interest income and other..................................     86.1     83.7    31.4
                                                             -------   ------   -----
          Total............................................  $(198.4)  $106.1   $25.1
                                                             =======   ======   =====
</Table>

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

* Items also included in segment profit.

     Williams recognized a $94.2 million charge in third-quarter 2001,
representing declines in the value of certain investments, including $70.9
million related to Williams' investment in WCG and the $23.3 million related to
loss from other investments, which were determined to be other than temporary.
These determinations were primarily based on the continued depressed market
values of these investments and the overall market value decline experienced by
related industry sectors. In addition, a $25 million charge relating to
Williams' remaining investment in WCG common stock was recorded in conjunction
with Williams' assessment of realization as a result of WCG's balance sheet
restructuring program. The total charges of $119.2 million are included in
investing income (loss) and are reflected in net income (loss) with no
associated tax benefit.

                                        94
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Investments at December 31, 2001 and 2000, are as follows:

<Table>
<Caption>
                                                                2001       2000
                                                              --------   --------
                                                                  (MILLIONS)
<S>                                                           <C>        <C>
Equity method:
  Gulfstream Pipeline, LLC -- 50%...........................  $  467.8   $   17.1
  Alliance Pipeline -- 14.6%................................     186.8      183.6
  Longhorn Partners Pipeline, L.P. -- 32.1%.................     105.1      105.3
  Discovery Pipeline -- 50%.................................      70.2       87.6
  Accroven -- 49.3%.........................................      57.1         --
  Alliance Aux Sable -- 14.6%...............................      53.9       57.6
  AB Mazeikiu Nafta -- 33%..................................      39.1       61.2
  Other.....................................................     191.2      242.2
                                                              --------   --------
                                                               1,171.2      754.6
Cost method:
  Gulf Liquids Holdings, LLC................................      92.2       44.5
  Algar Telecom S.A. -- common and preferred stock..........      52.8       52.8
  Asian Infrastructure Fund.................................      36.3       40.5
  Other.....................................................      95.1       72.5
                                                              --------   --------
                                                                 276.4      210.3
Ferrellgas Partners L.P. senior common units................        --      193.9
Advances to affiliates and other............................     115.5      209.8
                                                              --------   --------
                                                              $1,563.1   $1,368.6
                                                              ========   ========
</Table>

     Dividends and distributions received from companies carried on the equity
basis were $51 million, $21 million and $14 million in 2001, 2000 and 1999,
respectively.

     The Ferrellgas Partners L.P. senior common units were sold in 2001 for
$199.1 million. Williams recognized no gain or loss associated with this
transaction as the purchase price of the units sold approximated their carrying
value. As part of the sale, Williams is party to a put agreement whereby the
purchaser's lenders can require Williams to repurchase the units upon certain
events of default by the purchaser or failure or default by Williams under any
of its debt obligations greater than $60 million. The total contingent
obligation under the put agreement at December 31, 2001, was $99.6 million.
Williams' contingent obligation reduces as purchaser's payments are made to the
lender. The put agreement expires December 30, 2005. There have been no events
of default and the purchaser has performed as required under payment terms with
the lender.

     At December 31, 2001, commitments for additional investments in Gulfstream
Pipeline, LLC, certain international cost investments and advances to Longhorn
Partners Pipeline, L.P. are $233 million.

NOTE 5. ASSET SALES, IMPAIRMENTS AND OTHER ACCRUALS

     The $170 million impairment charge, reflected in the Consolidated Statement
of Operations, relates to the soda ash mining facility located in Colorado. The
facility, which began production in fourth-quarter 2000, experienced higher than
expected construction costs and implementation difficulties through December
2001. As a result, an impairment of the assets based on management's estimate of
the fair value was recorded in fourth-quarter 2001. Management's estimate was
based on the present value of discounted future cash flows. In addition,
management engaged an outside business consulting firm to provide further
information to be utilized in management's estimation. Future events and the use
of different judgments and/or assumptions could result in the recognition of an
additional impairment charge.

                                        95
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Significant gains or losses from asset sales, impairments and other
accruals included in other (income) expense -- net within segment costs and
expenses for the years ended December 31, 2001, 2000 and 1999, are as follows:

<Table>
<Caption>
                                                                  (GAINS) LOSSES
                                                               2001    2000     1999
                                                              ------   -----   ------
                                                                    (MILLIONS)
<S>                                                           <C>      <C>     <C>
ENERGY MARKETING & TRADING
  Impairment of plant for terminated expansion..............  $ 13.3   $  --   $   --
  Guarantee loss accruals and impairments...................      --    47.5       --
  Impairment of distributed power services business.........      --    16.3       --
  Gain on sale of certain retail gas and electric
     operations.............................................      --      --    (22.3)
GAS PIPELINE
  Gain on sale of limited partner units of Northern Border
     Partners, L.P..........................................   (27.5)     --       --
  Loss accrual for royalty claims (see Note 19).............    18.3      --       --
ENERGY SERVICES:
  EXPLORATION & PRODUCTION
     Gain on sale of certain interests in gas producing
       properties...........................................      --      --    (14.7)
  MIDSTREAM GAS & LIQUIDS
     Impairment of south Texas assets.......................    13.8      --       --
  PETROLEUM SERVICES
     Impairment and other loss accruals for travel
       centers..............................................    14.7      --       --
     Gain on sale of certain convenience stores.............   (75.3)     --       --
     Impairment of end-to-end mobile computing systems
       business.............................................    12.1    11.9       --
</Table>

     The guarantee loss accruals and impairments of $47.5 million in 2000
include impairment charges resulting from the decision to discontinue mezzanine
lending services, and the accruals represent the estimated liabilities
associated with guarantees of third-party lending activities.

NOTE 6. PROVISION FOR INCOME TAXES

     The provision for income taxes from continuing operations includes:

<Table>
<Caption>
                                                             2001     2000     1999
                                                            ------   ------   -------
                                                                   (MILLIONS)
<S>                                                         <C>      <C>      <C>
Current:
  Federal.................................................  $242.2   $160.4   $(286.7)
  State...................................................    28.7     24.7      28.1
  Foreign.................................................    13.1      4.3       3.4
                                                            ------   ------   -------
                                                             284.0    189.4    (255.2)
Deferred:
  Federal.................................................   295.5    379.4     465.5
  State...................................................    33.0     63.8      21.1
  Foreign.................................................    17.7     (2.7)      (.6)
                                                            ------   ------   -------
                                                             346.2    440.5     486.0
                                                            ------   ------   -------
          Total provision.................................  $630.2   $629.9   $ 230.8
                                                            ======   ======   =======
</Table>

                                        96
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Reconciliations from the provision for income taxes from continuing
operations at the federal statutory rate to the provision for income taxes are
as follows:

<Table>
<Caption>
                                                              2001     2000     1999
                                                             ------   ------   ------
                                                                    (MILLIONS)
<S>                                                          <C>      <C>      <C>
Provision at statutory rate................................  $513.0   $558.4   $205.0
Increases (reductions) in taxes resulting from:
  State income taxes (net of federal benefit)..............    40.2     57.5     32.0
  Foreign operations-net...................................    12.2      2.1     (1.6)
  Change in valuation allowance............................    44.5       --       --
  Other -- net.............................................    20.3     11.9     (4.6)
                                                             ------   ------   ------
Provision for income taxes.................................  $630.2   $629.9   $230.8
                                                             ======   ======   ======
</Table>

     Significant components of deferred tax liabilities and assets as of
December 31, 2001 and 2000, are as follows:

<Table>
<Caption>
                                                                2001       2000
                                                              --------   --------
                                                                  (MILLIONS)
<S>                                                           <C>        <C>
Deferred tax liabilities:
  Property, plant and equipment.............................  $3,075.1   $2,268.6
  Energy risk management and trading -- net.................   1,023.1      368.3
  Investments...............................................     510.2      525.3
  Other.....................................................     170.6      211.5
                                                              --------   --------
          Total deferred tax liabilities....................   4,779.0    3,373.7
                                                              --------   --------
Deferred tax assets:
  Guarantee obligations related to WCG......................     742.5         --
  Minimum tax credits.......................................     249.0      241.7
  Accrued liabilities.......................................     245.4      230.5
  Investments...............................................     173.3         --
  Receivables...............................................      63.1        2.5
  Loss carryovers...........................................      73.5         --
  Rate refunds..............................................      35.7       19.4
  Other.....................................................     120.5       80.6
                                                              --------   --------
          Total deferred tax assets.........................   1,703.0      574.7
                                                              --------   --------
  Valuation allowance.......................................     173.3         --
                                                              --------   --------
          Net deferred tax assets...........................   1,529.7      574.7
                                                              --------   --------
  Overall net deferred tax liabilities......................  $3,249.3   $2,799.0
                                                              ========   ========
</Table>

     Cash payments for income taxes (net of refunds) were $87 million and $112
million in 2001 and 2000, respectively. In 1999, cash refunds exceeded cash
payments resulting in a net refund of $387 million. Federal tax refunds received
in 1999 are reflected as current tax benefits with offsetting deferred tax
provisions attributable to temporary differences between the book and tax basis
of certain assets.

     Valuation allowances were established during 2001 for deferred tax assets
from basis differences in investments for which the ultimate realization of the
tax asset may be dependent on future capital gains. The recording of the
investment in the retained shares of WCG after the spinoff (see Note 3) resulted
in a $129 million tax asset for which a valuation allowance of $129 million was
established. The remaining $44 million of the tax asset, for which a valuation
allowance was established, resulted from the financial impairment of certain
investments during 2001 (see Note 4).

                                        97
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The merger with Barrett (see Note 2) resulted in $620 million of net
liability added to Williams' deferred tax balances as of the merger date.
Included in this amount was $70 million of deferred tax assets for pre-
affiliation federal net operating loss carryovers which are expected to be
utilized by Williams prior to expiration of the carryovers in 2011 through 2018.

NOTE 7.  EXTRAORDINARY GAIN

     On December 17, 1999, Williams sold its retail propane business, Thermogas
L.L.C. (Thermogas), previously a subsidiary of MAPCO, to Ferrellgas Partners
L.P. (Ferrellgas) for $443.7 million, including $175 million in senior common
units of Ferrellgas. The sale resulted from an unsolicited offer from Ferrellgas
and yielded an after-tax gain of $65.2 million (net of a $47.9 million provision
for income taxes), which is reported as an extraordinary gain. The results of
operations from this business are not significant to consolidated net income for
1999. Thermogas operations for 1999 are reported within the Energy Marketing &
Trading segment.

NOTE 8.  EARNINGS PER SHARE

     Basic and diluted earnings per common share are computed for the years
ended December 31, 2001, 2000 and 1999, as follows:

<Table>
<Caption>
                                                          2001         2000         1999
                                                       ----------   ----------   ----------
                                                        (DOLLARS IN MILLIONS, EXCEPT PER-
                                                       SHARE AMOUNTS; SHARES IN THOUSANDS)
<S>                                                    <C>          <C>          <C>
Income from continuing operations....................   $  835.4     $  965.4     $  354.9
Convertible preferred stock dividends................         --           --         (2.8)
                                                        --------     --------     --------
Income from continuing operations available to common
  stockholders for basic earnings per share..........      835.4        965.4        352.1
Effect of dilutive securities:
  Convertible preferred stock dividends..............         --           --          2.8
                                                        --------     --------     --------
Income from continuing operations available to common
  stockholders for diluted earnings per share........   $  835.4     $  965.4     $  354.9
                                                        ========     ========     ========
Basic weighted-average shares........................    496,935      444,416      436,117
Effect of dilutive securities:
  Convertible preferred stock........................         --           --        5,403
  Stock options......................................      3,632        4,904        5,395
                                                        --------     --------     --------
Diluted weighted-average shares......................    500,567      449,320      446,915
                                                        --------     --------     --------
Earnings per share from continuing operations:
  Basic..............................................   $   1.68     $   2.17     $    .81
                                                        ========     ========     ========
  Diluted............................................   $   1.67     $   2.15     $    .79
                                                        ========     ========     ========
</Table>

     Approximately 15.3 million, 7.2 million and 6.2 million options to purchase
shares of common stock with weighted-average exercise prices of $36.12, $43.11
and $38.56, respectively, were outstanding on December 31, 2001, 2000 and 1999,
respectively, but have been excluded from the computation of diluted earnings
per share. Inclusion of these shares would have been antidilutive, as the
exercise prices of the options exceeded the average market prices of the common
shares for the respective years.

                                        98
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 9. EMPLOYEE BENEFIT PLANS

     The following table presents the changes in benefit obligations and plan
assets for pension benefits and other postretirement benefits for the years
indicated. It also presents a reconciliation of the funded status of these
benefits to the amount recognized in the Consolidated Balance Sheet at December
31 of each year indicated. The year 2000 disclosure excludes WCG which has been
accounted for as discontinued operations (see Note 1). Subsequent measurement of
the impact of the spinoff of WCG identified additional benefit obligations and
plan assets of $2.3 million and $11.8 million, respectively, which have been
included in the table as a divestiture in the year 2001.

<Table>
<Caption>
                                                                      OTHER POSTRETIREMENT
                                                 PENSION BENEFITS           BENEFITS
                                                -------------------   ---------------------
                                                  2001       2000       2001        2000
                                                --------   --------   ---------   ---------
                                                                (MILLIONS)
<S>                                             <C>        <C>        <C>         <C>
Change in benefit obligation:
  Benefit obligations at beginning of year....  $  937.8   $  791.5    $ 466.8     $ 443.3
  Service cost................................      37.0       34.1        6.9         7.5
  Interest cost...............................      71.6       69.6       29.5        33.1
  Plan participants' contributions............        --         --        2.7         2.0
  Amendments..................................        --        4.7         --          --
  Divestiture.................................      (2.3)        --         --          --
  Special termination benefit cost............        --       11.6         --         1.4
  Actuarial loss..............................      44.5      111.4        6.9          .5
  Benefits paid...............................     (65.3)     (85.1)     (23.8)      (21.0)
                                                --------   --------    -------     -------
  Benefit obligation at end of year...........   1,023.3      937.8      489.0       466.8
                                                --------   --------    -------     -------
Change in plan assets:
  Fair value of plan assets at beginning of
     year.....................................     981.5    1,079.9      254.2       252.5
  Actual return on plan assets................     (81.4)     (29.1)     (14.4)       (6.5)
  Divestiture.................................     (11.8)        --         --          --
  Employer contributions......................      63.0       15.8       28.9        27.2
  Plan participants' contributions............        --         --        2.7         2.0
  Benefits paid...............................     (65.3)     (61.7)     (23.8)      (21.0)
  Settlement benefits paid....................        --      (23.4)        --          --
                                                --------   --------    -------     -------
  Fair value of plan assets at end of year....     886.0      981.5      247.6       254.2
                                                --------   --------    -------     -------
Funded status.................................    (137.3)      43.7     (241.4)     (212.6)
Unrecognized net actuarial (gain) loss........     254.8       22.2       37.9        (8.1)
Unrecognized prior service credit.............     (11.4)     (13.5)      (1.3)       (1.2)
Unrecognized transition (asset) obligation....        .4        (.2)      44.8        48.9
                                                --------   --------    -------     -------
Prepaid (accrued) benefit cost................  $  106.5   $   52.2    $(160.0)    $(173.0)
                                                ========   ========    =======     =======
</Table>

     Amounts recognized in the Consolidated Balance Sheet consist of:

<Table>
<S>                                             <C>        <C>        <C>       <C>
Prepaid benefit cost..........................  $  135.1   $   79.7   $    --       5.9
Accrued benefit cost..........................     (34.1)     (27.5)   (160.0)   (178.9)
Intangible asset..............................       1.9         --        --        --
Accumulated other comprehensive income (before
  tax)........................................       3.6         --        --        --
                                                --------   --------   -------   -------
Prepaid (accrued) benefit cost................  $  106.5   $   52.2   $(160.0)  $(173.0)
                                                ========   ========   =======   =======
</Table>

                                        99
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Net pension and other postretirement benefit expense consists of the
following:

<Table>
<Caption>
                                                                PENSION BENEFITS
                                                              ---------------------
                                                              2001    2000    1999
                                                              -----   -----   -----
                                                                   (MILLIONS)
<S>                                                           <C>     <C>     <C>
Components of net periodic pension expense:
  Service cost..............................................  $37.0   $34.1   $36.0
  Interest cost.............................................   71.6    69.6    65.1
  Expected return on plan assets............................  (98.8)  (96.3)  (89.6)
  Amortization of transition asset..........................    (.6)    (.8)    (.7)
  Amortization of prior service credit......................   (2.1)   (2.1)   (2.4)
  Recognized net actuarial loss.............................     .5      --     2.1
  Regulatory asset amortization.............................    4.8     4.4     7.2
  Settlement/curtailment gain...............................     --      --    (5.6)
  Special termination benefit cost..........................     --    11.6     2.2
                                                              -----   -----   -----
Net periodic pension expense................................  $12.4   $20.5   $14.3
                                                              =====   =====   =====
</Table>

<Table>
<Caption>
                                                             OTHER POSTRETIREMENT BENEFITS
                                                             ------------------------------
                                                               2001       2000       1999
                                                             --------   --------   --------
                                                                       (MILLIONS)
<S>                                                          <C>        <C>        <C>
Components of net periodic postretirement benefit expense:
  Service cost.............................................   $  6.9     $  7.5     $  8.5
  Interest cost............................................     29.5       33.1       29.9
  Expected return on plan assets...........................    (22.6)     (17.3)     (14.3)
  Amortization of transition obligation....................      4.1        4.1        4.0
  Amortization of prior service cost.......................       .1         .2         .1
  Recognized net actuarial loss (gain).....................     (2.6)       (.9)        .3
  Regulatory asset amortization............................     14.7        8.7        9.0
  Special termination benefit cost.........................       --        1.4         --
                                                              ------     ------     ------
Net periodic postretirement benefit expense................   $ 30.1     $ 36.8     $ 37.5
                                                              ======     ======     ======
</Table>

     The projected benefit obligation, accumulated benefit obligation and fair
value of plan assets for the pension plans with accumulated benefit obligations
in excess of plan assets were $65.7 million, $51.9 million and $19.7 million,
respectively, as of December 31, 2001, and $65.0 million, $50.4 million and
$22.5 million, respectively, as of December 31, 2000.

     The following are the weighted-average assumptions utilized as of December
31 of the year indicated:

<Table>
<Caption>
                                                                                 OTHER
                                                                PENSION     POSTRETIREMENT
                                                               BENEFITS        BENEFITS
                                                              -----------   ---------------
                                                              2001   2000    2001     2000
                                                              ----   ----   ------   ------
<S>                                                           <C>    <C>    <C>      <C>
Discount rate...............................................  7.5%   7.5%     7.5%     7.5%
Expected return on plan assets..............................   10     10       10       10
Expected return on plan assets (net of effective tax
  rate).....................................................  N/A    N/A      8.2        6
Rate of compensation increase...............................    5      5      N/A      N/A
</Table>

     The annual assumed rate of increase in the health care cost trend rate for
2002 is 11.8 percent, and systematically decreases to 5 percent by 2015.

     The various nonpension postretirement benefit plans which Williams sponsors
provide for retiree contributions and contain other cost-sharing features such
as deductibles and coinsurance. The accounting for

                                       100
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

these plans anticipates future cost-sharing changes to the written plans that
are consistent with Williams' expressed intent to increase the retiree
contribution rate generally in line with health care cost increases.

     The health care cost trend rate assumption has a significant effect on the
amounts reported. A one-percentage-point change in assumed health care cost
trend rates would have the following effects:

<Table>
<Caption>
                                                             POINT INCREASE   POINT DECREASE
                                                             --------------   --------------
                                                                       (MILLIONS)
<S>                                                          <C>              <C>
Effect on total of service and interest cost components....      $ 5.2            $ (4.2)
Effect on postretirement benefit obligation................       66.3             (54.3)
</Table>

     The amount of postretirement benefit costs deferred as a regulatory asset
at December 31, 2001 and 2000, is $56 million and $84 million, respectively, and
is expected to be recovered through rates over approximately 13 years.

     Williams maintains various defined-contribution plans. Williams recognized
costs related to continuing operations of $36 million in 2001, $30 million in
2000 and $29 million in 1999 for these plans.

NOTE 10. INVENTORIES

     Inventories at December 31, 2001 and 2000, are as follows:

<Table>
<Caption>
                                                               2001     2000
                                                              ------   ------
                                                                (MILLIONS)
<S>                                                           <C>      <C>
Raw materials:
  Crude oil.................................................  $117.7   $ 70.0
  Other.....................................................     1.3      1.6
                                                              ------   ------
                                                               119.0     71.6
                                                              ------   ------
Finished goods:
  Refined products..........................................   265.0    269.6
  Natural gas liquids.......................................   142.6    200.2
  General merchandise.......................................    14.5     12.5
                                                              ------   ------
                                                               422.1    482.3
                                                              ------   ------
Materials and supplies......................................   134.6    122.9
Natural gas in underground storage..........................   136.4    169.0
Other.......................................................     1.7      2.6
                                                              ------   ------
                                                              $813.8   $848.4
                                                              ======   ======
</Table>

     As of December 31, 2001 and 2000, approximately 35 percent and 54 percent
of inventories, respectively, were stated at fair value. Inventories, primarily
related to energy risk management and trading activities, stated at fair value
at December 31, 2001 and 2000, included refined products of $90.8 million and
$195.1 million, respectively; natural gas in underground storage of $65.3
million and $125.8 million, respectively; and natural gas liquids of $97.9
million and $124.4 million, respectively. Inventories determined using the LIFO
cost method were approximately five percent and three percent of inventories at
December 31, 2001 and 2000, respectively. Certain crude oil and refined products
inventories determined using the FIFO cost method and adjusted for the effects
of fair value hedges, as prescribed by SFAS No. 133 were approximately 25
percent of inventories at December 31, 2001. The remaining inventories were
primarily determined using the average-cost method.

                                       101
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 11. PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment at December 31, 2001 and 2000, is as follows:

<Table>
<Caption>
                                                                2001        2000
                                                              ---------   ---------
                                                                   (MILLIONS)
<S>                                                           <C>         <C>
Cost:
  Energy Marketing & Trading................................  $   378.9   $   299.8
  Gas Pipeline..............................................    9,929.4     9,084.9
  Energy Services:
     Exploration & Production...............................    3,267.1       526.3
     International..........................................      800.1       820.3
     Midstream Gas & Liquids................................    5,512.4     5,098.9
     Petroleum Services.....................................    2,722.8     2,588.2
     Williams Energy Partners...............................      382.8       341.0
  Other.....................................................      281.9       269.4
                                                              ---------   ---------
                                                               23,275.4    19,028.8
Accumulated depreciation, depletion and amortization........   (5,556.2)   (4,822.9)
                                                              ---------   ---------
                                                              $17,719.2   $14,205.9
                                                              =========   =========
</Table>

     Depreciation, depletion and amortization expense for property, plant and
equipment was $790.7 million, $636.1 million and $585.1 million, respectively,
in 2001, 2000 and 1999.

     Included in gross property, plant and equipment at December 31, 2001 and
2000, is approximately $1.1 billion and $940 million, respectively, of
construction in progress which is not yet subject to depreciation. In addition,
property of Exploration & Production includes approximately $839 million at
December 31, 2001, of capitalized costs from the Barrett acquisition (see Note
2) related to properties with probable reserves not yet subject to depletion.

     Commitments for construction and acquisition of property, plant and
equipment are approximately $771 million at December 31, 2001.

     Included in net property, plant and equipment is approximately $1.8 billion
and $1.9 billion at December 31, 2001 and 2000, respectively, related to amounts
in excess of the original cost of the regulated facilities within Gas Pipeline
as a result of Williams' and prior acquisitions. This amount is being amortized
over the estimated remaining useful lives of these assets at the date of
acquisition. Current FERC policy does not permit recovery through rates for
amounts in excess of original cost of construction.

                                       102
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 12. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

     Under Williams' cash-management system, certain subsidiaries' cash accounts
reflect credit balances to the extent checks written have not been presented for
payment. The amounts of these credit balances included in accounts payable are
$32 million at December 31, 2001, and $70 million at December 31, 2000.

     Accrued liabilities at December 31, 2001 and 2000, are as follows:

<Table>
<Caption>
                                                                2001       2000
                                                              --------   --------
                                                                  (MILLIONS)
<S>                                                           <C>        <C>
Employee costs..............................................  $  371.2   $  335.8
Deposits received from customers relating to energy risk
  management and trading and hedging activities.............     265.5      244.6
Interest....................................................     213.0      151.3
Taxes other than income taxes...............................     165.4      128.5
Income taxes................................................     105.7       18.4
Rate refunds................................................      95.9       72.1
Other.......................................................     748.5      436.7
                                                              --------   --------
                                                              $1,965.2   $1,387.4
                                                              ========   ========
</Table>

NOTE 13. DEBT, LEASES AND BANKING ARRANGEMENTS

NOTES PAYABLE

     During 2001, Williams' commercial paper program, backed by a short-term
credit facility, was increased from $1.7 billion to $2.2 billion. At December
31, 2001 and 2000, $1.4 billion and $1.7 billion, respectively, of commercial
paper was outstanding under the respective programs. Interest rates vary with
current market conditions. In January 2002, $300 million of commercial paper was
repaid with proceeds from the issuance of long-term debt obligations and, as
such, $300 million is classified as long-term as discussed below. In addition,
Williams has entered into various other short-term credit agreements, as
discussed below, with amounts outstanding totaling $300 million at December 31,
2001, as compared to $350 million at December 31, 2000. The weighted-average
interest rate on all short-term borrowings at December 31, 2001 and 2000, was
3.33 percent and 7.18 percent, respectively.

     In June 2001, Williams entered into a $200 million (amended in July to $300
million) short-term debt obligation expiring January 2002. The interest rate
varies based on LIBOR plus .875 with an interest rate of 2.81 percent at
December 31, 2001. In January 2002, this debt obligation was repaid with
proceeds from the issuance of long-term debt obligations and, as such, is
classified as long-term as discussed below.

     In July 2001, Williams issued $300 million in floating rate notes due July
2002. The interest rate varies based on LIBOR plus .875 percent and was 3.15
percent at December 31, 2001.

                                       103
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

LONG-TERM DEBT

     Long-term debt at December 31, 2001 and 2000, is as follows:

<Table>
<Caption>
                                                       WEIGHTED
                                                       AVERAGE
                                                       INTEREST
                                                        RATE*       2001        2000
                                                       --------   ---------   ---------
                                                                       (MILLIONS)
<S>                                                    <C>        <C>         <C>
Revolving credit loans...............................    3.3%     $    53.7   $   350.0
Commercial paper.....................................    3.4          300.0          --
Debentures 6.25% -- 10.25%, payable 2003 -- 2031.....    7.4        1,585.4     1,103.5
Notes, 5.1% -- 9.45%, payable through 2031(1)........    7.2        7,345.3     4,856.8
Notes, adjustable rate, payable through 2004.........    2.9        1,192.9     2,080.4
Other, including capitalized leases of $9.3 million
  in 2001, payable through 2016......................    7.8           60.2        73.9
                                                                  ---------   ---------
                                                                   10,537.5     8,464.6
Current portion of long-term debt....................              (1,036.8)   (1,634.1)
                                                                  ---------   ---------
                                                                  $ 9,500.7   $ 6,830.5
                                                                  =========   =========
</Table>

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

 *  At December 31, 2001.

(1) $240 million, 6.125% notes, payable 2012, redeemed at par in February 2002,
    and $400 million of 6.75% notes, payable 2016, putable/callable in 2006.

     For financial statement reporting purposes at December 31, 2001, $300
million of commercial paper, $300 million of short-term debt obligations and
$244 million of long-term debt obligations due within one year, which would have
otherwise been classified as current, have been classified as noncurrent based
on Williams' intent and ability to refinance on a long-term basis. In January
2002, in connection with the issuance of the FELINE PACS (see Note 23), Williams
issued $1.1 billion of 6.5 percent long-term debt obligations due in 2007, but
subject to remarketing in 2004. Proceeds from the issuance of these long-term
debt obligations were sufficient to complete these refinancings.

     Under the terms of Williams' $700 million revolving credit agreement,
Northwest Pipeline, Transcontinental Gas Pipe Line and Texas Gas Transmission
have access to various amounts of the facility, while Williams (Parent) has
access to all unborrowed amounts. Interest rates vary with current market
conditions. At December 31, 2001, no amounts were outstanding under this
revolving credit agreement. Additionally, certain Williams subsidiaries have
revolving credit facilities with a total capacity of $110 million at December
31, 2001.

                                       104
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Significant long-term debt issuances and retirements, other than amounts
under revolving credit agreements, in 2001 are as follows:

<Table>
<Caption>
                                                                          PRINCIPAL
ISSUE/TERMS                                                   DUE DATE      AMOUNT
- -----------                                                   ---------   ----------
                                                                          (MILLIONS)
<S>                                                           <C>         <C>
Issuance of long-term debt in 2001:
  7.875% notes..............................................    2021        $750.0
  7.125% notes..............................................    2011         750.0
  7.5% debentures...........................................    2031         700.0
  6.676% notes (Kern River Gas Transmission)................  2002-2016      510.0
  7.75% notes...............................................    2031         480.0
  6.75% Putable Asset Term Securities(1)....................    2016         400.0
  7% notes (Transcontinental Gas Pipe Line).................    2011         300.0
  Adjustable rate notes (Williams Energy Partners)..........    2004          90.0
Retirements of long-term debt in 2001:
  Adjustable rate notes.....................................    2001        $500.0
  6.72% notes (Kern River Gas Transmission).................    2001         434.7
  6.125% notes..............................................    2001         300.0
  7.08% debentures (Transcontinental Gas Pipe Line)(2)......    2026         192.5
  9.375% notes..............................................    2001          34.8
  6.42% notes (Kern River Gas Transmission).................    2001          25.8
  Various notes, 6.65%-9.45%................................    2001         120.4
  Various notes, adjustable rate............................    2001          15.5
</Table>

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

(1) Putable/callable in 2006.

(2) Subject to redemption at par at the option of the debtholder in 2001.

     In connection with the Barrett acquisition (see Note 2), Williams' December
31, 2001 Consolidated Balance Sheet includes $155 million of debt obligations of
Barrett. Barrett's debt obligations consist of $150 million principal amount of
7.55 percent notes due 2007, which are guaranteed by Williams, and $5 million
from purchase price allocation. Additionally, Williams repaid $155 million of
debt obligations under Barrett's bank-credit facility in fourth-quarter 2001.

     The agreements governing Williams' debt contain covenants and, in some
cases, conditions for future borrowings, with which Williams believes it is
currently in compliance. The conditions for future borrowings include the
absence of default under such agreements, continued accuracy of the
representations and warranties contained in such agreements and absence of any
material adverse changes. Additionally, the agreements governing Williams' debt
include limitations upon liens on Williams' assets with certain exceptions,
including purchase money liens, liens existing on property when acquired by
Williams, liens on receivables, and liens payable solely out of the proceeds of
oil, gas or other minerals produced from the property subject to the lien, as
further defined in the agreements and indentures. Most of Williams' private debt
agreements, including the $2.2 billion short-term credit facility backing
Williams' commercial paper program and $700 million revolving credit agreement,
are subject to compliance with certain financial covenants, including a
requirement that Williams' net debt, as defined in the governing agreements, not
exceed 65 percent of consolidated net worth plus net debt, each as defined in
the governing agreements. Consolidated net worth is defined as total assets less
liabilities and minority and preferred interests in consolidated subsidiaries
plus certain minority interests as defined in the debt agreements. Net debt is
defined as all debt, other than non-recourse debt, as well as certain Williams'
guarantees as defined in the agreements less cash and cash equivalents.
Williams' ratio of net debt to consolidated net worth plus net debt at December
31, 2001 was 61.5 percent. Following the January 2002 issuance of the FELINE
PACS (see

                                       105
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Note 23), the definition of consolidated net worth was amended to include those
securities and the definition of net debt was amended to exclude those
securities. If the FELINE PACS were included in consolidated net worth at
December 31, 2001, Williams' ratio of net debt to consolidated net worth plus
net debt would have been 57.6 percent. None of the Williams loans, notes or
debentures maintains preferential rights in the event of liquidation.

     Terms of certain subsidiaries' borrowing arrangements with lenders limit
the transfer of funds to Williams (Parent). At December 31, 2001, approximately
$423 million of net assets of consolidated subsidiaries was restricted. In
addition, certain equity method investees' borrowing arrangements and foreign
government regulations limit the amount of dividends or distributions to
Williams. Restricted net assets of equity method investees was approximately
$337 million at December 31, 2001.

     Aggregate minimum maturities, considering the reclassification of current
obligations as previously described, for each of the next five years are as
follows:

<Table>
<Caption>
                                                               (MILLIONS)
                                                               ----------
<S>                                                            <C>
2002........................................................     $1,037
2003........................................................        732
2004........................................................      1,562
2005........................................................        282
2006........................................................      1,156
</Table>

     Cash payments for interest (net of amounts capitalized) are as follows:
2001 -- $643 million; 2000 -- $648 million; and 1999 -- $512 million.

LEASES-LESSEE

     Future minimum annual rentals under noncancelable operating leases as of
December 31, 2001, are payable as follows:

<Table>
<Caption>
                                                               (MILLIONS)
                                                               ----------
<S>                                                            <C>
2002........................................................     $ 81.7
2003........................................................       57.8
2004........................................................       47.0
2005........................................................       37.2
2006........................................................       28.6
Thereafter..................................................      176.7
                                                                 ------
Total.......................................................     $429.0
                                                                 ======
</Table>

     Total rent expense was $112 million in 2001, $107 million in 2000 and $109
million in 1999.

     During 2000, Williams entered into operating lease agreements with two
special purpose entities (SPEs) owned by third parties covering certain Williams
travel center stores, offshore oil and gas pipelines and an onshore gas
processing plant. The SPEs are not consolidated by Williams as their equity is
provided by non-related parties. The total estimated cost of the assets covered
by the lease agreements is approximately $300 million. The lease terms include a
five-year base term including the construction phase and can be renewed for
another five-year term upon mutual agreement of the lessor and lessee.

     Williams has an option to purchase the leased assets during the lease terms
at amounts approximating the lessors' cost. Williams provides a residual value
guarantee equal to 85 percent of the lessor's cost on the completed travel
center stores and equal to 89.9 percent of the lessor's cost, less the present
value of actual lease payments, on the offshore oil and gas pipelines and the
onshore gas processing plant. In the event that Williams does not exercise its
purchase option, Williams expects the fair market value of the covered assets to
substantially offset Williams' obligation under the residual value guarantees.
Williams' disclosures for future

                                       106
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

minimum annual rentals under noncancelable operating leases do not include
amounts for residual value guarantees. As of December 31, 2001, approximately
$276 million of costs has been incurred by the lessors.

LEASES-LESSOR

     In third-quarter 2001, Williams purchased the Technology Center and three
corporate aircraft from WCG for $276 million, which represents the approximate
actual cost of construction of the Williams Technology Center and the
acquisition cost of the ancillary assets and aircraft. Williams then entered
into long-term lease arrangements under which WCG is the sole lessee of the
Technology Center and aircraft assets. The lease arrangements are fully backed
by the underlying assets and have payment terms ranging from three to ten years.
WCG has an option to purchase the Technology Center, at any time during the term
of the lease, at the unamortized cost of those assets. Williams has a put option
that requires WCG to purchase the Technology Center due to a default by WCG on
the lease at the unamortized cost of the assets plus accrued rent, or within the
90-day period prior to the 10-year lease termination or in the event of a
casualty loss which exceeds set amounts at the unamortized cost of the
Technology Center. WCG also has an option to purchase the corporate aircraft, at
any time during the term of the lease, at the greater of the unamortized cost or
the market value of those assets. The leases are classified as direct-financing
leases. As a result, Williams removed the leased assets discussed above from its
books and recorded a minimum lease payment receivable equal to the total of the
minimum lease payments of $396 million reduced by the unearned interest income
which is computed using a variable interest rate and initially equaled $120
million. Lease payments from WCG are applied as a reduction of the receivable
while the unearned income is accreted to interest income using the effective
interest method over the life of the leases. As of December 31, 2001, the
Consolidated Balance Sheet includes $28.8 million in current accounts and notes
receivable and $137.2 million (net of allowance for doubtful accounts of $103.2
million) in noncurrent other assets and deferred charges relating to these
leasing arrangements.

     Future minimum lease payments receivable under the leasing arrangements as
of December 31, 2001, are as follows:

<Table>
<Caption>
                                                               (MILLIONS)
                                                               ----------
<S>                                                            <C>
2002........................................................    $  41.9
2003........................................................       40.6
2004........................................................       36.4
2005........................................................       27.1
2006........................................................       24.8
Thereafter..................................................      204.5
                                                                -------
Total minimum lease payments receivable.....................      375.3
Less: Unearned income.......................................     (106.1)
Allowance for doubtful accounts.............................     (103.2)
                                                                -------
Recorded net minimum lease payments receivable..............    $ 166.0
                                                                =======
</Table>

NOTE 14. PREFERRED INTERESTS IN CONSOLIDATED SUBSIDIARIES

     Williams owns the controlling interest in various entities formed in
separate transactions that resulted in the sale of a non-controlling preferred
ownership interest in one entity in each transaction to an outside investor. The
assets and liabilities of each of these entities are included in the
Consolidated Balance Sheet. The preferred ownership interest in each entity is
reflected in the preferred interest in consolidated subsidiaries caption of the
Consolidated Balance Sheet. The outside investors in these entities are
unconsolidated special purpose entities formed solely for the purpose of
purchasing the preferred ownership interest in the respective entity and are
capitalized with no less than three-percent equity from an independent third
party. Each outside investor is entitled to a priority return paid from the
operating results of the entity in which they have an

                                       107
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

investment. Williams has the option to acquire each outside investor's interest
in each entity for an amount approximating the fair value of their ownership
interest. Absent the occurrence of certain events, the purchase option can be
exercised at any time prior to the expiration of the initial priority return
period.

     In addition to financial support in favor of these entities, typically in
the form of demand notes, Williams provides the outside investor in each entity
with certain assurances that the entities involved in each transaction will
maintain certain financial ratios and follow various restrictive covenants
similar to, but in some cases broader than those found in Williams' credit
agreements. A violation of any restrictive covenant, a default by Williams of
its debt obligations, a failure to make priority distributions, or a failure to
negotiate new priority return structures prior to the end of the initial
priority return structure period, could ultimately result in an election by the
outside investor in the impacted entity to liquidate the assets of that entity.
A liquidation could result in a demand of repayment on any Williams obligations
as well as the sale of other assets owned or secured by the entity in order to
generate proceeds to return the investor's capital account balance. Williams can
prevent liquidation of each entity through the exercise of the option to
purchase the outside investor's preferred ownership interest.

     At December 31, 2001, outside investors owned preferred interests in the
following Williams subsidiaries.

SNOW GOOSE ASSOCIATES, L.L.C.

     In December 2000, Williams formed two separate legal entities, Snow Goose
Associates, L.L.C. (Snow Goose) and Arctic Fox Assets, L.L.C. (Arctic Fox) for
the purpose of generating funds to invest in certain Canadian energy-related
assets. An outside investor contributed $560 million in exchange for the non-
controlling preferred interest in Snow Goose. The investor in Snow Goose is
entitled to quarterly priority distributions, representing an adjustable rate
structure of approximately 3.5 percent at December 31, 2001. The initial
priority return period is currently set to expire in December 2005.

     Snow Goose loaned the proceeds received from the outside investor to Arctic
Fox. These proceeds were ultimately used to purchase the Canadian energy-related
assets. Snow Goose's sole asset consists of a note receivable, due in December
2005 from Arctic Fox. At December 31, 2001, the assets of Arctic Fox include
approximately a $400 million note receivable from Williams Energy (Canada),
Inc., due in December 2005, collateralized by the Canadian energy-related
assets, $35 million in loans from Williams payable upon demand, an investment in
operating assets with a carrying value of approximately $140 million and an
investment in 342,000 shares of Williams' cumulative convertible preferred stock
with a liquidation value of $1,000 per share. If sold in a liquidation, each
share of the Williams' cumulative preferred stock would become convertible into
a number of Williams common stock determined by dividing $1,000 by a conversion
price. The initial conversion price is $31.8125 per share. The initial
conversion price is subject to adjustment for events such as stock splits of
Williams common stock, the issuance of stock dividends, issuance of below market
value subscription rights or warrants, and issuance of unusually large cash
dividends.

     In addition to the covenants discussed above, the Snow Goose transaction
requires Williams to maintain a credit rating equal to or higher than BBB- by
Standard & Poor's or a credit rating equal to or higher than Baa3 by Moody's
Investor's Service, but Williams must also maintain credit ratings of BB+ by
Standard & Poor's and Ba1 by Moody's Investor's Service regardless of the rating
by the other agency. Other significant covenants include: (i) an obligation of
Williams Energy (Canada), Inc. to have earnings before interest, taxes,
depreciation and amortization each quarter that are at least three times greater
than the interest due on its loan from Arctic Fox for the quarter; (ii) an
obligation of Williams Energy (Canada), Inc. to have total debt that is less
than 50 percent of its total capitalization; (iii) an obligation of Arctic Fox
to have assets with a book value that is at least two times larger than the
unrecovered capital of the outside investor in Snow Goose; and (iv) an
obligation of Arctic Fox to have cash flow each quarter that is at least three
times greater than amounts payable to the outside investor in Snow Goose for
that quarter.

                                       108
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

CASTLE ASSOCIATES L.P.

     In December 1998, Williams formed Castle Associates L.P. (Castle) through a
series of transactions that resulted in the sale of a non-controlling preferred
interest in Castle to an outside investor for $200 million. Williams used the
proceeds of the sale for general corporate purposes. At December 31, 2001, the
assets of Castle include approximately $145 million in loans from Williams
payable upon demand (demand loans), a $125 million loan from a Williams
subsidiary secured by operating assets and a Williams guarantee due in December
2003, $60 million in third-party receivables guaranteed by Williams, and
approximately $204 million in other various assets. While no event of default
would arise from a downgrade of Williams' unsecured credit rating below Baa3 by
Moody's Investor's Service and below BBB- by Standard & Poor's, Williams would
be required to replace the demand loans with other assets. The outside investor
is entitled to quarterly priority distributions based upon an adjustable rate
structure of approximately 3.8 percent at December 31, 2001, in addition to a
portion of the participation in the operating results of Castle. The initial
priority return structure is currently set to expire in December 2002.

     Castle must satisfy certain financial covenants beyond those found in
Williams' standard credit agreements, including a requirement that it must have
assets with a value of at least 1.75 times the outside investors contributed
capital, and a requirement that at the end of each fiscal quarter, Castle's
profits for the year to date be at least 1.4 times the investor's priority
return.

PICEANCE PRODUCTION HOLDINGS LLC

     In December 2001, Williams formed Piceance Production Holdings LLC
(Piceance) and Rulison Production Company LLC (Rulison) in a series of
transactions that resulted in the sale of a non-controlling preferred interest
in Piceance to an outside investor for $100 million. Williams used the proceeds
of the sale for general corporate purposes. The assets of Piceance include
fixed-price overriding royalty interests in certain oil and gas properties owned
by a Williams subsidiary as well as a $135 million note from Rulison. The
outside investor is entitled to monthly priority distributions beginning in
January 2002, based upon an adjustable rate structure currently approximating
3.9 percent in addition to participation in a portion of the operating results
of Piceance. The initial priority return structure is currently scheduled to
expire in December 2006.

     Piceance must satisfy certain financial covenants beyond those found in
Williams' standard credit agreements, including a requirement that it have
assets with a value of at least 1.35 times the investor's capital account, and a
requirement that at the end of each fiscal quarter, Piceance's profits for the
year to date be at least 1.2 times the investor's priority return.

     Williams is allowed to access the excess cash flow of Piceance and Rulison
between distribution period through demand loans. However, if Williams' credit
ratings fall below BBB- by Standard & Poor's and Baa3 by Moody's Investor's
Service or below BB+ by Standard & Poor's or below Ba1 by Moody's Investor's
Service, Williams will be prevented from using demand loans, and therefore
excess cash will be retained between distribution periods. These ratings
triggers do not force an acceleration.

     Failure to satisfy the terms of the agreements would entitle the investor
to deliver a transfer notice declaring the occurrence of a transfer event. In
such case, unless the Williams' subsidiary that is a member of Piceance
exercises its purchase option, the managing member interest will automatically
be transferred to the investor ten days following the transfer event. Upon a
transfer event, the managing member can elect to liquidate and wind-up Piceance.

     In addition to the transactions discussed above, an outside investor owns a
non-controlling preferred interest in the following Williams subsidiary.

                                       109
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

WILLIAMS RISK HOLDINGS L.L.C.

     During 1998, Williams formed Williams Risk Holdings L.L.C. (Holdings) in a
series of transactions that resulted in the sale of a non-controlling preferred
interest in Holdings to an outside investor for $135 million. Williams used the
proceeds from the sale for general corporate purposes. The outside investor in
Holdings is not a special purpose entity. The outside investor is entitled to
monthly preferred distributions based upon an adjustable rate structure of
approximately 5.9 percent at December 31, 2001, in addition to participation in
a portion of the operating results of Holdings. The initial priority return
structure of Holdings is currently scheduled to expire in September 2003 at
which time Williams can attempt to negotiate a new priority return or elect to
retire the outside investor's interest. In addition, terms of the Holdings
transaction require Williams to maintain a specified minimum credit rating with
various ratings organizations. Violation of various restrictive covenants,
including a downgrade of Williams' senior unsecured rating below BB by Standard
& Poor's or Ba1 by Moody's Investor's Service, could require an early retirement
of the outside investor's ownership interest.

     Holdings must satisfy certain financial covenants beyond those found in
Williams standard credit agreements, including, (i) a requirement that Holdings'
cash, promissory notes and investments minus its contingent liabilities be equal
to or greater than the purchase price of the outside investors' interests; (ii)
a requirement that Holdings' maintain a consolidated net worth at least two
times greater than the purchase price of the outside investors' interests; and
(iii) a requirement that Holdings' subsidiary's assets exceed by at least 1.05
times the fair market value of such subsidiary's liabilities.

NOTE 15. WILLIAMS OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF TRUST
         HOLDING ONLY WILLIAMS INDENTURES

     In December 1999, Williams formed Williams Capital Trust I which issued
$175 million in zero coupon Williams obligated mandatorily redeemable preferred
securities. During April 2001, these securities were redeemed.

NOTE 16. STOCKHOLDERS' EQUITY

     In January 2001, Williams issued approximately 38 million shares of common
stock in a public offering at $36.125 per share. The impact of this issuance
resulted in increases of approximately $38 million to common stock and $1.3
billion to capital in excess of par value.

     During 1999, each remaining share of the $3.50 Williams preferred stock was
converted at the option of the holder into 4.6875 shares of Williams common
stock prior to the redemption date.

     Williams maintains a Stockholder Rights Plan under which each outstanding
share of Williams common stock has one-third of a preferred stock purchase right
attached. Under certain conditions, each right may be exercised to purchase, at
an exercise price of $140 (subject to adjustment), one two-hundredth of a share
of Series A Junior Participating Preferred Stock. The rights may be exercised
only if an Acquiring Person acquires (or obtains the right to acquire) 15
percent or more of Williams common stock; or commences an offer for 15 percent
or more of Williams common stock; or the board of directors determines an
Adverse Person has become the owner of a substantial amount of Williams common
stock. The rights, which until exercised do not have voting rights, expire in
2006 and may be redeemed at a price of $.01 per right prior to their expiration,
or within a specified period of time after the occurrence of certain events. In
the event a person becomes the owner of more than 15 percent of Williams common
stock or the board of directors determines that a person is an Adverse Person,
each holder of a right (except an Acquiring Person or an Adverse Person) shall
have the right to receive, upon exercise, Williams common stock having a value
equal to two times the exercise price of the right. In the event Williams is
engaged in a merger, business combination or 50 percent or more of Williams'
assets, cash flow or earnings power is sold or transferred, each holder of a
right (except an Acquiring Person or an Adverse Person) shall have the right to
receive, upon

                                       110
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

exercise, common stock of the acquiring company having a value equal to two
times the exercise price of the right.

NOTE 17. STOCK-BASED COMPENSATION

     Williams has several plans providing for common-stock-based awards to
employees and to non-employee directors. The plans permit the granting of
various types of awards including, but not limited to, stock options,
stock-appreciation rights, restricted stock and deferred stock. Awards may be
granted for no consideration other than prior and future services or based on
certain financial performance targets being achieved. The purchase price per
share for stock options and the grant price for stock-appreciation rights may
not be less than the market price of the underlying stock on the date of grant.
Depending upon terms of the respective plans, stock options generally become
exercisable in one-third increments each year from the anniversary of the grant
or after three or five years, subject to accelerated vesting if certain future
stock prices or if specific financial performance targets are achieved. Stock
options expire 10 years after grant. At December 31, 2001, 46.4 million shares
of Williams common stock were reserved for issuance pursuant to existing and
future stock awards, of which 18.2 million shares were available for future
grants (20.9 million at December 31, 2000).

     Certain of these plans had loan programs that provided loans for either a
three- or five-year term using stock certificates as collateral. Interest
payments are due annually during the term of the loan and interest rates are
based on the minimum applicable federal rates required to avoid imputed income.
The principal amount is due at the end of the loan term. Participants who leave
the company during the loan period are required to pay the loan balance and any
accrued interest within 30 days of termination. The amount of loans outstanding
at December 31, 2001 and 2000, totaled approximately $38.1 million and $53.5
million, respectively.

     Effective November 14, 2001, the Company will no longer issue new loans
under the stock option loan program. Current loan holders have been offered a
one-time opportunity to refinance outstanding loans at a market rate of interest
commensurate with the borrower's credit standing. The refinancing, if elected,
would be in the form of a full recourse note, interest payable annually in cash,
and loan maturity of no later than December 31, 2005. The loan would remain in
force until maturity in the event of the employee's termination. The Company
would hold the collateral shares and would review the borrower's financial
position upon the one-time election and on an annual basis thereafter. If a
current loan holder does not make the election to refinance, the current loans
would remain outstanding with no refinancing at maturity.

                                       111
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The following summary reflects stock option activity for Williams common
stock and related information for 2001, 2000 and 1999:

<Table>
<Caption>
                                                2001                 2000                 1999
                                         ------------------   ------------------   ------------------
                                                   WEIGHTED             WEIGHTED             WEIGHTED
                                                   AVERAGE              AVERAGE              AVERAGE
                                                   EXERCISE             EXERCISE             EXERCISE
                                         OPTIONS    PRICE     OPTIONS    PRICE     OPTIONS    PRICE
                                         -------   --------   -------   --------   -------   --------
<S>                                      <C>       <C>        <C>       <C>        <C>       <C>
Outstanding -- beginning of year.......    23.1     $28.63      22.8     $25.03      21.7     $20.73
Granted................................     4.8      37.45       3.8      45.87       5.1      39.62
Exercised..............................    (3.3)     18.47      (3.3)     23.12      (3.7)     18.81
Barrett option conversions (Note 2)....     2.0      21.57        --         --        --         --
Adjustment for WCG spinoff(1)..........     2.1         --        --         --        --         --
Canceled...............................    (3.1)     32.35       (.2)     38.19       (.3)     36.50
                                          -----     ------     -----     ------     -----     ------
Outstanding -- end of year.............    25.6     $28.23      23.1     $28.63      22.8     $25.03
                                          =====     ======     =====     ======     =====     ======
Exercisable at end of year.............    20.0     $26.41      22.1     $28.24      21.9     $24.50
                                          =====     ======     =====     ======     =====     ======
</Table>

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

(1) Effective with the spinoff of WCG on April 23, 2001, the number of
    unexercised Williams stock options and the exercise price were adjusted to
    preserve the intrinsic value of the stock options that existed prior to the
    spinoff.

     The following summary provides information about Williams stock options
outstanding and exercisable at December 31, 2001:

<Table>
<Caption>
                                        STOCK OPTIONS OUTSTANDING         STOCK OPTIONS EXERCISABLE
                                   ------------------------------------   --------------------------
                                                             WEIGHTED-
                                                WEIGHTED-     AVERAGE                     WEIGHTED-
                                                 AVERAGE     REMAINING                     AVERAGE
                                                EXERCISE    CONTRACTUAL                   EXERCISE
    RANGE OF EXERCISE PRICES        OPTIONS       PRICE        LIFE         OPTIONS         PRICE
    ------------------------       ----------   ---------   -----------   ------------   -----------
                                   (MILLIONS)                              (MILLIONS)
<S>                                <C>          <C>         <C>           <C>            <C>
$4.24 to $25.14..................     10.2       $16.39      3.9 years         10.2         $16.39
$26.79 to $42.52.................     15.4        36.03      7.5 years          9.8          36.78
                                     -----                                    -----
          Total..................     25.6       $28.23      6.1 years         20.0         $26.41
                                     =====                                    =====
</Table>

     The estimated fair value at date of grant of options for Williams common
stock granted in 2001, 2000 and 1999, using the Black-Scholes option pricing
model, is as follows:

<Table>
<Caption>
                                                              2001     2000     1999
                                                             ------   ------   ------
<S>                                                          <C>      <C>      <C>
Weighted-average grant date fair value of options for
  Williams common stock granted during the year............  $10.93   $15.44   $11.90
                                                             ======   ======   ======
Assumptions:
  Dividend yield...........................................     1.9%     1.5%     1.5%
  Volatility...............................................      35%      31%      28%
  Risk-free interest rate..................................     4.8%     6.5%     5.6%
  Expected life (years)....................................     5.0      5.0      5.0
</Table>

                                       112
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Pro forma net income (loss) and earnings per share, assuming Williams had
applied the fair-value method of SFAS No. 123, "Accounting for Stock-Based
Compensation" in measuring compensation cost beginning with 1997 employee
stock-based awards, are as follows:

<Table>
<Caption>
                                       2001                2000                1999
                                ------------------   -----------------   -----------------
                                  PRO                 PRO                 PRO
                                 FORMA    REPORTED   FORMA    REPORTED   FORMA    REPORTED
                                -------   --------   ------   --------   ------   --------
                                           (MILLIONS, EXCEPT PER-SHARE AMOUNTS)
<S>                             <C>       <C>        <C>      <C>        <C>      <C>
Net income (loss).............  $(488.8)  $(477.7)   $381.4    $524.3    $168.1    $221.4
Earnings (loss) per share:
  Basic.......................  $  (.98)  $  (.96)   $  .86    $ 1.18    $  .38    $  .50
  Diluted.....................  $  (.98)  $  (.95)   $  .85    $ 1.17    $  .37    $  .50
</Table>

     Pro forma amounts for 2001 include compensation expense from certain
Williams awards made in 1999 and compensation expense from Williams awards made
in 2001.

     Pro forma amounts for 2000 include compensation expense from certain
Williams awards made in 1999 and the total compensation expense from Williams
awards made in 2000, as these awards fully vested in 2000 as a result of the
accelerated vesting provisions. Pro forma amounts for 2000 include $37.3 million
for Williams awards and $105.7 million related to discontinued operations.

     Pro forma amounts for 1999 include the remaining total compensation expense
from Williams awards made in 1998 and the total compensation expense from
certain Williams awards made in 1999, as these awards fully vested in 1999 as a
result of the accelerated vesting provisions. In addition, 1999 pro forma
amounts include compensation expense related to the WCG plan awards and
conversions in 1999. Pro forma amounts for 1999 include $47.1 million related to
Williams awards and $6.2 million related to discontinued operations. Since
compensation expense from stock options is recognized over the future years'
vesting period for pro forma disclosure purposes, and additional awards
generally are made each year, pro forma amounts may not be representative of
future years' amounts.

     Williams granted deferred shares of approximately 1,423,000 in 2001,
332,000 in 2000 and 260,000 in 1999. Deferred shares are valued at the date of
award, and the weighted-average grant date fair value of the shares granted was
$40.84 in 2001, $39.13 in 2000 and $34.84 in 1999. Approximately $22 million,
$11 million and $13 million was recognized as expense for deferred shares of
Williams in 2001, 2000 and 1999, respectively. Expense related to deferred
shares is recognized in the performance year or over the vesting period,
depending on the terms of the awards. Williams issued approximately 260,000 in
2001, 140,000 in 2000 and 125,000 in 1999, of the deferred shares previously
granted.

NOTE 18. FINANCIAL INSTRUMENTS, DERIVATIVES, INCLUDING ENERGY TRADING
         ACTIVITIES, AND CONCENTRATION OF CREDIT RISK

FINANCIAL INSTRUMENTS FAIR VALUE

  Fair-value methods

     The following methods and assumptions were used by Williams in estimating
its fair-value disclosures for financial instruments:

     Cash and cash equivalents and notes payable:  The carrying amounts reported
in the balance sheet approximate fair value due to the short-term maturity of
these instruments.

     Retained interest in accounts receivable sold to SPEs:  The carrying
amounts reported in the balance sheet approximate fair value. Fair value is
based on the present value of future expected cash flows using management's best
estimates of various factors, including credit loss experience and discount
rates commensurate with the risks involved.

                                       113
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Notes and other noncurrent receivables, margin deposits and deposits
received from customers relating to energy trading and hedging activities:  For
those instruments with interest rates approximating market or maturities of less
than three years, fair value is estimated to approximate historically recorded
amounts.

     Investments-cost and advances to affiliates:  Fair value is reflected to
approximate historically recorded amounts as the investments are primarily in
non-publicly traded foreign companies for which it is not practicable to
estimate fair value of these investments.

     Investment in WCG:  Fair value is calculated based on the year-end closing
price of WCG common stock. The carrying amount reflects write-downs of the WCG
investment to zero (see Note 4).

     Ferrellgas Partners L.P. senior common units:  These securities are
classified as available-for-sale and are reported at fair value, with net
unrealized appreciation or depreciation reported as a component of accumulated
other comprehensive income.

     Long-term debt:  The fair value of Williams' long-term debt is valued using
indicative year-end traded bond market prices for publicly traded issues, while
private debt is valued based on the prices of similar securities with similar
terms and credit ratings. At December 31, 2001 and 2000, 75 percent and 59
percent, respectively, of Williams' long-term debt was publicly traded. Williams
used the expertise of outside investment banking firms to assist with the
estimate of the fair value of long-term debt.

     Williams obligated mandatorily redeemable preferred securities of
Trust:  Fair value is based on the prices of similar securities with similar
terms and credit ratings as the preferred securities are not publicly traded.
Williams used the expertise of an outside investment banking firm to establish
the fair value of obligated mandatorily redeemable preferred securities.

     Interest-rate swaps:  Fair value is determined by discounting estimated
future cash flows using forward-interest rates derived from the year-end yield
curve. Fair value was calculated by the financial institutions that are the
counterparties to the swaps.

     Foreign exchange forward contract:  Fair value is determined by discounting
estimated future cash flows using forward foreign exchange rates derived from
the year-end forward exchange curve. Fair value was calculated by the financial
institution that is counterparty to the agreement.

     Energy risk management and trading and hedging contracts:  Energy contracts
utilized in trading activities include forward contracts, futures contracts,
option contracts, swap agreements, commodity inventories, short- and long-term
purchase and sale commitments, which involve physical delivery of an energy
commodity and energy-related contracts, such as transportation, storage, full
requirements, load serving and power tolling contracts. In addition, Williams
enters into interest-rate swap agreements and credit default swaps to manage the
interest rate and credit risk in its energy trading portfolio. Fair value of
energy contracts is determined based on the nature of the transaction and the
market in which transactions are executed. Certain transactions are executed in
exchange-traded or over-the-counter markets for which quoted prices in active
periods exist. Transactions are executed in exchange-traded or over-the-counter
markets for which quoted market prices may exist; however, the markets may be
relatively inactive, and price transparency is limited. Certain transactions are
executed for which quoted market prices are not available. See Note 1 regarding
Energy commodity risk management and trading activities and Derivative
instruments and hedging activities for further discussion about determining fair
value for energy contracts.

                                       114
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Carrying amounts and fair values of Williams' financial instruments and energy
  risk management and trading activities

<Table>
<Caption>
                                                          2001                      2000
                                                 -----------------------   ----------------------
                                                  CARRYING                 CARRYING
              ASSET (LIABILITY)                    AMOUNT     FAIR VALUE    AMOUNT     FAIR VALUE
              -----------------                  ----------   ----------   ---------   ----------
                                                                    (MILLIONS)
<S>                                              <C>          <C>          <C>         <C>
Financial instruments:
  Cash and cash equivalents...................   $  1,301.1   $  1,301.1   $   996.8   $   996.8
  Retained interest in accounts receivable
     sold to SPEs.............................        205.0        205.0       936.4       936.4
  Notes and other noncurrent receivables......         41.2         41.2        67.3        67.3
  Investments-cost and advances to
     affiliates...............................        383.5        383.5       407.7       407.7
  Investment in WCG...........................           --         49.8          --          --
  Ferrellgas Partners L.P. senior common
     units....................................           --           --       193.9       193.9
  Notes payable...............................     (1,424.5)    (1,424.5)   (2,036.7)   (2,036.7)
  Long-term debt, including current portion...    (10,528.2)   (10,710.7)   (8,464.6)   (8,522.3)
  Williams obligated mandatorily redeemable
     preferred securities of Trust............           --           --      (189.9)     (191.6)
  Margin deposits.............................        213.8        213.8       730.9       730.9
  Deposits received from customers relating to
     energy risk management and trading and
     hedging activities.......................       (265.5)      (265.5)     (244.6)     (244.6)
  Guarantees..................................        (13.2)         (a)       (17.0)        (a)
Derivatives, including energy risk management
  and trading activities:
  Energy risk management and trading
     activities:
     Assets...................................     10,723.5     10,723.5     9,710.9     9,710.9
     Liabilities..............................     (8,462.3)    (8,462.3)   (8,900.1)   (8,900.1)
  Energy commodity cash flow and fair-value
     hedges:
     Assets...................................        488.9        488.9          --        65.9
     Liabilities..............................        (28.1)       (28.1)       (2.5)     (218.1)
  Other energy commodity derivatives:
     Assets...................................           --           --          --          --
     Liabilities..............................        (11.8)       (11.8)         --          --
  Foreign currency hedges.....................         16.9         16.9          --          --
  Interest-rate derivatives(b)................           --           --       (32.8)      (32.8)
</Table>

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

(a) It is not practicable to estimate the fair value of these financial
    instruments because of their unusual nature and unique characteristics.

(b) At December 31, 2001, Williams had interest rate swaps to mitigate its
    interest rate risk in its energy trading portfolio and are included in
    energy risk management and trading and price-risk management activities.

  Other financial instruments

     Williams, through wholly owned bankruptcy remote subsidiaries, sells
certain trade accounts receivable to special purpose entities (SPEs) in a
securitization structure requiring annual renewal. Williams acts as the
servicing agent for sold receivables and receives a servicing fee approximating
the fair value of such services.

                                       115
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

At December 31, 2001, approximately $625 million of accounts receivable that
would otherwise be Williams receivables were sold to the SPEs in exchange for
$420 million in cash and a $205 million subordinated retained interest in the
accounts receivable sold to the SPEs. In 2000, Williams sold accounts receivable
to special purpose entities under a similar structure. For 2001 and 2000,
Williams received cash from the SPEs of approximately $12.8 billion and $9
billion, respectively. The sales of these receivables resulted in a charge to
results of operations of approximately $17 million and $23 million in 2001 and
2000, respectively. The retained interest in accounts receivable sold to the
SPEs is subject to credit risk to the extent that these receivables are not
collected. See Concentration of credit risk below.

     In addition to the guarantees included in the table, the guarantees and
payment obligations related to WCG discussed in Note 3, certain residual value
guarantees discussed in Note 13 and potential obligation under a put agreement
discussed in Note 4, Williams has issued other guarantees and letters of credit
with off balance sheet risk that total approximately $99 million and $78 million
at December 31, 2001 and 2000, respectively. Williams believes it will not have
to perform under these other guarantees and letters of credit, because the
likelihood of default by the primary party is remote and/or because of certain
indemnifications received from other third parties.

DERIVATIVES, INCLUDING ENERGY RISK MANAGEMENT AND TRADING ACTIVITIES

  Energy risk management and trading activities

     Williams, through Energy Marketing & Trading, has energy commodity risk
management and trading operations that enter into energy contracts to provide
price-risk management services associated with the energy industry to its
customers. Contracts utilized in energy commodity risk management and trading
activities include forward contracts, futures contracts, option contracts, swap
agreements, short- and long-term purchase and sale commitments which involve
physical delivery of an energy commodity and energy-related contracts, including
transportation, storage, full requirements, load serving and power tolling
contracts. In addition, Williams enters into interest rate swap agreements and
credit default swaps to manage the interest rate and credit risk in its energy
portfolio. See Note 1 for a description of the accounting valuation for these
energy commodity risk management and trading activities. The net gain recognized
in revenues from all price-risk management and trading activities was $1,696
million, $1,285.1 million and $214 million in 2001, 2000 and 1999, respectively.

     Energy Marketing & Trading actively manages the risk assumed from its
activities and operations. This risk results from exposure to commodity market
prices, volatility in those prices, correlation of commodity prices, the
liquidity of the market in which the contract is transacted, interest rates,
credit and counterparty performance. Energy Marketing & Trading manages market
risk on a portfolio basis through established trading policy guidelines which
are monitored on a daily basis. Energy Marketing & Trading actively seeks to
diversify its portfolio in managing the commodity price risk in the transactions
that it executes in various markets and regions by executing offsetting
contracts to manage such commodity price risk.

     Futures contracts are commitments to either purchase or sell a commodity at
a future date for a specified price and are generally settled in cash, but may
be settled through delivery of the underlying commodity. An exchange-traded or
over-the-counter market for which quoted prices in active periods are available
exists for the futures contracts entered into by Energy Marketing & Trading. The
fair value of these contracts is based on quoted prices.

     Swap agreements call for Energy Marketing & Trading to make payments to (or
receive payments from) counterparties based upon the differential between a
fixed and variable price or variable prices of energy commodities for different
locations. Forward contracts and purchase and sale commitments with fixed
volumes which involve physical delivery of energy commodities, contain both
fixed and variable pricing terms. Swap agreements, forward contracts and
purchase and sale commitments with fixed volumes are valued based

                                       116
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

on prices of the underlying energy commodities over the contract life and
contractual or notional volumes with the resulting expected future cash flows
discounted to a present value using a risk-free market interest rate.

     Certain of Energy Marketing & Trading's purchase and sale commitments,
which involve physical delivery of energy commodities, contain optionality
clauses or other arrangements that result in varying volumes. In addition,
Energy Marketing & Trading buys and sells physical and financial option
contracts which give the buyer the right to exercise the option and receive the
difference between a predetermined strike price and a market price at the date
of exercise. These contracts are valued based on option pricing models
considering prices of the underlying energy commodities over the contract life,
volatility of the commodity prices, contractual volumes, estimated volumes under
option and other arrangements and a risk-free market interest rate.

     Energy-related contracts include transportation, storage, full
requirements, load serving and power tolling contracts. Transportation contracts
provide Energy Marketing & Trading the right, but not the obligation, to
transport physical quantities of natural gas from one location to another on a
daily basis. The payment or settlement required typically has a fixed component
paid regardless of whether the transportation capacity is used and a variable
component. Variable payments are made for shipments actually made during the
month. The decision to use the capacity to ship natural gas is based on the
difference between the price of natural gas at the pipeline receipt and delivery
locations and the variable cost of transportation. Storage contracts provide
Energy Marketing & Trading the right, but not the obligation, to store physical
quantities of gas to take advantage of anticipated differentials between the
price of natural gas during the period between injection and withdrawal and to
enable it to supply existing delivery commitments when the estimated price
spread differential less the cost of storing the natural gas is favorable.
Energy Marketing & Trading enters full requirements arrangements which are
structured to meet a variety of customers' needs. Agreements may be designed to
manage natural gas and power supply requirements, service load growth, manage
unplanned outages or other scenarios. Load serving agreements require Energy
Marketing & Trading to procure energy supplies for its customers necessary to
meet their load or energy needs. Power tolling contracts provide Energy
Marketing & Trading the right, but not the obligation, to call on the
counterparty to convert natural gas to electricity at a predefined heat
conversion rate. Energy Marketing & Trading supplies the natural gas to the
power plants and markets the electricity output. In exchange for this right,
Energy Marketing & Trading pays a monthly fee and a variable fee based on usage.
The decision as to whether the option will be exercised is dependent on the
differential between natural gas and power commodity prices considering the heat
conversion rate and variable fee.

     Fair value of these energy-related contracts is estimated using valuation
techniques that incorporate option pricing theory, statistical and simulation
analysis, present value concepts incorporating risk from uncertainty of the
timing and amount of estimated cash flows and specific contractual terms. These
valuation techniques utilize factors such as quoted energy commodity market
prices, estimates of energy commodity market prices in the absence of quoted
market prices, volatility factors underlying the positions, estimated
correlation of energy commodity prices, contractual volumes, estimated volumes
under option and other arrangements, the liquidity of the market in which the
contract is transacted and a risk-free market discount rate. Fair value also
reflects a risk premium that market participants would consider in their
determination of fair value.

     Interest-rate swap agreements are used to manage the interest rate risk in
the energy trading portfolio. Under these agreements, Energy Marketing & Trading
pays a fixed rate and receives a variable rate on the notional amount of the
agreements. The fair value of these contracts is determined by discounting
estimated future cash flows using forward interest rates derived from interest
rate yield curves. Credit default swaps are used to manage counterparty credit
exposure in the energy trading portfolio. Under these agreements, Energy
Marketing & Trading pays a fixed rate premium for a notional amount of risk
coverage associated with certain

                                       117
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

credit events. The covered credit events are bankruptcy, obligation
acceleration, failure to pay and restructuring. The fair value of these
agreements is based on current pricing received from the counterparties.

     The valuation of the contracts entered into by Energy Marketing & Trading
also considers factors such as the liquidity of the market in which the contract
is transacted, uncertainty regarding the ability to liquidate the position
considering market factors applicable at the date of such valuation and risk of
non-performance and credit considerations of the counterparty. For contracts or
transactions that extend into periods for which actively quoted prices are not
available, Energy Marketing & Trading estimates energy commodity prices in the
illiquid periods by incorporating information obtained from commodity prices in
actively quoted markets, prices reflected in current transactions and market
fundamental analysis.

     Determining fair value for contracts also involves complex assumptions
including estimating natural gas and power market prices in illiquid periods and
markets, estimating volatility and correlation of natural gas and power prices,
evaluating risk from uncertainty inherent in estimating cash flows and estimates
regarding counterparty performance and credit considerations.

     Energy Marketing & Trading has the risk of loss as a result of
counterparties not performing pursuant to the terms of their contractual
obligations. Risk of loss can result from credit considerations and the
regulatory environment of the counterparty. Energy Marketing & Trading attempts
to minimize credit-risk exposure to trading counterparties and brokers through
formal credit policies, consideration of credit ratings from public rating
agencies, monitoring procedures, master netting agreements and collateral
support under certain circumstances. In addition, Williams has entered into
credit default swaps to reduce this exposure. Valuation allowances are provided
for credit risk in accordance with established credit policies.

     The concentration of counterparties within the energy and energy trading
industry impacts Williams' overall exposure to credit risk in that these
counterparties are similarly influenced by changes in the economy and regulatory
issues.

     The counterparties associated with assets from energy commodity risk
management and trading activities as of December 31, 2001 and 2000, are
summarized as follows:

<Table>
<Caption>
                                                     2001                    2000
                                            ----------------------   ---------------------
                                            INVESTMENT               INVESTMENT
                                             GRADE(A)      TOTAL      GRADE(A)     TOTAL
                                            ----------   ---------   ----------   --------
                                                              (MILLIONS)
<S>                                         <C>          <C>         <C>          <C>
Gas and electric utilities................  $ 4,253.9    $ 4,924.5   $ 3,281.1    $3,495.2
Energy marketers and traders..............    5,645.5      6,058.2     4,105.9     4,861.0
Financial institutions....................      249.8        341.7       674.6       677.2
Other.....................................       16.4         47.3       297.1       738.4
                                            ---------    ---------   ---------    --------
     Total................................  $10,165.6    $11,371.7   $ 8,358.7     9,771.8
                                            =========                =========
Credit reserves...........................                  (648.2)                  (60.9)
                                                         ---------                --------
Assets from price-risk management
  activities(b)...........................               $10,723.5                $9,710.9
                                                         =========                ========
</Table>

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

(a)  "Investment Grade" is primarily determined using publicly available credit
     ratings along with consideration of cash, standby letters of credit, parent
     company guarantees and property interests, including oil and gas reserves.
     Included in "Investment Grade" are counterparties with a minimum Standard &
     Poor's or Moody's Investor's Service rating of BBB- or Baa3, respectively.

(b)  One counterparty within the California power market represents greater than
     ten percent of assets from energy risk management and trading activities
     and is included in "investment grade." Standard & Poor's or Moody's
     Investor's Service does not rate this counterparty. However, Energy
     Marketing & Trading has considered this counterparty investment grade by
     the manner in which it was established by the State of California.

                                       118
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The notional quantities for trading activities for the prior year, December
31, 2000, as required under previous accounting disclosure rules, were as
follows:

<Table>
<Caption>
                                                                     2000
                                                              ------------------
                                                               PAYOR    RECEIVER
                                                              -------   --------
<S>                                                           <C>       <C>
Fixed price:
  Natural gas (Tbtu)........................................  4,552.4   6,406.3
  Refined products, NGLs and crude (MMbbls).................    450.8     300.9
  Power (Terawatt Hrs)......................................    440.0     207.1
Variable price:
  Natural gas (Tbtu)........................................  2,715.5   2,473.5
  Refined products, NGLs and crude (MMbbls).................     44.2      63.2
</Table>

     The net cash inflows related to these contracts at December 31, 2000 were
approximately $1 billion. At December 31, 2000, the cash inflows extend
primarily through 2022.

  Energy commodity cash flow hedges

     Williams is also exposed to market risk from changes in energy commodity
prices within the Energy Services business unit and the non-trading operations
of Energy Marketing & Trading. Williams utilizes derivatives to manage its
exposure to the variability in expected future cash flows attributable to
commodity price risk associated with forecasted purchases and sales of natural
gas, refined products, crude oil, electricity, ethanol and corn. These
derivatives have been designated as cash flow hedges.

     Williams produces, buys and sells natural gas at different locations
throughout the United States. To reduce exposure to a decrease in revenues or an
increase in costs from fluctuations in natural gas market prices, Williams
enters into natural gas futures contracts and swap agreements to fix the price
of anticipated sales and purchases of natural gas.

     Williams' refineries purchase crude oil for processing and sell the refined
products. To reduce the exposure to increasing costs of crude oil and/or
decreasing refined product sales prices due to changes in market prices,
Williams enters into crude oil and refined products futures contracts and swap
agreements to lock in the prices of anticipated purchases of crude oil and sales
of refined products.

     Williams' electric generation facilities utilize natural gas in the
production of electricity. To reduce the exposure to increasing costs of natural
gas due to changes in market prices, Williams enters into natural gas futures
contracts and swap agreements to fix the prices of anticipated purchases of
natural gas. To reduce the exposure to decreasing revenues from electricity
sales, Williams enters into fixed-price forward physical contracts to fix the
prices of anticipated sales of electric production.

     Derivative gains or losses from these cash flow hedges are deferred in
other comprehensive income and reclassified into earnings in the same period or
periods during which the hedged forecasted purchases or sales affect earnings.
To match the underlying transaction being hedged, derivative gains or losses
associated with anticipated purchases are recognized in costs and operating
expenses and amounts associated with anticipated sales are recognized in
revenues in the Consolidated Statement of Operations. Approximately $1 million
of gains from hedge ineffectiveness is included in revenues in the Consolidated
Statement of Operations during 2001. There were no derivative gains or losses
excluded from the assessment of hedge effectiveness and no hedges were
discontinued during 2001 as a result of it becoming probable that the forecasted
transaction will not occur. There is approximately $142 million of pre-tax gains
related to terminated derivatives included in accumulated other comprehensive
income at December 31, 2001. These amounts will be recognized into net income as
the hedged transaction occurs. As of December 31, 2001, Williams has hedged
future cash flows associated with anticipated energy commodity purchases and
sales for up to 15 years, and, based on recorded

                                       119
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

values at December 31, 2001, approximately $139 million of net gains (net of
income tax provision of $86 million) will be reclassified into earnings within
the next year offsetting net losses that will be realized in earnings from
unfavorable market movements associated with the underlying hedged transactions.

  Energy commodity fair-value hedges

     Williams' refineries carry inventories of crude oil and refined products.
Williams enters into crude oil and refined products futures contracts and swap
agreements to reduce the market exposure of these inventories from changing
energy commodity prices. These derivatives have been designated as fair-value
hedges. Derivative gains and losses from these fair-value hedges are recognized
in earnings currently along with the change in fair value of the hedged item
attributable to the risk being hedged. Gains and losses related to hedges of
inventory are recognized in costs and operating expenses in the Consolidated
Statement of Operations. Approximately $5 million of net gains from hedge
ineffectiveness was recognized in costs and operating expenses in the
Consolidated Statement of Operations during 2001. There were no derivative gains
or losses excluded from the assessment of hedge effectiveness.

  Other energy commodity derivatives

     Williams' operations associated with crude oil refining and refined
products marketing also include derivative transactions (primarily forward
contracts, futures contracts, swap agreements and option contracts) which are
not designated as hedges. The forward contracts are for the procurement of crude
oil and refined products supply for operational purposes, while the other
derivatives manage certain risks associated with market fluctuations in crude
oil and refined product prices related to refined products marketing. The net
change in fair value of these derivatives representing unrealized gains and
losses is recognized in earnings currently as revenues or costs and operating
expenses in the Consolidated Statement of Operations.

  Foreign currency hedges

     Williams has a Canadian-dollar-denominated note receivable that is exposed
to foreign-currency risk. To protect against variability in the cash flows from
the repayment of the note receivable associated with changes in foreign currency
exchange rates, Williams entered into a forward contract to fix the U.S. dollar
principal cash flows from this note. This derivative has been designated as a
cash flow hedge and is expected to be highly effective over the period of the
hedge. Gains and losses from the change in fair value of the derivative are
deferred in other comprehensive income (loss) and reclassified to other income
(expense) -- net below operating income when the Canadian-dollar-denominated
note receivable impacts earnings as it is translated into U.S. dollars. There
were no derivative gains or losses recorded in the Consolidated Statement of
Operations from hedge ineffectiveness or from amounts excluded from the
assessment of hedge effectiveness, and no foreign currency hedges were
discontinued during 2001 as a result of it becoming probable that the forecasted
transaction will not occur. This foreign-currency risk exposure is being hedged
over the next 48 months. Of the $3.7 million net loss (net of income tax
benefits of $2.3 million) deferred in other comprehensive income (loss) at
December 31, 2001, the amount that will be reclassified into earnings over the
next year will vary based on the gain or loss recognized as the note receivable
is translated into U.S. dollars following changes in foreign-exchange rates.

  Interest-rate derivatives

     Williams enters into interest-rate swap agreements to manage its exposure
to interest rates and modify the interest characteristics of its long-term debt.
These agreements are designated with specific debt obligations, and involve the
exchange of amounts based on the difference between fixed and variable interest
rates calculated by reference to an agreed-upon notional amount. Interest-rate
swaps in place during 2001 effectively modified Williams' exposure to interest
rates by converting a portion of Williams' fixed rate debt to

                                       120
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

a variable rate. These derivatives were designated as fair value hedges and were
perfectly effective. As a result, there was no current impact to earnings due to
hedge ineffectiveness or due to the exclusion of a component of a derivative
from the assessment of effectiveness. The change in fair value of the
derivatives and the adjustments to the carrying amount of the underlying hedged
debt were recorded as equal and offsetting gains and losses in other income
(expense) -- net below operating income in the Consolidated Statement of
Operations. There are no interest-rate derivatives designated as fair value
hedges at December 31, 2001.

     Kern River Gas Transmission had interest-rate swap agreements to manage
interest-rate risk that were not designated as hedges of long-term debt. Changes
in fair value were recorded each period in other income (expense) -- net below
operating income in the Consolidated Statement of Operations. These agreements
were terminated during 2001. Offsetting amounts were recorded as an adjustment
to a regulatory asset, which is expected to be recovered in future
transportation rates.

CONCENTRATION OF CREDIT RISK

     Williams' cash equivalents consist of high-quality securities placed with
various major financial institutions with credit ratings at or above AA by
Standard & Poor's or Aa by Moody's Investor's Service. Williams' investment
policy limits its credit exposure to any one issuer/obligor.

     The following table summarizes concentration of receivables, net of
allowances, by product or service at December 31, 2001 and 2000:

<Table>
<Caption>
                                                                2001       2000
                                                              --------   --------
                                                                  (MILLIONS)
<S>                                                           <C>        <C>
Receivables by product or service:
  Sale or transportation of natural gas and related
     products...............................................  $  396.8   $  507.8
  Power sales and related services..........................   1,445.3    1,148.7
  Sale or transportation of petroleum products..............     841.6      518.3
  Retained interest in accounts receivable sold to SPEs.....     205.0      936.4
  Other.....................................................     245.2      246.1
                                                              --------   --------
          Total.............................................  $3,133.9   $3,357.3
                                                              ========   ========
</Table>

     Natural gas customers include pipelines, distribution companies, producers,
gas marketers and industrial users primarily located in the eastern,
northwestern and midwestern United States. Petroleum products customers include
wholesale, commercial, governmental, industrial and individual consumers and
independent dealers located primarily in Alaska and the midsouth and
southeastern United States. Power customers include the California Independent
System Operator (ISO), the California Department of Water Resources, other power
marketers and utilities located throughout the majority of the United States.
Collection of the retained interest in accounts receivable sold to the SPEs is
dependent on the collection of the receivables. The underlying receivables are
primarily for the sale or transportation of natural gas and related products or
services and the sale of petroleum products in the United States. As a general
policy, collateral is not required for receivables, but customers' financial
condition and credit worthiness are evaluated regularly.

     As of December 31, 2001, $388 million of certain power receivables from the
ISO and the California Power Exchange have not been paid. In addition, Williams
and other energy traders and marketers have been ordered to continue selling
power to the ISO and certain other utilities irrespective of their credit
ratings. Williams believes that it has appropriately reflected the collection
and credit risk associated with receivables and trading assets in the statement
of position and results of operations at December 31, 2001.

                                       121
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 19. CONTINGENT LIABILITIES AND COMMITMENTS

RATE AND REGULATORY MATTERS AND RELATED LITIGATION

     Williams' interstate pipeline subsidiaries have various regulatory
proceedings pending. As a result of rulings in certain of these proceedings, a
portion of the revenues of these subsidiaries has been collected subject to
refund. The natural gas pipeline subsidiaries have accrued approximately $96
million for potential refund as of December 31, 2001.

     On January 30, 1998, the FERC convened a public conference to consider, on
an industry-wide basis, issues with respect to rates of return for interstate
natural gas pipelines. In July 1998, the FERC issued orders announcing a
modification of its methodology for calculating a pipeline's return on equity.
Certain parties appealed the FERC's action because the modified formula results
in somewhat higher rates of return compared to the rates of return calculated by
the prior formula. These appeals have been denied and the FERC has continued to
utilize the formula as modified in 1998.

     As a result of FERC Order 636 decisions in prior years, each of the natural
gas pipeline subsidiaries has undertaken the reformation or termination of its
respective gas supply contracts. None of the pipelines has any significant
pending supplier take-or-pay, ratable take or minimum take claims.

     Williams Energy Marketing & Trading subsidiaries are engaged in power
marketing in various geographic areas, including California. Prices charged for
power by Williams and other traders and generators in California and other
western states have been challenged in various proceedings including those
before the FERC. In December 2000, the FERC issued an order which provided that,
for the period between October 2, 2000 and December 31, 2002, it may order
refunds from Williams and other similarly situated companies if the FERC finds
that the wholesale markets in California are unable to produce competitive, just
and reasonable prices or that market power or other individual seller conduct is
exercised to produce an unjust and unreasonable rate. Beginning on March 9,
2001, the FERC issued a series of orders directing Williams and other similarly
situated companies to provide refunds for any prices charged in excess of FERC
established proxy prices in January, February, March, April and May 2001, or to
provide justification for the prices charged during those months. According to
these orders, Williams' total potential refund liability for January through May
2001 is approximately $30 million. Williams has filed justification for its
prices with the FERC and calculated its refund liability under the methodology
used by the FERC to compute refund amounts at approximately $11 million. On July
25, 2001, the FERC issued an order establishing a hearing to establish the facts
necessary to determine refunds under the approved methodology. Refunds under
this order will cover the period of October 2, 2000 through June 20, 2001. They
will be paid as offsets against outstanding bills and are inclusive of any
amounts previously noticed for refund for that period. The judge presiding over
the refund proceedings is expected to issue his findings in August 2002. The
FERC will subsequently issue a refund order based on these findings.

     In the order issued June 19, 2001, the FERC implemented a revised price
mitigation and market monitoring plan for wholesale power sales by all suppliers
of electricity, including Williams, in spot markets for a region that includes
California and ten other western states (the "Western Systems Coordinating
Council," or "WSCC"). In general, the plan, which will be in effect from June
20, 2001 through September 30, 2002, establishes a market clearing price for
spot sales in all hours of the day that is based on the bid of the highest-cost
gas-fired California generating unit that is needed to serve the ISO's load.
When generation operating reserves fall below seven percent in California (a
"reserve deficiency period"), absent cost-based justification for a higher
price, the maximum price that Williams may charge for wholesale spot sales in
the WSCC is the market clearing price. When generation operating reserves rise
to seven percent or above in California, absent cost-based justification for a
higher price, Williams' maximum price will be limited to 85 percent of the
highest hourly price that was in effect during the most recent reserve
deficiency period. This methodology initially resulted in a maximum price of $92
per megawatt hour during non-emergency periods and $108 per

                                       122
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

megawatt hour during emergency periods, and these maximum prices remained
unchanged throughout Summer and Fall 2001.

     The California Public Utilities Commission (CPUC) filed a complaint with
the FERC on February 25, 2002, seeking to void or, alternatively, reform a
number of the long-term power purchase contracts entered into between the State
of California and several suppliers in 2001, including Energy Marketing &
Trading. The CPUC alleges that the contracts are tainted with the exercise of
market power and significantly exceed "just and reasonable" prices. The
Electricity Oversight Board made a similar filing on February 27, 2002.

     On December 19, 2001, the FERC reaffirmed its June 19 and July 25 orders
with certain clarifications and modifications. It also altered the price
mitigation methodology for spot market transactions for the WSCC market for the
winter 2001 season and set the period maximum price at $108 per megawatt hour
through April 30, 2002. Under the order, this price would be subject to being
recalculated when the average gas price rises by a minimum factor of ten percent
effective for the following trading day, but in no event will the maximum price
drop below $108 per megawatt hour. The FERC also upheld a ten percent addition
to the price applicable to sales into California to reflect credit risk.

     Certain entities have also asked the FERC to revoke Williams' authority to
sell power from California-based generating units at market-based rates to limit
Williams to cost-based rates for future sales from such units and to order
refunds of excessive rates, with interest, back to May 1, 2000, and possibly
earlier.

     On March 14, 2001, the FERC issued a Show Cause Order directing Williams
Energy Marketing & Trading Company and AES Southland, Inc. to show cause why
they should not be found to have engaged in violations of the Federal Power Act
and various agreements, and they were directed to make refunds in the aggregate
of approximately $10.8 million, and have certain conditions placed on Williams'
market-based rate authority for sales from specific generating facilities in
California for a limited period. On April 30, 2001, the FERC issued an Order
approving a settlement of this proceeding. The settlement terminated the
proceeding without making any findings of wrongdoing by Williams. Pursuant to
the settlement, Williams agreed to refund $8 million to the ISO by crediting
such amount against outstanding invoices. Williams also agreed to prospective
conditions on its authority to make bulk power sales at market-based rates for
certain limited facilities under which it has call rights for a one-year period.
Williams also has been informed that the facts underlying this proceeding are
also under investigation by a California Grand Jury.

     On September 27, 2001, the FERC issued a Notice of Proposed Rulemaking
proposing to adopt uniform standards of conduct for transmission providers. The
proposed rules define transmission providers as interstate natural gas pipelines
and public utilities that own, operate or control electric transmission
facilities. The proposed standards would regulate the conduct of transmission
providers with their energy affiliates. The FERC proposes to define energy
affiliates broadly to include any transmission provider affiliate that engages
in or is involved in transmission (gas or electric) transactions, or manages or
controls transmission capacity, or buys, sells, trades or administers natural
gas or electric energy or engages in financial transactions relating to the sale
or transmission of natural gas or electricity. Current rules affecting Williams
regulate the conduct of Williams' natural gas pipelines and their natural gas
marketing affiliates. If adopted, these new standards would require the adoption
of new compliance measures by certain Williams subsidiaries.

     On February 13, 2002, the FERC issued an Order Directing Staff
Investigation commencing a proceeding titled Fact-Finding Investigation of
Potential Manipulation of Electric and Natural Gas Prices. Through the
investigation, the FERC intends to determine whether "any entity, including
Enron Corporation (through any of its affiliates or subsidiaries), manipulated
short-term prices for electric energy or natural gas in the West or otherwise
exercised undue influence over wholesale electric prices in the West, since
January 1, 2000, resulting in potentially unjust and unreasonable rates in
long-term power sales contracts subsequently entered into by sellers in the
West." This investigation does not constitute a Federal Power Act complaint,
rather, the results of the investigation will be used by the FERC in any
existing or subsequent Federal Power

                                       123
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Act or Natural Gas Act complaint. The FERC Staff is directed to complete the
investigation as soon as "is practicable." Williams, through many of its
subsidiaries, is a major supplier of natural gas and power in the West and, as
such, anticipates being the subject of certain aspects of the investigation.

ENVIRONMENTAL MATTERS

     Since 1989, Texas Gas and Transcontinental Gas Pipe Line have had studies
under way to test certain of their facilities for the presence of toxic and
hazardous substances to determine to what extent, if any, remediation may be
necessary. Transcontinental Gas Pipe Line has responded to data requests
regarding such potential contamination of certain of its sites. The costs of any
such remediation will depend upon the scope of the remediation. At December 31,
2001, these subsidiaries had accrued liabilities totaling approximately $33
million for these costs.

     Certain Williams subsidiaries, including Texas Gas and Transcontinental Gas
Pipe Line, have been identified as potentially responsible parties (PRP) at
various Superfund and state waste disposal sites. In addition, these
subsidiaries have incurred, or are alleged to have incurred, various other
hazardous materials removal or remediation obligations under environmental laws.
Although no assurances can be given, Williams does not believe that these
obligations or the PRP status of these subsidiaries will have a material adverse
effect on its financial position, results of operations or net cash flows.

     Transcontinental Gas Pipe Line, Texas Gas and Williams Gas Pipelines
Central (Central) have identified polychlorinated biphenyl contamination in air
compressor systems, soils and related properties at certain compressor station
sites. Transcontinental Gas Pipe Line, Texas Gas and Central have also been
involved in negotiations with the U.S. Environmental Protection Agency (EPA) and
state agencies to develop screening, sampling and cleanup programs. In addition,
negotiations with certain environmental authorities and other programs
concerning investigative and remedial actions relative to potential mercury
contamination at certain gas metering sites have been commenced by Central,
Texas Gas and Transcontinental Gas Pipe Line. As of December 31, 2001, Central
had accrued a liability for approximately $9 million, representing the current
estimate of future environmental cleanup costs to be incurred over the next six
to ten years. Texas Gas and Transcontinental Gas Pipe Line likewise had accrued
liabilities for these costs which are included in the $33 million liability
mentioned above. Actual costs incurred will depend on the actual number of
contaminated sites identified, the actual amount and extent of contamination
discovered, the final cleanup standards mandated by the EPA and other
governmental authorities and other factors.

     In July 1999, Transcontinental Gas Pipe Line received a letter stating that
the U.S. Department of Justice (DOJ), at the request of the EPA, intends to file
a civil action against Transcontinental Gas Pipe Line arising from its waste
management practices at Transcontinental Gas Pipe Line's compressor stations and
metering stations in 11 states from Texas to New Jersey. Transcontinental Gas
Pipe Line, the EPA and the DOJ agreed to settle this matter by signing a Consent
Decree that provides for a civil penalty of $1.4 million.

     Williams Energy Services (WES) and its subsidiaries also accrue
environmental remediation costs for its natural gas gathering and processing
facilities, petroleum products pipelines, retail petroleum and refining
operations and for certain facilities related to former propane marketing
operations primarily related to soil and groundwater contamination. In addition,
WES owns a discontinued petroleum refining facility that is being evaluated for
potential remediation efforts. At December 31, 2001, WES and its subsidiaries
had accrued liabilities totaling approximately $43 million. WES accrues
receivables related to environmental remediation costs based upon an estimate of
amounts that will be reimbursed from state funds for certain expenses associated
with underground storage tank problems and repairs. At December 31, 2001, WES
and its subsidiaries had accrued receivables totaling $1 million.

     Williams Field Services (WFS), a WES subsidiary, received a Notice of
Violation (NOV) from the EPA in February 2000. WFS received a contemporaneous
letter from the DOJ indicating that the DOJ will

                                       124
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

also be involved in the matter. The NOV alleged violations of the Clean Air Act
at a gas processing plant. WFS, the EPA and the DOJ agreed to settle this matter
for a penalty of $850,000. In the course of investigating this matter, WFS
discovered a similar potential violation at the plant and disclosed it to the
EPA and the DOJ. In December 2001, the EPA, the DOJ and WFS agreed to settle
this self-reported matter by signing a Consent Decree that provides for a
penalty of $950,000.

     In connection with the 1987 sale of the assets of Agrico Chemical Company,
Williams agreed to indemnify the purchaser for environmental cleanup costs
resulting from certain conditions at specified locations, to the extent such
costs exceed a specified amount. At December 31, 2001, Williams had
approximately $10 million accrued for such excess costs. The actual costs
incurred will depend on the actual amount and extent of contamination
discovered, the final cleanup standards mandated by the EPA or other
governmental authorities, and other factors.

     On July 2, 2001, the EPA issued an information request asking for
information on oil releases and discharges in any amount from Williams'
pipelines, pipeline systems, and pipeline facilities used in the movement of oil
or petroleum products, during the period July 1, 1998 through July 2, 2001. In
November 2001, Williams furnished its response.

OTHER LEGAL MATTERS

     In connection with agreements to resolve take-or-pay and other contract
claims and to amend gas purchase contracts, Transcontinental Gas Pipe Line and
Texas Gas each entered into certain settlements with producers which may require
the indemnification of certain claims for additional royalties which the
producers may be required to pay as a result of such settlements. As a result of
such settlements, Transcontinental Gas Pipe Line is currently defending three
lawsuits brought by producers. In one of the cases, a jury verdict found that
Transcontinental Gas Pipe Line was required to pay a producer damages of $23.3
million including $3.8 million in attorneys' fees. In addition, through December
31, 2001, post-judgment interest was approximately $10.5 million.
Transcontinental Gas Pipe Line's appeals have been denied by the Texas Court of
Appeals for the First District of Texas, and on April 2, 2001, the company filed
an appeal to the Texas Supreme Court. On February 21, 2002, the Texas Supreme
Court denied Transcontinental Gas Pipe Line's petition for review. As a result,
Transcontinental Gas Pipe Line recorded a pre-tax charge to income (loss) for
the year ended December 31, 2001 in the amount of $37 million ($18 million is
included in Gas Pipeline's segment profit and $19 million in interest accrued)
representing management's estimate of the effect of this ruling.
Transcontinental Gas Pipe Line plans to request rehearing of the court's
decision. In the other cases, producers have asserted damages, including
interest calculated through December 31, 2001, of $16.3 million. Producers have
received and may receive other demands, which could result in additional claims.
Indemnification for royalties will depend on, among other things, the specific
lease provisions between the producer and the lessor and the terms of the
settlement between the producer and either Transcontinental Gas Pipe Line or
Texas Gas. Texas Gas may file to recover 75 percent of any such additional
amounts it may be required to pay pursuant to indemnities for royalties under
the provisions of Order 528.

     On June 8, 2001, 14 Williams entities were named as defendants in a
nationwide class action lawsuit which has been pending against other defendants,
generally pipeline and gathering companies, for more than one year. The
plaintiffs allege that the defendants, including the Williams defendants, have
engaged in mismeasurement techniques that distort the heating content of natural
gas, resulting in an alleged underpayment of royalties to the class of producer
plaintiffs. In September 2001, the plaintiffs voluntarily dismissed two of the
14 Williams entities named as defendants in the lawsuit. In November 2001,
Williams, along with other Coordinating Defendants, filed a motion to dismiss
under Rules 9b and 12b of the Kansas Rules of Civil Procedure. In January 2002,
most of the Williams defendants, along with a group of Coordinating Defendants,
filed a motion to dismiss for lack of personal jurisdiction. The court has not
yet ruled on these motions. In the

                                       125
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

next several months, the Williams entities will join with other defendants in
contesting certification of the plaintiff class.

     In 1998, the United States Department of Justice informed Williams that
Jack Grynberg, an individual, had filed claims in the United States District
Court for the District of Colorado under the False Claims Act against Williams
and certain of its wholly owned subsidiaries including Central, Kern River Gas
Transmission, Northwest Pipeline, Williams Gas Pipeline Company,
Transcontinental Gas Pipe Line Corporation, Texas Gas, Williams Field Services
Company and Williams Production Company. Mr. Grynberg has also filed claims
against approximately 300 other energy companies and alleges that the defendants
violated the False Claims Act in connection with the measurement and purchase of
hydrocarbons. The relief sought is an unspecified amount of royalties allegedly
not paid to the federal government, treble damages, a civil penalty, attorneys'
fees, and costs. On April 9, 1999, the United States Department of Justice
announced that it was declining to intervene in any of the Grynberg qui tam
cases, including the action filed against the Williams entities in the United
States District Court for the District of Colorado. On October 21, 1999, the
Panel on Multi-District Litigation transferred all of the Grynberg qui tam
cases, including those filed against Williams, to the United States District
Court for the District of Wyoming for pre-trial purposes. Motions to dismiss the
complaints filed by various defendants, including Williams, were denied on May
18, 2001.

     Williams and certain of its subsidiaries are named as defendants in various
putative, nationwide class actions brought on behalf of all landowners on whose
property the plaintiffs have alleged WCG installed fiber-optic cable without the
permission of the landowners. Williams believes that WCG's installation of the
cable containing the fiber network that crosses over or near the putative class
members' land does not infringe on their property rights. Williams also does not
believe that the plaintiffs have sufficient basis for certification of a class
action. It is likely that Williams will be subject to other putative class
action suits challenging WCG's railroad or pipeline rights of way. However,
Williams has a claim for indemnity from WCG, subject to their ability to
perform, for damages resulting from or arising out of the businesses or
operations conducted or formerly conducted or assets owned or formerly owned by
any subsidiary of WCG.

     In November 2000, class actions were filed in San Diego, California
Superior Court by Pamela Gordon and Ruth Hendricks on behalf of San Diego rate
payers against California power generators and traders including Williams Energy
Services Company and Williams Energy Marketing & Trading Company, subsidiaries
of Williams. Three municipal water districts also filed a similar action on
their own behalf. Other class actions have been filed on behalf of the people of
California and on behalf of commercial restaurants in San Francisco Superior
Court. These lawsuits result from the increase in wholesale power prices in
California that began in the summer of 2000. Williams is also a defendant in
other litigation arising out of California energy issues. The suits claim that
the defendants acted to manipulate prices in violation of the California
antitrust and unfair business practices statutes and other state and federal
laws. Plaintiffs are seeking injunctive relief as well as restitution,
disgorgement, appointment of a receiver, and damages, including treble damages.
These cases have all been coordinated in San Diego County Superior Court.

     On May 2, 2001, the Lieutenant Governor of the State of California and
Assemblywoman Barbara Matthews, acting in their individual capacities as members
of the general public, filed suit against five companies including Williams
Energy Marketing & Trading and 14 executive officers, including Keith Bailey,
Chairman of Williams, Steve Malcolm, President and CEO of Williams, and Bill
Hobbs, President and CEO of Williams Energy Marketing & Trading, in Los Angeles
Superior State Court alleging State Antitrust and Fraudulent and Unfair Business
Act Violations and seeking injunctive and declaratory relief, civil fines,
treble damages and other relief, all in an unspecified amount. This case is
being coordinated with the other class actions in San Diego Superior Court.

     On May 17, 2001, the DOJ advised Williams that it had commenced an
antitrust investigation relating to an agreement between a subsidiary of
Williams and AES Southland alleging that the agreement limits the expansion of
electric generating capacity at or near the AES Southland plants that are
subject to a long-term

                                       126
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

tolling agreement between Williams and AES Southland. In connection with that
investigation, the DOJ has issued two Civil Investigative Demands to Williams
requesting answers to certain interrogatories and the production of documents.
Williams is cooperating with the investigation.

     On October 5, 2001, suit was filed on behalf of California taxpayers and
electric ratepayers in the Superior Court for the County of San Francisco
against the Governor of California and 22 other defendants consisting of other
state officials, utilities and generators, including Energy Marketing & Trading.
The suit alleges that the long-term power contracts entered into by the state
with generators are illegal and unenforceable on the basis of fraud, mistake,
breach of duty, conflict of interest, failure to comply with law, commercial
impossibility and change in circumstances. Remedies sought include rescission,
reformation, injunction, and recovery of funds.

     On October 19, 2001, Williams settled a $42 million claim for coal royalty
payments relating to a discontinued activity by agreeing to pay $9.5 million.

     Since January 29, 2002, Williams is aware of numerous shareholder class
action suits that have been filed in the United States District Court for the
Northern District of Oklahoma. The majority of the suits allege that Williams
and co-defendants, Williams Communications and certain corporate officers, have
acted jointly and separately to inflate the stock price of both companies. Other
suits allege similar causes of action related to a public offering in early
January 2002, known as the FELINE PACS offering. This case was filed against
Williams, certain corporate officers, all members of the Williams board of
directors and all of the offerings' underwriters. Williams does not anticipate
any immediate action by the Court in these actions. In addition, class action
complaints have been filed against Williams and the members of its board of
directors under the Employee Retirement Income Security Act by participants in
Williams' 401(k) plan based on similar allegations.

     In addition to the foregoing, various other proceedings are pending against
Williams or its subsidiaries which are incidental to their operations.

     Enron Corp. (Enron) and certain of its subsidiaries, with whom Energy
Marketing & Trading and other Williams subsidiaries have had commercial
relations, filed a voluntary petition for Chapter 11 reorganization under the
U.S. Bankruptcy Code in the Federal District Court for the Southern District of
New York on December 2, 2001. Additional Enron subsidiaries have subsequently
filed for Chapter 11. The court has not set a date for the filing of claims.
During fourth-quarter 2001, Energy Marketing & Trading recorded a total decrease
to revenues of approximately $130 million as a part of its valuation of energy
commodity and derivative trading contracts with Enron entities, approximately
$91 million of which was recorded pursuant to events immediately preceding and
following the announced bankruptcy of Enron. Other Williams subsidiaries
recorded approximately $5 million of bad debt expense related to amounts
receivable from Enron entities in fourth-quarter 2001, reflected in selling,
general and administrative expenses. At December 31, 2001, Williams has reduced
its recorded exposure to accounts receivable from Enron entities, net of margin
deposits, to expected recoverable amounts.

SUMMARY

     While no assurances may be given, Williams, based on advice of counsel,
does not believe that the ultimate resolution of the foregoing matters, taken as
a whole and after consideration of amounts accrued, insurance coverage, recovery
from customers or other indemnification arrangements, will have a materially
adverse effect upon Williams' future financial position, results of operations
or cash flow requirements.

COMMITMENTS

     Energy Marketing & Trading has entered into certain contracts giving
Williams the right to receive fuel conversion services as well as certain other
services associated with electric generation facilities that are either

                                       127
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

currently in operation or are to be constructed at various locations throughout
the continental United States. At December 31, 2001, annual estimated committed
payments under these contracts range from approximately $20 million to $462
million, resulting in total committed payments over the next 21 years of
approximately $8 billion.

     See Note 4 for commitments related to certain equity and cost method
investments and Note 11 for commitments for construction and acquisition of
property, plant and equipment.

NOTE 20. RELATED PARTY TRANSACTIONS

     In fourth-quarter 2000, Williams entered into a $600 million debt
obligation with Lehman Brothers Inc. Lehman Brothers Inc. is a related party as
a result of a director that serves on both Williams' and Lehman Brothers
Holdings, Inc.'s board of directors. This debt obligation was paid in
first-quarter 2001. In addition, Williams paid $27 million to Lehman Brothers
Inc. in 2001, primarily for underwriting fees related to debt and equity
issuances.

                                       128
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 21. ACCUMULATED OTHER COMPREHENSIVE INCOME

     The table below presents changes in the components of accumulated other
comprehensive income.

<Table>
<Caption>
                                                         INCOME (LOSS)
                                 --------------------------------------------------------------
                                               UNREALIZED
                                              APPRECIATION      FOREIGN      MINIMUM
                                 CASH FLOW   (DEPRECIATION)    CURRENCY      PENSION
                                  HEDGES     ON SECURITIES    TRANSLATION   LIABILITY    TOTAL
                                 ---------   --------------   -----------   ---------   -------
                                                           (MILLIONS)
<S>                              <C>         <C>              <C>           <C>         <C>
Balance at December 31, 1998...   $    --       $  21.7         $ (5.0)       $  --     $  16.7
                                  -------       -------         ------        -----     -------
1999 change:
  Pre-income tax amount........        --         194.9          (17.9)          --       177.0
  Income tax provision.........        --         (75.8)            --           --       (75.8)
  Minority interest in other
     comprehensive income......        --         (14.9)           (.1)          --       (15.0)
                                  -------       -------         ------        -----     -------
                                       --         104.2          (18.0)          --        86.2
Adjustment due to issuance of
  subsidiary's common stock....        --          (5.8)           2.4           --        (3.4)
                                  -------       -------         ------        -----     -------
Balance at December 31, 1999...        --         120.1          (20.6)          --        99.5
                                  -------       -------         ------        -----     -------
2000 change:
  Pre-income tax amount........        --         218.1          (28.2)          --       189.9
  Income tax provision.........        --         (82.2)            --           --       (82.2)
  Minority interest in other
     comprehensive income
     (loss)....................        --         (20.4)           4.3           --       (16.1)
  Net realized gains in net
     income (net of $118.3
     income tax benefit and
     $28.0 minority
     interest).................        --        (162.9)            --           --      (162.9)
                                  -------       -------         ------        -----     -------
                                       --         (47.4)         (23.9)          --       (71.3)
                                  -------       -------         ------        -----     -------
Balance at December 31, 2000...        --          72.7          (44.5)          --        28.2
                                  -------       -------         ------        -----     -------
2001 change:
  Cumulative effect of change
     in accounting for
     derivative instruments
     (net of a $58.9 million
     income tax benefit).......     (94.5)           --             --           --       (94.5)
  Pre-income tax amount........     896.8         (69.7)         (39.9)        (3.6)      783.6
  Income tax benefit
     (provision)...............    (343.3)         27.5             --          1.4      (314.4)
  Minority interest in other
     comprehensive loss........        --           5.4            2.8           --         8.2
  Net realized gains in net
     income (net of $.1 income
     tax benefit and $1.8
     minority interest)........        --           1.5             --           --         1.5
  Net reclassification into
     earnings of derivative
     instrument gains (net of a
     $55.7 million income tax
     benefit)..................     (88.8)           --             --           --       (88.8)
                                  -------       -------         ------        -----     -------
                                    370.2         (35.3)         (37.1)        (2.2)      295.6
Adjustment due to spinoff of
  WCG..........................        --         (36.5)          57.8           --        21.3
                                  -------       -------         ------        -----     -------
Balance at December 31, 2001...   $ 370.2       $    .9         $(23.8)       $(2.2)    $ 345.1
                                  =======       =======         ======        =====     =======
</Table>

                                       129
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Unrealized appreciation (depreciation) on securities for years prior to
2000 represents activity related to securities held by WCG. At December 31,
2000, the unrealized appreciation (depreciation) on securities balance includes
$76.1 million of unrealized net appreciation related to securities held by WCG.
Foreign currency translation balances include translation losses of $38.5
million and $13.6 million at December 31, 2000 and 1999, respectively, which
relate to WCG. The adjustment due to the spinoff of WCG for 2001 includes
unrealized appreciation (depreciation) on securities and foreign currency
translation balances which relate to WCG and are included in the $2.0 billion
decrease to stockholders' equity (see Note 3). The remaining balances relate to
the continuing operations of Williams.

NOTE 22. SEGMENT DISCLOSURES

     Williams evaluates performance based upon segment profit (loss) from
operations which includes revenues from external and internal customers,
operating costs and expenses, depreciation, depletion and amortization, equity
earnings (losses) and income (loss) from investments. The accounting policies of
the segments are the same as those described in Note 1, Summary of Significant
Accounting Policies. Intersegment sales are generally accounted for as if the
sales were to unaffiliated third parties, that is, at current market prices.

     The majority of energy commodity hedging by the Energy Services' business
units is done through intercompany derivatives with Energy Marketing & Trading
which, in turn, enters into offsetting derivative contracts with unrelated third
parties. Energy Marketing & Trading bears the counter party performance risks
associated with unrelated third parties. Similarly, hedging of interest rate
risk in the energy trading portfolio by Energy Marketing & Trading is
facilitated by the corporate treasury operation. All hedging effectiveness,
ineffectiveness and risk of this activity is recognized by Energy Marketing &
Trading.

     Williams' reportable segments are strategic business units that offer
different products and services. The segments are managed separately because
each segment requires different technology, marketing strategies and industry
knowledge. Other includes corporate operations.

     Segment amounts for 2000 and 1999 have been restated to reflect two new
reporting segments, International and Williams Energy Partners, and the
reclassification of Energy Marketing & Trading to a third industry group (see
Note 1).

     Exploration & Production's 2001 additions to long-lived assets and increase
in total assets, as noted on pages 132 and 133, respectively, are due primarily
to the Barrett acquisition (see Note 2).

                                       130
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The following table reflects the reconciliation of operating income as
reported on the Consolidated Statement of Operations to segment profit (loss),
per the table on page 132.

<Table>
<Caption>
                                                           EQUITY      INCOME
                                              OPERATING   EARNINGS   (LOSS) FROM   SEGMENT
                                               INCOME     (LOSSES)   INVESTMENTS    PROFIT
                                              ---------   --------   -----------   --------
                                                               (MILLIONS)
<S>                                           <C>         <C>        <C>           <C>
2001
Energy Marketing & Trading..................  $1,296.1     $ (1.3)     $(23.3)     $1,271.5
Gas Pipeline................................     673.8       46.3          --         720.1
Energy Services.............................     591.5      (21.6)         --         569.9
Other.......................................      12.9        (.7)         --          12.2
                                              --------     ------      ------      --------
          Total segments....................   2,574.3     $ 22.7      $(23.3)     $2,573.7
                                              --------     ------      ------      --------
General corporate expenses..................    (124.3)
                                              --------
          Total operating income............  $2,450.0
                                              ========
2000
Energy Marketing & Trading..................  $1,005.5     $  1.6      $   .8      $1,007.9
Gas Pipeline................................     714.5       27.0          --         741.5
Energy Services.............................     571.7       (6.8)         --         564.9
Other.......................................      11.5        (.2)         --          11.3
                                              --------     ------      ------      --------
          Total segments....................   2,303.2     $ 21.6      $   .8      $2,325.6
                                              --------     ------      ------      --------
General corporate expenses..................     (97.2)
                                              --------
          Total operating income............  $2,206.0
                                              ========
1999
Energy Marketing & Trading..................  $  104.5     $  (.5)     $   --      $  104.0
Gas Pipeline................................     688.3        9.0          --         697.3
Energy Services.............................     439.6      (18.4)         --         421.2
Other.......................................      11.1        3.6          --          14.7
                                              --------     ------      ------      --------
          Total segments....................   1,243.5     $ (6.3)     $   --      $1,237.2
                                              --------     ------      ------      --------
General corporate expenses..................     (76.9)
                                              --------
          Total operating income............  $1,166.6
                                              ========
</Table>

     The following geographic area data includes revenues from external
customers based on product shipment origin and long-lived assets based upon
physical location.

<Table>
<Caption>
                                                        2001        2000        1999
                                                      ---------   ---------   ---------
                                                                 (MILLIONS)
<S>                                                   <C>         <C>         <C>
Revenues from external customers:
  United States.....................................  $ 9,625.7   $ 9,283.7   $ 6,522.3
  Other.............................................    1,409.0       308.2       107.1
                                                      ---------   ---------   ---------
          Total.....................................  $11,034.7   $ 9,591.9   $ 6,629.4
                                                      =========   =========   =========
Long-lived assets:
  United States.....................................  $17,543.3   $13,121.8   $12,522.4
  Other.............................................    1,356.5     1,126.6       354.4
                                                      ---------   ---------   ---------
          Total.....................................  $18,899.8   $14,248.4   $12,876.8
                                                      =========   =========   =========
</Table>

     Long-lived assets are comprised of property, plant and equipment and
goodwill and other intangible assets.

                                       131
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                               REVENUES                                       ADDITIONS
                                 ------------------------------------   SEGMENT     EQUITY    TO LONG-    DEPRECIATION,
                                 EXTERNAL                                PROFIT    EARNINGS     LIVED      DEPLETION &
                                 CUSTOMERS   INTERSEGMENT     TOTAL      (LOSS)    (LOSSES)    ASSETS     AMORTIZATION
                                 ---------   ------------   ---------   --------   --------   ---------   -------------
                                                                       (MILLIONS)
<S>                              <C>         <C>            <C>         <C>        <C>        <C>         <C>
2001
Energy Marketing & Trading.....  $2,573.5      $ (701.7)*   $ 1,871.8   $1,271.5    $ (1.3)   $  209.6       $ 21.1
Gas Pipeline...................   1,698.3          50.5       1,748.8      720.1      46.3       872.2        330.5
Energy Services
  Exploration & Production.....      86.0         493.6         579.6      218.7       8.5     3,770.2         94.6
  International................     159.0            --         159.0     (172.8)    (13.1)      123.3         38.4
  Midstream Gas & Liquids......   1,327.3         595.1       1,922.4      221.6     (16.9)      489.5        179.8
  Petroleum Services...........   5,083.5         324.4       5,407.9      286.9       (.1)      115.6        105.3
  Williams Energy Partners.....      70.3          15.9          86.2       17.0        --        66.0         12.3
  Merger-related costs.........        --            --            --       (1.5)       --          --           --
                                 ---------     --------     ---------   --------    ------    --------       ------
         Total Energy
           Services............   6,726.1       1,429.0       8,155.1      569.9     (21.6)    4,564.6        430.4
                                 ---------     --------     ---------   --------    ------    --------       ------
Other..........................      36.8          39.5          76.3       12.2       (.7)       34.9         15.7
Eliminations...................        --        (817.3)       (817.3)        --        --          --           --
                                 ---------     --------     ---------   --------    ------    --------       ------
         Total.................  $11,034.7     $     --     $11,034.7   $2,573.7    $ 22.7    $5,681.3       $797.7
                                 =========     ========     =========   ========    ======    ========       ======
2000
Energy Marketing & Trading.....  $2,273.2      $ (700.6)*   $ 1,572.6   $1,007.9    $  1.6    $   68.8       $ 18.7
Gas Pipeline...................   1,818.6          60.6       1,879.2      741.5      27.0       664.4        294.1
Energy Services
  Exploration & Production.....      39.6         254.6         294.2       62.4        --        70.7         29.1
  International................     104.1            --         104.1       14.1      (2.2)      327.1         18.1
  Midstream Gas & Liquids......     835.1         679.6       1,514.7      297.9      (4.0)      799.2        163.0
  Petroleum Services...........   4,436.5         168.5       4,605.0      175.8       (.6)      189.8         95.5
  Williams Energy Partners.....      56.1          17.4          73.5       21.8        --        42.0          9.1
  Merger-related costs.........        --            --            --       (7.1)       --          --           --
                                 ---------     --------     ---------   --------    ------    --------       ------
         Total Energy
           Services............   5,471.4       1,120.1       6,591.5      564.9      (6.8)    1,428.8        314.8
                                 ---------     --------     ---------   --------    ------    --------       ------
Other..........................      28.7          38.1          66.8       11.3       (.2)       43.2         19.2
Eliminations...................        --        (518.2)       (518.2)        --        --          --           --
                                 ---------     --------     ---------   --------    ------    --------       ------
         Total.................  $9,591.9      $     --     $ 9,591.9   $2,325.6    $ 21.6    $2,205.2       $646.8
                                 =========     ========     =========   ========    ======    ========       ======
1999
Energy Marketing & Trading.....  $1,217.7      $ (555.4)*   $   662.3   $  104.0    $  (.5)   $   82.8       $ 35.3
Gas Pipeline...................   1,762.7          59.9       1,822.6      697.3       9.0       361.3        285.1
Energy Services
  Exploration & Production.....      50.2         139.9         190.1       39.8        --       148.5         23.5
  International................      72.5            --          72.5       (3.9)     (6.8)      247.9         11.9
  Midstream Gas & Liquids......     648.9         381.5       1,030.4      223.9     (12.1)      341.5        143.2
  Petroleum Services...........   2,812.6         175.2       2,987.8      157.8        .5       488.5         78.9
  Williams Energy Partners.....      36.7           6.9          43.6       16.3        --       227.6          4.6
  Merger-related costs.........        --            --            --      (12.7)       --          --           --
                                 ---------     --------     ---------   --------    ------    --------       ------
         Total Energy
           Services............   3,620.9         703.5       4,324.4      421.2     (18.4)    1,454.0        262.1
                                 ---------     --------     ---------   --------    ------    --------       ------
Other..........................      28.1          37.3          65.4       14.7       3.6        42.7         23.0
Eliminations...................        --        (245.3)       (245.3)        --        --          --           --
                                 ---------     --------     ---------   --------    ------    --------       ------
         Total.................  $6,629.4      $     --     $ 6,629.4   $1,237.2    $ (6.3)   $1,940.8       $605.5
                                 =========     ========     =========   ========    ======    ========       ======
</Table>

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

* Energy Marketing & Trading intercompany cost of sales, which are netted in
  revenues consistent with fair-value accounting, exceed intercompany revenues.

                                       132
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONCLUDED)

<Table>
<Caption>
                                            TOTAL ASSETS            EQUITY METHOD INVESTMENTS
                                     ---------------------------   ---------------------------
                                     DECEMBER 31,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,
                                         2001           2000           2001           2000
                                     ------------   ------------   ------------   ------------
                                                            (MILLIONS)
<S>                                  <C>            <C>            <C>            <C>
Energy Marketing & Trading.........   $15,483.0      $14,609.7       $     --        $  1.4
Gas Pipeline.......................     9,253.0        8,817.2          715.5         281.5
Energy Services
  Exploration & Production.........     4,925.7          671.5             --            --
  International....................     2,101.1        2,214.4          127.8         119.3
  Midstream Gas & Liquids..........     4,484.4        4,293.5          217.8         239.2
  Petroleum Services...............     2,907.7        2,666.5          110.1         113.2
  Williams Energy Partners.........       401.3          349.8             --            --
                                      ---------      ---------       --------        ------
          Total Energy Services....    14,820.2       10,195.7          455.7         471.7
                                      ---------      ---------       --------        ------
Other..............................     7,344.5        7,019.9             --            --
Eliminations.......................    (7,994.5)      (8,156.1)            --            --
                                      ---------      ---------       --------        ------
                                       38,906.2       32,486.4        1,171.2         754.6
                                      ---------      ---------       --------        ------
Net assets of discontinued
  operations.......................          --        2,290.2             --            --
                                      ---------      ---------       --------        ------
Total assets.......................   $38,906.2      $34,776.6       $1,171.2        $754.6
                                      =========      =========       ========        ======
</Table>

NOTE 23. SUBSEQUENT EVENTS

     In January 2002, Williams issued 44 million publicly traded units, more
commonly known as FELINE PACs, that include a senior debt security and an equity
purchase contract. The debt has a term of five years, and the equity purchase
contract will require the company to deliver Williams common stock to holders
after three years based on a previously agreed rate. Net proceeds from this
issuance were approximately $1.1 billion.

     The FELINE PACS were issued as part of Williams' plan to strengthen its
balance sheet and maintain its investment-grade rating. Some of the steps which
could impact amounts recorded at December 31, 2001 include:

     - A $1 billion reduction in planned capital spending for 2002.

     - Sales of certain non-core assets during 2002, from which Williams expects
       to receive proceeds of between $250 million and $750 million.

     - Initiation of action to eliminate ratings triggers on certain obligations
       and contingencies that do not appear as debt on the Consolidated Balance
       Sheet.

     Williams has also announced plans to sell its midwest petroleum products
pipeline and on-system terminals. A potential buyer would be Williams Energy
Partners, L.P., a consolidated entity.

                                       133
<PAGE>

                          THE WILLIAMS COMPANIES, INC.

                            QUARTERLY FINANCIAL DATA
                                  (UNAUDITED)

     Summarized quarterly financial data are as follows (millions, except
per-share amounts). Certain amounts have been restated or reclassified as
described in Note 1 of Notes to Consolidated Financial Statements.

<Table>
<Caption>
                                                FIRST      SECOND     THIRD      FOURTH
2001                                           QUARTER    QUARTER    QUARTER    QUARTER
- ----                                           --------   --------   --------   --------
<S>                                            <C>        <C>        <C>        <C>
Revenues.....................................  $3,096.2   $2,815.0   $2,804.6   $2,318.9
Costs and operating expenses.................   2,045.5    1,984.1    1,809.9    1,545.1
Income (loss) from continuing operations.....     378.3      339.5      221.3     (103.7)
Net income (loss)............................     199.2      339.5      221.3   (1,237.7)
Basic earnings (loss) per common share:
  Income (loss) from continuing operations...       .79        .70        .44       (.20)
  Net income (loss)..........................       .42        .70        .44      (2.39)
Diluted earnings (loss) per common share:....
  Income (loss) from continuing operations...       .78        .69        .44       (.20)
  Net income (loss)..........................       .41        .69        .44      (2.39)
</Table>

<Table>
<Caption>
                                                FIRST      SECOND     THIRD      FOURTH
2000                                           QUARTER    QUARTER    QUARTER    QUARTER
- ----                                           --------   --------   --------   --------
<S>                                            <C>        <C>        <C>        <C>
Revenues.....................................  $1,898.9   $2,351.5   $2,330.9   $3,010.6
Costs and operating expenses.................   1,314.9    1,494.5    1,671.6    1,960.8
Income from continuing operations............     138.9      286.4      176.5      363.6
Net income (loss)............................      99.7      351.8      121.1      (48.3)
Basic earnings (loss) per common share:
  Income from continuing operations..........       .31        .64        .39        .81
  Net income (loss)..........................       .22        .79        .27       (.11)
Diluted earnings (loss) per common share:
  Income from continuing operations..........       .31        .63        .39        .80
  Net income (loss)..........................       .22        .78        .27       (.11)
</Table>

     The sum of earnings per share for the four quarters may not equal the total
earnings per share for the year due to changes in the average number of common
shares outstanding and rounding.

     First-quarter 2001 net income includes an after-tax loss from discontinued
operations of $179.1 million related to the spinoff of WCG and fourth-quarter
2001 loss from discontinued operations includes $1.17 billion after-tax impact
for accruals of WCG guarantees and payment obligations (see Note 3).
Additionally, first and fourth-quarter 2001 net income (loss) includes
additional pre-tax impairment charges of $11.2 million and $.9 million,
respectively, relating to Petroleum Services' end-to-end mobile computing
systems business.

     Second and fourth-quarter 2001 net income (loss) includes a pre-tax gain
from the sale of certain convenience stores at Petroleum Services of $72.1
million and $3.2 million, respectively. Second and third-quarter 2001 net income
includes a pre-tax impairment loss related to certain south Texas non-regulated
gathering and processing assets at Midstream Gas & Liquids of $10.9 million and
$4.2 million, respectively. A $1.3 million reduction to these impairment charges
was made in fourth-quarter 2001 based on proceeds from the sales which closed in
first-quarter 2002. Additionally, second-quarter 2001 includes a $27.5 million
pre-tax gain on the sale of Williams' limited partnership interest in Northern
Border Partners, L.P. at Gas Pipeline.

     Included in third-quarter 2001 net income is a $94.2 million pre-tax charge
related to the write-down of certain equity and cost basis investments (see Note
4).

     Fourth-quarter 2001 net income (loss) includes a $170 million pre-tax
impairment charge relating to the soda ash mining operations located in Colorado
(see Note 5). Also, included in fourth-quarter 2001 net

                                       134
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

                    QUARTERLY FINANCIAL DATA -- (CONCLUDED)
                                  (UNAUDITED)

income (loss) is a $130 million pre-tax decrease to revenues and a $5 million
pre-tax charge to bad expense related to Williams' estimated net exposure for
the Enron bankruptcy at Energy Marketing & Trading and Gas Pipeline,
respectively (see Note 19), a $13.3 million pre-tax impairment charge for the
termination of a plant expansion at Energy Marketing & Trading and a $14.7
million pre-tax impairment charge and other loss accruals related to certain
travel centers at Petroleum Services. Additionally, fourth-quarter 2001 net
income (loss) includes a $37 million pre-tax charge resulting from an
unfavorable court decision in one of Transcontinental Gas Pipe Line's royalty
claims proceeding (see Note 19) and $213 million pre-tax charges included in
continuing operations related to estimated losses from an assessment of the
recoverability of WCG related receivables (see Note 3).

     Second-quarter 2000 net income includes approximately $75 million in
pre-tax reductions to certain rate refund liabilities and related interest
accruals based on favorable FERC and judicial rulings received regarding
regulatory proceedings. Also included in second and fourth-quarter 2000 net
income (loss) is a $25.9 million and a $17.2 million pre-tax charge,
respectively, resulting from the decision to discontinue Energy Marketing &
Trading's mezzanine lending services (see Note 5). Fourth-quarter 2000 net
income includes a $16.3 million pre-tax charge relating to management's decision
and commitment to sell Energy Marketing & Trading's distributed power generation
business and an $11.9 million pre-tax charge relating to management's decision
and commitment to sell certain of Petroleum Services' end-to-end mobile
computing systems business. These charges represent the impairment of the assets
to fair value based on the expected net sales proceeds.

     First, third and fourth-quarter 2000 include after-tax loss from
discontinued operations of $39.2 million, $55.4 million and $411.9 million,
respectively, while second-quarter 2000 includes after-tax income of $65.4
million, all of which are related to WCG which was spun off April 23, 2001 (see
Note 3).

                                       135
<PAGE>

                          THE WILLIAMS COMPANIES, INC.

                      SUPPLEMENTAL OIL AND GAS DISCLOSURES
                                  (UNAUDITED)

     The following information pertains to the Company's oil and gas producing
activities and is presented in accordance with SFAS No. 69 "Disclosures About
Oil and Gas Producing Activities". The information is required to be disclosed
by geographic region. Williams has significant oil and gas producing activities
primarily in the Rocky Mountain, Mid-continent and Gulf Coast regions of the
United States. Additionally, Williams has oil and gas producing activities in
Argentina; however, proved reserves and revenues related to these activities are
approximately 5.6 percent and 4.3 percent, respectively, of Williams' total oil
and gas producing activities. The following information relates only to the oil
and gas activities in the United States.

CAPITALIZED COSTS

<Table>
<Caption>
                                                              FOR THE YEAR ENDED
                                                                 DECEMBER 31,
                                                                     2001
                                                              ------------------
                                                                  (MILLIONS)
<S>                                                           <C>
Proved properties...........................................       $2,415.2
Unproved properties.........................................          851.9
                                                                   --------
                                                                    3,267.1
Accumulated depreciation, depletion, and amortization, and
  valuation provisions......................................          268.3
                                                                   --------
Net capitalized costs.......................................       $2,998.8
                                                                   ========
</Table>

     - Capitalized costs include the cost of equipment and facilities for oil
       and gas producing activities. This amount does not include approximately
       $1 billion of goodwill related to the purchase of Barrett Resources Corp.
       (Barrett).

     - Proved properties include capitalized costs for oil and gas leaseholds
       holding proved reserves; development wells and related equipment and
       facilities (including uncompleted development well costs); successful
       exploratory wells and related equipment and facilities (and uncompleted
       exploratory well costs) and support equipment.

     - Unproved properties consist primarily of acreage related to probable
       reserves acquired through the Barrett acquisition in addition to a small
       portion of unproved exploratory acreage.

COSTS INCURRED DURING 2001

<Table>
<Caption>
                                                              FOR THE YEAR ENDED
                                                                 DECEMBER 31,
                                                                     2001
                                                              ------------------
                                                                  (MILLIONS)
<S>                                                           <C>
Acquisition.................................................       $2,557.0
Exploration.................................................           35.6
Development.................................................          198.9
                                                                   --------
                                                                   $2,791.5
                                                                   ========
</Table>

     - Costs incurred include capitalized and expensed items.

     - Property acquisition costs include costs incurred to purchase, lease, or
       otherwise acquire a property, the majority of which is related to the
       Barrett acquisition.

     - Exploration costs include the costs of geological and geophysical
       activity, dry holes, drilling and equipping exploratory wells, and the
       cost of retaining undeveloped leaseholds.

     - Development costs include costs incurred to gain access to and prepare
       development well locations for drilling and to drill and equip
       development wells.

                                       136
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

              SUPPLEMENTAL OIL AND GAS DISCLOSURES -- (CONTINUED)
                                  (UNAUDITED)

RESULTS OF OPERATIONS

<Table>
<Caption>
                                                              FOR THE YEAR ENDED
                                                                 DECEMBER 31,
                                                                     2001
                                                              ------------------
                                                                  (MILLIONS)
<S>                                                           <C>
Revenues:
Oil and gas revenues........................................        $408.4
Other revenues..............................................         171.2
                                                                    ------
Total revenues..............................................         579.6
                                                                    ------
Costs:
Production costs............................................          79.3
General & administrative....................................          40.1
Exploration expenses........................................          10.1
Depreciation, depletion & amortization......................          94.0
Property impairments........................................           7.2
Other expenses..............................................         138.7
                                                                    ------
Total expenses..............................................         369.4
                                                                    ------
Results of operations.......................................         210.2
                                                                    ------
Equity earnings.............................................           8.5
Provision for income taxes..................................         (80.4)
                                                                    ------
Exploration and production net income.......................        $138.3
                                                                    ======
</Table>

     - Results of operations for producing activities consist of all related
       activities within the Exploration & Production reporting unit.

     - Oil and gas revenues consist primarily of natural gas production sold to
       Energy Marketing & Trading and includes the impact of intercompany
       hedges.

     - Other revenues and other expenses consist of activities within the
       Exploration & Production segment that are not a direct part of the
       producing activities. These non-producing activities include acquisition
       and disposition of other working interest and royalty interest gas and
       the movement of gas from the wellhead to the tailgate of the respective
       plants for sale to Energy Marketing & Trading or third party purchases.
       In addition, other revenues include recognition of income from
       transactions which transferred certain non-operating benefits to a third
       party.

     - Production costs consist of costs incurred to operate and maintain wells
       and related equipment and facilities used in the production of petroleum
       liquids and natural gas. These costs also include production related
       taxes other than income taxes, and administrative expenses related to the
       production activity. Excluded are depreciation, depletion and
       amortization of capitalized acquisition, exploration and development
       costs.

     - Exploration expenses include unsuccessful exploratory dry hole costs,
       leasehold impairment, geological and geophysical expenses and the cost of
       retaining undeveloped leaseholds.

     - Depreciation, depletion and amortization includes depreciation of support
       equipment.

                                       137
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

              SUPPLEMENTAL OIL AND GAS DISCLOSURES -- (CONTINUED)
                                  (UNAUDITED)

PROVED RESERVES

<Table>
<Caption>
                                                               2001
                                                              ------
                                                              (BCFE)
<S>                                                           <C>
Proved reserves at beginning of period......................  1,202
  Revisions.................................................    (69)
  Purchases.................................................  1,949
  Extensions and discoveries................................    239
  Production................................................   (131)
  Sale of minerals in place.................................    (12)
                                                              -----
Proved reserves at end of period............................  3,178
                                                              =====
Proved developed reserves at end of period..................  1,599
                                                              =====
</Table>

     - Proved oil and gas reserves are the estimated quantities of crude oil,
       natural gas and natural gas liquids which geological and engineering data
       indicate with reasonable certainty to be recoverable in future years from
       known reservoirs under existing economic and operating conditions, i.e.,
       prices and costs as of the date the estimate is made.

     - Natural gas reserves are computed at 14.73 pounds per square inch
       absolute and 60 degrees Fahrenheit. Crude oil reserves are insignificant
       and have been included in the proved reserves on a basis of billion cubic
       feet equivalents (Bcfe).

STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED OIL
AND GAS RESERVES

     The following is based on the estimated quantities of proved reserves and
the year-end prices and costs. The average year end natural gas prices used in
the following estimates were $2.31 per mmcf and $9.17 per mmcf at December 31,
2001 and December 31, 2000, respectively. Future income tax expenses have been
computed considering available carryforwards and credits and the appropriate
statutory tax rates. The discount rate of 10 percent is as prescribed by SFAS
No. 69. Continuation of year-end economic conditions also is assumed. The
calculation is based on estimates of proved reserves, which are revised over
time as new data becomes available. Probable or possible reserves, which may
become proved in the future, are not considered. The calculation also requires
assumptions as to the timing of future production of proved reserves, and the
timing and amount of future development and production costs.

     Numerous uncertainties are inherent in estimating volumes and the value of
proved reserves and in projecting future production rates and timing of
development expenditures. Such reserve estimates are subject to change as
additional information becomes available. The reserves actually recovered and
the timing of production may be substantially different from the reserve
estimates.

                                       138
<PAGE>
                          THE WILLIAMS COMPANIES, INC.

              SUPPLEMENTAL OIL AND GAS DISCLOSURES -- (CONCLUDED)
                                  (UNAUDITED)

STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS

<Table>
<Caption>
                                                                     AT
                                                              DECEMBER 31, 2001
                                                              -----------------
                                                                 (MILLIONS)
<S>                                                           <C>
Future cash inflows.........................................       $7,334
Less:
  Future production and development costs...................        3,072
  Future income tax provisions..............................        1,317
                                                                   ------
Future net cash flows.......................................        2,945
Less 10 percent annual discount for estimated timing of cash
  flows.....................................................        1,513
                                                                   ------
Standardized measure of discounted future net cash flows....       $1,432
                                                                   ======
</Table>

SOURCES OF CHANGE IN STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS

<Table>
<Caption>
                                                                 2001
                                                              ----------
                                                              (MILLIONS)
<S>                                                           <C>
Standardized measure of discounted future net cash flows
  beginning of period.......................................   $ 2,720
Changes during the year:
  Sales of oil and gas produced, net of operating costs.....      (270)
  Net change in prices and production costs.................    (3,945)
  Extensions, discoveries and improved recovery, less
     estimated future costs.................................       153
  Development costs incurred during year....................       199
  Changes in estimated future development costs.............       (41)
  Purchase of reserves in place, less estimated future
     costs..................................................     1,069
  Sales of reserves in place, less estimated future costs...        (8)
  Revisions of previous quantity estimates..................       (43)
  Accretion of discount.....................................       426
  Net change in income taxes................................     1,077
  Other.....................................................        95
                                                               -------
  Net changes...............................................    (1,288)
                                                               -------
Standardized measure of discounted future net cash flows end
  of period.................................................   $ 1,432
                                                               =======
</Table>

                                       139
<PAGE>

                          THE WILLIAMS COMPANIES, INC.

                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

<Table>
<Caption>
                                                                ADDITIONS
                                                            -----------------
                                                            CHARGED
                                                            TO COSTS
                                                BEGINNING     AND                                  ENDING
                                                 BALANCE    EXPENSES   OTHER       DEDUCTIONS      BALANCE
                                                ---------   --------   ------      ----------      -------
                                                                        (MILLIONS)
<S>                                             <C>         <C>        <C>         <C>             <C>
Year ended December 31, 2001:
  Allowance for doubtful accounts --
     Accounts and notes receivable(a).........    $ 9.8      $100.0    $145.6(e)     $(1.2)(c)     $256.6
     Other noncurrent assets(a)...............       --       103.2        --           --          103.2
  Price-risk management credit reserves(a)....     60.9       728.5    (141.2)(f)       --          648.2
  Refining and processing plant major
     maintenance accrual(b)...................     13.9        10.2        --         11.1(d)        13.0
Year ended December 31, 2000:
  Allowance for doubtful accounts --
     Receivables(a)...........................      3.5         4.7        --         (1.6)(c)        9.8
  Price-risk management credit reserves(a)....     10.6        50.3        --           --           60.9
  Refining and processing plant major
     maintenance accrual(b)...................      7.6         8.4        --          2.1(d)        13.9
Year ended December 31, 1999:
  Allowance for doubtful accounts --
     Receivables(a)...........................     10.6         (.1)       --          7.0(c)         3.5
  Price-risk management credit reserves(a)....     13.0        (2.4)       --           --           10.6
  Refining and processing plant major
     maintenance accrual(b)...................      5.3         7.8       3.9(g)       9.4(d)         7.6
</Table>

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

(a)  Deducted from related assets.

(b)  Included in liabilities.

(c)  Represents balances written off, net of recoveries and reclassifications.

(d)  Represents payments made.

(e)  Reflects a reclassification of the reserve related to Enron from Price-risk
     management credit reserves to Allowance for doubtful
     accounts -- Receivables (see Note 19 of Notes to Consolidated Financial
     Statements) and amounts related to acquisitions of businesses.

(f)  Reflects a reclassification of the reserve related to Enron from Price-risk
     management credit reserves to Allowance for doubtful
     accounts -- Receivables (see Note 19 of Notes to Consolidated Financial
     Statements).

(g)  Primarily relates to acquisitions of businesses.




ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

     None.

                                       140
<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information regarding the directors and nominees for director of
Williams required by Item 401 of Regulation S-K will be presented under the
heading "Election of Directors" in Williams' Proxy Statement prepared for the
solicitation of proxies in connection with the Annual Meeting of Stockholders of
Williams for 2002 (the "Proxy Statement"), which information is incorporated by
reference herein. Information regarding the executive officers of Williams is
presented following Item 4 herein as permitted by General Instruction G(3) to
Form 10-K and Instruction 3 to Item 401(b) of Regulation S-K. Information
required by Item 405 of Regulation S-K is included under the heading "Compliance
with Section 16(a) of the Securities Exchange Act of 1934" in the Proxy
Statement, which information is incorporated by reference herein.

ITEM 11. EXECUTIVE COMPENSATION

     The information required by Item 402 of Regulation S-K regarding executive
compensation is presented under the headings "Election of Directors" and
"Executive Compensation and Other Information" in the Proxy Statement, which
information is incorporated by reference herein. Notwithstanding the foregoing,
the information provided under the headings "Compensation Committee Report on
Executive Compensation" and "Stockholder Return Performance Presentation" in the
Proxy Statement is not incorporated by reference herein.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information regarding the security ownership of certain beneficial
owners and management required by Item 403 of Regulation S-K is presented under
the headings "Security Ownership of Certain Beneficial Owners and Management" in
the Proxy Statement, which information is incorporated by reference herein.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information regarding certain relationships and related transactions
required by Item 404 of Regulation S-K is presented under the heading "Certain
Relationships and Related Transactions" in the Proxy Statement, which
information is incorporated by reference herein.

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

     (a) 1 and 2.

<Table>
<Caption>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Covered by report of independent auditors:
  Consolidated statement of operations for each of the three
     years ended December 31, 2001..........................   75
  Consolidated balance sheet at December 31, 2001 and
     2000...................................................   76
  Consolidated statement of stockholders' equity for each of
     the three years ended December 31, 2001................   77
  Consolidated statement of cash flows for each of the three
     years ended December 31, 2001..........................   78
  Notes to consolidated financial statements................   79
  Schedule for each of the three years ended December 31,
     2001:
     II -- Valuation and qualifying accounts................  140
Not covered by report of independent auditors:
  Quarterly financial data (unaudited)......................  134
  Supplemental oil and gas disclosures (unaudited)..........  136
</Table>

                                       141
<PAGE>

     All other schedules have been omitted since the required information is not
present or is not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the financial
statements and notes thereto.

     (a) 3 and (c). The exhibits listed below are filed as part of this annual
report.

                                    EXHIBITS

<Table>
<Caption>
EXHIBIT NO.                                    DESCRIPTION
- -----------                                    -----------
<S>                 <C>  <C>
        2*          --   Agreement and Plan of Merger among Williams, Resources
                         Acquisition Corp. and Barrett Resources Corporation dated as
                         of May 7, 2001 (filed as Exhibit 2 to Form 10-Q filed May
                         15, 2001).
         3(I)(a)*   --   Restated Certificate of Incorporation, as supplemented
                         (filed as Exhibit 3(I)(a) to Form 10-Q filed May 15, 2001).
         3(II)(a)*  --   Restated By-laws (filed as Exhibit 99.1 to Form 8-K filed
                         January 19, 2000).
         4(a)*      --   Form of Senior Debt Indenture between Williams and Bank One
                         Trust Company, N.A. (formerly The First National Bank of
                         Chicago), as Trustee (filed as Exhibit 4.1 to Form S-3 filed
                         September 8, 1997).
           (b)*     --   Form of Subordinated Debt Indenture between Williams and
                         Bank One Trust Company, N.A. (formerly The First National
                         Bank of Chicago), as Trustee (filed as Exhibit 4.2 to Form
                         S-3 filed September 8, 1997).
           (c)*     --   Form of Floating Rate Senior Note (filed as Exhibit 4.3 to
                         Form S-3 filed September 8, 1997).
           (d)*     --   Form of Fixed Rate Senior Note (filed as Exhibit 4.4 to Form
                         S-3 filed September 8, 1997).
           (e)*     --   Form of Floating Rate Subordinated Note (filed as Exhibit
                         4.5 to Form S-3 filed September 8, 1997).
           (f)*     --   Form of Fixed Rate Subordinated Note (filed as Exhibit 4.6
                         to Form S-3 filed September 8, 1997).
           (g)**    --   First Supplemental Indenture between Williams and Bank One
                         Trust Company, N.A., as Trustee, dated as of September 8,
                         2000.
           (h)**    --   Second Supplemental Indenture between Williams and Bank One
                         Trust Company, N.A., as Trustee, dated as of December 7,
                         2000.
           (i)**    --   Third Supplemental Indenture between Williams and Bank One
                         Trust Company, N.A., as Trustee dated as of December 20,
                         2000.
           (j)*     --   Fourth Supplemental Indenture between Williams and Bank One
                         Trust Company, N.A., as Trustee, dated as of January 17,
                         2001 (filed as Exhibit 4(j) to Form 10-K for the fiscal year
                         ended December 31, 2000).
           (k)*     --   Fifth Supplemental Indenture between Williams and Bank One
                         Trust Company, N.A., as Trustee, dated as of January 17,
                         2001 (filed as Exhibit 4(k) to Form 10-K for the fiscal year
                         ended December 31, 2000).
           (l)*     --   Sixth Supplemental Indenture dated January 14, 2002, between
                         Williams and Bank One Trust Company, National Association,
                         as Trustee (filed as Exhibit 4.1 to Form 8-K filed January
                         23, 2002).
           (m)*     --   Registration Rights Agreement dated January 17, 2001, among
                         Williams and UBS Warburg LLC, Credit Suisse First Boston,
                         Lehman Brothers and the other parties listed therein, as
                         Initial Purchasers (filed as Exhibit 4.4 to Form S-4 filed
                         March 22, 2001).
           (n)*     --   Note Purchase Agreement between Williams and parties listed
                         therein dated January 17, 2001 (filed as Exhibit 10.1 to
                         Form S-4 filed March 22, 2001).
           (o)*     --   Form of Senior Debt Indenture between Williams and The Chase
                         Manhattan Bank (formerly Chemical Bank), as Trustee (filed
                         as Exhibit 4.1 to Form S-3 filed February 2, 1990).
           (p)*     --   Indenture dated May 1, 1990, between Transco Energy Company
                         and The Bank of New York, as Trustee (filed as an Exhibit to
                         Transco Energy Company's Form 8-K dated June 25, 1990).
</Table>

                                       142
<PAGE>

<Table>
<Caption>
EXHIBIT NO.                                    DESCRIPTION
- -----------                                    -----------
<S>                 <C>  <C>
           (q)*     --   First Supplemental Indenture dated June 20, 1990, between
                         Transco Energy Company and The Bank of New York, as Trustee
                         (filed as an Exhibit to Transco Energy Company's Form 8-K
                         dated June 25, 1990).
           (r)*     --   Second Supplemental Indenture dated November 29, 1990,
                         between Transco Energy Company and The Bank of New York, as
                         Trustee (filed as an Exhibit to Transco Energy Company's
                         Form 8-K dated December 7, 1990).
           (s)*     --   Third Supplemental Indenture dated April 23, 1991, between
                         Transco Energy Company and The Bank of New York, as Trustee
                         (filed as an Exhibit to Transco Energy Company's Form 8-K
                         dated April 30, 1991).
           (t)*     --   Fourth Supplemental Indenture dated August 22, 1991, between
                         Transco Energy Company and The Bank of New York, as Trustee
                         (filed as an Exhibit to Transco Energy Company's Form 8-K
                         dated August 27, 1991).
           (u)*     --   Fifth Supplemental Indenture dated May 1, 1995, among
                         Transco Energy Company, Williams and The Bank of New York,
                         as Trustee (filed as Exhibit 4(l) to Form 10-K for the
                         fiscal year ended December 31, 1998).
           (v)*     --   Form of Senior Debt Indenture between Williams Holdings of
                         Delaware, Inc. and Citibank, N.A., as Trustee (filed as
                         Exhibit 4.1 to Williams Holdings of Delaware, Inc.'s Form
                         10-Q filed October 18, 1995).
           (w)*     --   First Supplemental Indenture dated as of July 31, 1999,
                         among Williams Holdings of Delaware, Inc., Williams and
                         Citibank, N.A., as Trustee (filed as Exhibit 4(o) to Form
                         10-K for the fiscal year ended December 31, 1999).
           (x)*     --   Indenture dated March 31, 1990, between MAPCO Inc. and
                         Bankers Trust Company, as Trustee (filed as Exhibit 4.0 to
                         MAPCO Inc.'s Form 8-K filed February 19, 1991).
           (y)*     --   First Supplemental Indenture dated March 31, 1998, among
                         MAPCO Inc., Williams Holdings of Delaware, Inc. and Bankers
                         Trust Company, as Trustee (filed as Exhibit 4(f) to Williams
                         Holdings of Delaware, Inc.'s Form 10-K for the fiscal year
                         ended December 31, 1998).
           (z)*     --   Second Supplemental Indenture dated as of July 31, 1999,
                         among Williams Holdings of Delaware, Inc., Williams and
                         Bankers Trust Company, as Trustee (filed as Exhibit 4(p) to
                         Form 10-K for the fiscal year ended December 31, 1999).
           (aa)*    --   Senior Indenture dated February 25, 1997, between MAPCO Inc.
                         and Bank One Trust Company, N.A. (formerly The First
                         National Bank of Chicago), as Trustee (filed as Exhibit
                         4.5.1 to MAPCO Inc.'s Amendment No. 1 to Form S-3 dated
                         February 25, 1997).
           (bb)*    --   Supplemental Indenture No. 1 dated March 5, 1997, between
                         MAPCO Inc. and Bank One Trust Company, N.A. (formerly The
                         First National Bank of Chicago), as Trustee (filed as
                         Exhibit 4.(o) to MAPCO Inc.'s Form 10-K for the fiscal year
                         ended December 31, 1997).
           (cc)*    --   Supplemental Indenture No. 2 dated March 5, 1997, between
                         MAPCO Inc. and Bank One Trust Company, N.A. (formerly The
                         First National Bank of Chicago), as Trustee (filed as
                         Exhibit 4.(p) to MAPCO Inc.'s Form 10-K for the fiscal year
                         ended December 31, 1997).
           (dd)*    --   Supplemental Indenture No. 3 dated March 31, 1998, among
                         MAPCO Inc., Williams Holdings of Delaware, Inc. and Bank One
                         Trust Company, N.A. (formerly The First National Bank of
                         Chicago), as Trustee (filed as Exhibit 4(j) to Williams
                         Holdings of Delaware, Inc.'s Form 10-K for the fiscal year
                         ended December 31, 1998).
           (ee)*    --   Supplemental Indenture No. 4 dated as of July 31, 1999,
                         among Williams Holdings of Delaware, Inc., Williams and Bank
                         One Trust Company, N.A. (formerly The First National Bank of
                         Chicago), as Trustee (filed as Exhibit 4(q) to Form 10-K for
                         the fiscal year ended December 31, 1999).
           (ff)*    --   Revised Form of Indenture between Barrett Resources
                         Corporation, as Issuer, and Bankers Trust Company, as
                         Trustee, with respect to Senior Notes including specimen of
                         7.55% Senior Notes (filed as Exhibit 4.1 to Barrett
                         Resources Corporation's Amendment No. 2 to Registration
                         Statement on Form S-3 filed February 10, 1997).
</Table>

                                       143
<PAGE>

<Table>
<Caption>
EXHIBIT NO.                                    DESCRIPTION
- -----------                                    -----------
<S>                 <C>  <C>
           (gg)*    --   First Supplemental Indenture dated 2001, between Barrett
                         Resources Corporation, as Issuer, and Bankers Trust Company,
                         as Trustee (filed as Exhibit 4.3 to Form 10-Q filed November
                         13, 2001).
           (hh)*    --   Second Supplemental Indenture dated as of August 2, 2001,
                         among Barrett Resources Corporation, as Issuer, Resources
                         Acquisition Corp., The Williams Companies, Inc. and Bankers
                         Trust Company, as Trustee (filed as Exhibit 4.4 to Form 10-Q
                         filed November 13, 2001).
           (ii)*    --   Rights Agreement dated as of February 6, 1996, between
                         Williams and First Chicago Trust Company of New York (filed
                         as Exhibit 4 to Form 8-K filed January 24, 1996).
           (jj)*    --   Certificate of Increase of Authorized Number of Shares of
                         Series A Junior Participating Preferred Stock (filed as
                         Exhibit 3(f) to Form 10-K for the fiscal year ended December
                         31, 1995).
           (kk)*    --   Certificate of Increase of Authorized Number of Shares of
                         Series A Junior Participating Preferred Stock (filed as
                         Exhibit 3(g) to Form 10-K for the fiscal year ended December
                         31, 1997).
           (ll)*    --   Form of Note (filed as Exhibit 4.2 and included in Exhibit
                         4.1 to Form 8-K filed January 23, 2002).
           (mm)*    --   Purchase Contract Agreement dated January 14, 2002, between
                         Williams and JPMorgan Chase Bank, as Purchase Contract Agent
                         (filed as Exhibit 4.3 to Form 8-K filed January 23, 2002).
           (nn)*    --   Form of Income PACS Certificate (filed as Exhibit 4.4 and
                         included in Exhibit 4.3 to Form 8-K filed January 23, 2002).
           (oo)*    --   Pledge Agreement dated January 14, 2002, among Williams,
                         JPMorgan Chase Bank, as Collateral Agent, and JPMorgan Chase
                         Bank, as Purchase Contract Agent (filed as Exhibit 4.5 to
                         Form 8-K filed January 23, 2002).
           (pp)*    --   Remarketing Agreement dated January 14, 2002, among
                         Williams, JPMorgan Chase Bank, as Purchase Contract Agent,
                         and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
                         Smith Incorporated, as Remarketing Agent (filed as Exhibit
                         4.6 to Form 8-K filed January 23, 2002).
           (qq)     --   Trust Indenture dated as of August 13, 2001 among Kern River
                         Funding Corporation, as Issuer, Kern River Gas Transmission
                         Company, as Guarantor, and The Chase Manhattan Bank, as
                         Trustee.
           (rr)*    --   Indenture dated as of August 27, 2001, between
                         Transcontinental Gas Pipe Line Corporation and Citibank,
                         N.A. (filed as Exhibit 4.1 to Transco's Registration
                         Statement on Form S-4 filed November 8, 2001).
        10(a)*      --   Credit Agreement dated as July 25, 2000, among Williams and
                         certain of its subsidiaries, the banks named therein and
                         Citibank, N.A., as agent (filed as Exhibit 4.1 to Form 10-Q
                         filed August 11, 2000).
           (b)*     --   Waiver and First Amendment to Credit Agreement dated as of
                         January 31, 2001, to Credit Agreement dated July 25, 2000,
                         among Williams and certain of its subsidiaries, the banks
                         named therein and Citibank, N.A., as agent (filed as Exhibit
                         4(jj) to Form 10-K for the fiscal year ended December 31,
                         2000).
           (c)      --   Second Amendment to Credit Agreement dated as of February 7,
                         2002, among Williams and certain of its subsidiaries, the
                         banks named therein and Citibank, N.A., as agent.
           (d)*     --   Credit Agreement dated as of July 25, 2000, among Williams,
                         the banks named therein and Citibank, N.A., as agent (filed
                         as Exhibit 4.2 to Form 10-Q filed August 11, 2000).
           (e)*     --   Waiver and First Amendment to Credit Agreement dated as of
                         January 31, 2001, to Credit Agreement dated July 25, 2000,
                         among Williams, the banks named therein and Citibank, N.A.,
                         as agent.
           (f)      --   Limited Waiver and Second Amendment to Credit Agreement
                         dated July 24, 2001, among Williams, the banks named therein
                         and Citibank, N.A., as agent.
</Table>

                                       144
<PAGE>

<Table>
<Caption>
EXHIBIT NO.                                    DESCRIPTION
- -----------                                    -----------
<S>                 <C>  <C>
           (g)      --   Third Amendment to Credit Agreement dated as of February 7,
                         2002, among Williams, the banks named therein and Citibank,
                         N.A., as agent.
           (h)*     --   U.S. $400,000,000 Term Loan Agreement dated April 7, 2000,
                         among Williams, the lenders named therein and Credit
                         Lyonnais New York Branch, as administrative agent (filed as
                         Exhibit 4(r) to Form 10-K for the fiscal year ended December
                         31, 1999).
           (i)*     --   First Amendment dated as of August 21, 2000, to Term Loan
                         Agreement dated April 7, 2000, among Williams, the lenders
                         named therein and Credit Lyonnais New York Branch, as
                         administrative agent (filed as Exhibit 4(nn) to Form 10-K
                         for the fiscal year ended December 31, 2000).
           (j)*     --   Form of Waiver and Second Amendment dated as of January 31,
                         2001, to Term Loan Agreement dated April 7, 2000, among
                         Williams, the lenders named therein and Credit Lyonnais New
                         York Branch, as administrative agent (filed as Exhibit 4(oo)
                         to Form 10-K for the fiscal year ended December 31, 2000).
           (k)      --   Third Amendment dated as of February 7, 2002, to Term Loan
                         Agreement dated April 7, 2000, among Williams, the lenders
                         named therein and Credit Lyonnais New York Branch, as
                         administrative agent.
           (l)*     --   Underwriting Agreement dated January 16, 2001, among
                         Williams and the underwriters named therein (filed as
                         Exhibit 10(a) to Form 10-K for the fiscal year ended
                         December 31, 2000).
           (m)*     --   Participation Agreement among Williams, Williams
                         Communications Group, Inc., Williams Communications, LLC,
                         WCG Note Trust, WCG Note Corp., Inc., Williams Share Trust,
                         United States Trust Company of New York and Wilmington Trust
                         Company dated as of March 22, 2001 (filed as Exhibit 10(a)
                         to Form 10-Q filed May 15, 2001).
           (n)*     --   Williams Preferred Stock Remarketing, Registration Rights
                         and Support Agreement among Williams, Williams Share Trust,
                         WCG Note Trust, United States Trust Company of New York and
                         Credit Suisse First Boston Corporation dated as of March 28,
                         2001 (filed as Exhibit 10(b) to Form 10-Q filed May 15,
                         2001).
           (o)*     --   Indenture dated as of March 28, 2001, among WCG Note Trust,
                         Issuer, WCG Note Corp., Inc., Co-Issuer, and United States
                         Trust Company of New York, Indenture Trustee and Securities
                         Intermediary (filed as Exhibit 10.8 to Form 10-Q filed
                         November 13, 2001).
           (p)*     --   Intercreditor Agreement dated as of September 8, 1999, among
                         Williams, Williams Communications Group, Inc., Williams
                         Communications, LLC and Bank of America N.A. (filed as
                         Exhibit 10.7 to Form 10-Q filed November 13, 2001).
           (q)      --   Amendment and Consent dated as of August 17, 2000, to the
                         Amended and Restated Participation Agreement, attaching as
                         Exhibit A the Second Amended and Restated Guaranty Agreement
                         dated as of August 17, 2000, between Williams, State Street
                         Bank and Trust Company of Connecticut, National Association,
                         State Street Bank and Trust Company and Citibank, N.A., as
                         Agent.
           (r)      --   Amendment, Waiver and Consent dated as of January 31, 2001,
                         to Second Amended and Restated Guaranty Agreement between
                         Williams, State Street Bank and Trust Company of
                         Connecticut, National Association, State Street Bank and
                         Trust Company and Citibank, N.A., as Agent.
           (s)      --   Amendment and Consent dated as of February 7, 2002, to
                         Second Amended and Restated Guaranty Agreement between
                         Williams, State Street Bank and Trust Company of
                         Connecticut, National Association, State Street Bank and
                         Trust Company and Citibank, N.A., as Agent.
           (t)      --   Membership Interest Purchase Agreement dated as of September
                         13, 2001, between Williams Communications, LLC and Williams
                         Aircraft, Inc.
           (u)      --   Aircraft Dry Lease, N352WC, dated as of September 13, 2001,
                         between Williams Communications Aircraft, LLC and Williams
                         Communications, LLC.
</Table>

                                       145
<PAGE>

<Table>
<Caption>
EXHIBIT NO.                                    DESCRIPTION
- -----------                                    -----------
<S>                 <C>  <C>
           (v)      --   Aircraft Dry Lease, N358WC, dated as of September 13, 2001,
                         between Williams Communications Aircraft, LLC and Williams
                         Communications, LLC.
           (w)      --   Aircraft Dry Lease, N359WC, dated as of September 13, 2001,
                         between Williams Communications Aircraft, LLC and Williams
                         Communications, LLC.
           (x)      --   Agreement of Purchase and Sale dated as of September 13,
                         2001, among Williams Technology Center, LLC, Williams
                         Headquarters Building Company and Williams Communications,
                         LLC.
           (y)      --   Master Lease dated as of September 13, 2001, among Williams
                         Technology Center, LLC, Williams Headquarters Building
                         Company and Williams Communications, LLC.
           (z)*     --   The Williams Companies, Inc. Supplemental Retirement Plan
                         effective as of January 1, 1988 (filed as Exhibit 10(iii)(c)
                         to Form 10-K for the fiscal year ended December 31, 1987).
           (aa)*    --   Form of The Williams Companies, Inc. Change in Control
                         Protection Plan among Williams and employees (filed as
                         Exhibit 10(iii)(e) to Form 10-K for the fiscal year ended
                         December 31, 1989).
           (bb)*    --   The Williams Companies, Inc. 1985 Stock Option Plan (filed
                         as Exhibit A to the Proxy Statement dated March 13, 1985).
           (cc)*    --   The Williams Companies, Inc. 1988 Stock Option Plan for
                         Non-Employee Directors (filed as Exhibit A to the Proxy
                         Statement dated March 14, 1988).
           (dd)*    --   The Williams Companies, Inc. 1990 Stock Plan (filed as
                         Exhibit A to the Proxy Statement dated March 12, 1990).
           (ee)*    --   The Williams Companies, Inc. Stock Plan for Non-Officer
                         Employees (filed as Exhibit 10(iii)(g) to Form 10-K for the
                         fiscal year ended December 31, 1995).
           (ff)*    --   The Williams Companies, Inc. 1996 Stock Plan (filed as
                         Exhibit A to the Proxy Statement dated March 27, 1996).
           (gg)*    --   The Williams Companies, Inc. 1996 Stock Plan for
                         Non-Employee Directors (filed as Exhibit B to the Proxy
                         Statement dated March 27, 1996).
           (hh)*    --   Indemnification Agreement effective as of August 1, 1986,
                         among Williams, members of the Board of Directors and
                         certain officers of Williams (filed as Exhibit 10(iii)(e) to
                         Form 10-K for the year ended December 31, 1986).
           (ii)*    --   The Williams International Stock Plan (filed as Exhibit
                         10(iii)(l) to Form 10-K for the fiscal year ended December
                         31, 1998).
           (jj)*    --   Form of Stock Option Secured Promissory Note and Pledge
                         Agreement among Williams and certain employees, officers and
                         non-employee directors (filed as Exhibit 10(iii)(m) to Form
                         10-K for the fiscal year ended December 31, 1998).
           (kk)*    --   The Williams Companies, Inc. 2001 Stock Plan (filed as
                         Exhibit 4.1 to Form S-8 filed August 1, 2001).
           (ll)*    --   Amended and Restated Separation Agreement dated April 23,
                         2001, between Williams and Williams Communications Group,
                         Inc. (filed as Exhibit 99.1 to Form 8-K filed May 3, 2001).
           (mm)*    --   Amended and Restated Administrative Services Agreement dated
                         April 23, 2001, between Williams and certain subsidiaries of
                         Williams and Williams Communications Group, Inc., and
                         certain subsidiaries of Communications (filed as Exhibit
                         99.2 to Form 8-K filed May 3, 2001).
           (nn)*    --   Tax Sharing Agreement dated as of September 30, 1999, and
                         amended and restated as of April 23, 2001, between Williams
                         and Williams Communications Group, Inc. (filed as Exhibit
                         99.3 to Form 8-K filed May 3, 2001).
           (oo)*    --   Amended and Restated Indemnification Agreement dated April
                         23, 2001, between Williams and Williams Communications
                         Group, Inc. (filed as Exhibit 99.4 to Form 8-K filed May 3,
                         2001).
           (pp)*    --   Shareholder Agreement dated April 23, 2001, between Williams
                         and Williams Communications Group, Inc. (filed as Exhibit
                         99.5 to Form 8-K filed May 3, 2001).
</Table>

                                       146
<PAGE>

<Table>
<Caption>
EXHIBIT NO.                                    DESCRIPTION
- -----------                                    -----------
<S>                 <C>  <C>
           (qq)*    --   Amended and Restated Employee Benefits Agreement dated April
                         23, 2001, between Williams and Williams Communications
                         Group, Inc. (filed as Exhibit 99.6 to Form 8-K filed May 3,
                         2001).
           (rr)*    --   Deferral Letter dated April 23, 2001, between Williams and
                         Williams Communications Group, Inc. (filed as Exhibit 99.7
                         to Form 8-K filed May 3, 2001).
           (ss)*    --   Underwriting Agreement dated January 7, 2002, between
                         Williams and the several underwriters named therein (filed
                         as Exhibit 1.1 to Form 8-K filed January 23, 2002).
        12          --   Computation of Ratio of Earnings to Combined Fixed Charges
                         and Preferred Stock Dividend Requirements.
        20*         --   Definitive Proxy Statement of Williams for 2002 (to be filed
                         with the Securities and Exchange Commission on or before
                         March 31, 2002).
        21          --   Subsidiaries of the registrant.
        23          --   Consent of Independent Auditors, Ernst & Young LLP.
        24          --   Power of Attorney together with certified resolution.
</Table>

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

 * Each such exhibit has heretofore been filed with the Securities and Exchange
   Commission as part of the filing indicated and is incorporated herein by
   reference.

** Williams agrees upon request to furnish each such exhibit to the Securities
   and Exchange Commission. The total amount of the securities authorized under
   each such exhibit does not exceed ten percent of the total assets of Williams
   and its subsidiaries taken as a whole.

     (b) Reports on Form 8-K.

     On November 29, 2001, Williams filed a current report on Form 8-K to
reaffirm its 2001 earnings guidance and 15 percent annual earnings growth.

     On December 19, 2001, Williams filed a current report on Form 8-K to
announce steps to further strengthen its balance sheet and liquidity profile.

     On December 21, 2001, Williams filed a current report on Form 8-K to
announce that international rating agencies Fitch, Inc., Standard & Poor's and
Moody's Investors Service had reaffirmed Williams' investment-grade ratings.

     (d) The financial statements of partially owned companies are not presented
herein since none of them individually, or in the aggregate, constitute a
significant subsidiary.

                                       147
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                            THE WILLIAMS COMPANIES, INC.
                                            (Registrant)

                                            By:    /s/ SUZANNE H. COSTIN
                                              ----------------------------------
                                                      Suzanne H. Costin
                                                       Attorney-in-fact

Date: March 7, 2002

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<Table>
<Caption>
                      SIGNATURE                                     TITLE                    DATE
                      ---------                                     -----                    ----
<C>                                                     <S>                              <C>

               /s/ STEVEN J. MALCOLM*                   President, Chief Executive       March 7, 2002
- -----------------------------------------------------     Officer and Director
                  Steven J. Malcolm                       (Principal Executive
                                                          Officer)

                /s/ JACK D. MCCARTHY*                   Senior Vice                      March 7, 2002
- -----------------------------------------------------     President -- Finance
                  Jack D. McCarthy                        (Principal Financial
                                                          Officer)

                 /s/ GARY R. BELITZ*                    Controller (Principal            March 7, 2002
- -----------------------------------------------------     Accounting Officer)
                   Gary R. Belitz

                /s/ KEITH E. BAILEY*                    Chairman of the Board and        March 7, 2002
- -----------------------------------------------------     Director
                   Keith E. Bailey

                /s/ HUGH M. CHAPMAN*                    Director                         March 7, 2002
- -----------------------------------------------------
                   Hugh M. Chapman

                  /s/ GLENN A. COX*                     Director                         March 7, 2002
- -----------------------------------------------------
                    Glenn A. Cox

              /s/ THOMAS H. CRUIKSHANK*                 Director                         March 7, 2002
- -----------------------------------------------------
                Thomas H. Cruikshank

                /s/ WILLIAM E. GREEN*                   Director                         March 7, 2002
- -----------------------------------------------------
                  William E. Green

                  /s/ IRA D. HALL*                      Director                         March 7, 2002
- -----------------------------------------------------
                     Ira D. Hall

                  /s/ W.R. HOWELL*                      Director                         March 7, 2002
- -----------------------------------------------------
                     W.R. Howell
</Table>

                                       148
<PAGE>

<Table>
<Caption>
                      SIGNATURE                                     TITLE                    DATE
                      ---------                                     -----                    ----
<C>                                                     <S>                              <C>

                 /s/ JAMES C. LEWIS*                    Director                         March 7, 2002
- -----------------------------------------------------
                   James C. Lewis

               /s/ CHARLES M. LILLIS*                   Director                         March 7, 2002
- -----------------------------------------------------
                  Charles M. Lillis

                /s/ GEORGE A. LORCH*                    Director                         March 7, 2002
- -----------------------------------------------------
                   George A. Lorch

               /s/ FRANK T. MACINNIS*                   Director                         March 7, 2002
- -----------------------------------------------------
                  Frank T. MacInnis

                /s/ GORDON R. PARKER*                   Director                         March 7, 2002
- -----------------------------------------------------
                  Gordon R. Parker

                /s/ JANICE D. STONEY*                   Director                         March 7, 2002
- -----------------------------------------------------
                  Janice D. Stoney

               /s/ JOSEPH H. WILLIAMS*                  Director                         March 7, 2002
- -----------------------------------------------------
                 Joseph H. Williams

             *By: /s/ SUZANNE H. COSTIN                                                  March 7, 2002
  ------------------------------------------------
                  Suzanne H. Costin
                  Attorney-in-fact
</Table>

                                       149
<PAGE>

                               INDEX TO EXHIBITS

<Table>
<Caption>
EXHIBIT NO.                                    DESCRIPTION
- -----------                                    -----------
<S>                 <C>  <C>
        2*          --   Agreement and Plan of Merger among Williams, Resources
                         Acquisition Corp. and Barrett Resources Corporation dated as
                         of May 7, 2001 (filed as Exhibit 2 to Form 10-Q filed May
                         15, 2001).
         3(I)(a)*   --   Restated Certificate of Incorporation, as supplemented
                         (filed as Exhibit 3(I)(a) to Form 10-Q filed May 15, 2001).
         3(II)(a)*  --   Restated By-laws (filed as Exhibit 99.1 to Form 8-K filed
                         January 19, 2000).
         4(a)*      --   Form of Senior Debt Indenture between Williams and Bank One
                         Trust Company, N.A. (formerly The First National Bank of
                         Chicago), as Trustee (filed as Exhibit 4.1 to Form S-3 filed
                         September 8, 1997).
           (b)*     --   Form of Subordinated Debt Indenture between Williams and
                         Bank One Trust Company, N.A. (formerly The First National
                         Bank of Chicago), as Trustee (filed as Exhibit 4.2 to Form
                         S-3 filed September 8, 1997).
           (c)*     --   Form of Floating Rate Senior Note (filed as Exhibit 4.3 to
                         Form S-3 filed September 8, 1997).
           (d)*     --   Form of Fixed Rate Senior Note (filed as Exhibit 4.4 to Form
                         S-3 filed September 8, 1997).
           (e)*     --   Form of Floating Rate Subordinated Note (filed as Exhibit
                         4.5 to Form S-3 filed September 8, 1997).
           (f)*     --   Form of Fixed Rate Subordinated Note (filed as Exhibit 4.6
                         to Form S-3 filed September 8, 1997).
           (g)**    --   First Supplemental Indenture between Williams and Bank One
                         Trust Company, N.A., as Trustee, dated as of September 8,
                         2000.
           (h)**    --   Second Supplemental Indenture between Williams and Bank One
                         Trust Company, N.A., as Trustee, dated as of December 7,
                         2000.
           (i)**    --   Third Supplemental Indenture between Williams and Bank One
                         Trust Company, N.A., as Trustee dated as of December 20,
                         2000.
           (j)*     --   Fourth Supplemental Indenture between Williams and Bank One
                         Trust Company, N.A., as Trustee, dated as of January 17,
                         2001 (filed as Exhibit 4(j) to Form 10-K for the fiscal year
                         ended December 31, 2000).
           (k)*     --   Fifth Supplemental Indenture between Williams and Bank One
                         Trust Company, N.A., as Trustee, dated as of January 17,
                         2001 (filed as Exhibit 4(k) to Form 10-K for the fiscal year
                         ended December 31, 2000).
           (l)*     --   Sixth Supplemental Indenture dated January 14, 2002, between
                         Williams and Bank One Trust Company, National Association,
                         as Trustee (filed as Exhibit 4.1 to Form 8-K filed January
                         23, 2002).
           (m)*     --   Registration Rights Agreement dated January 17, 2001, among
                         Williams and UBS Warburg LLC, Credit Suisse First Boston,
                         Lehman Brothers and the other parties listed therein, as
                         Initial Purchasers (filed as Exhibit 4.4 to Form S-4 filed
                         March 22, 2001).
           (n)*     --   Note Purchase Agreement between Williams and parties listed
                         therein dated January 17, 2001 (filed as Exhibit 10.1 to
                         Form S-4 filed March 22, 2001).
           (o)*     --   Form of Senior Debt Indenture between Williams and The Chase
                         Manhattan Bank (formerly Chemical Bank), as Trustee (filed
                         as Exhibit 4.1 to Form S-3 filed February 2, 1990).
           (p)*     --   Indenture dated May 1, 1990, between Transco Energy Company
                         and The Bank of New York, as Trustee (filed as an Exhibit to
                         Transco Energy Company's Form 8-K dated June 25, 1990).
           (q)*     --   First Supplemental Indenture dated June 20, 1990, between
                         Transco Energy Company and The Bank of New York, as Trustee
                         (filed as an Exhibit to Transco Energy Company's Form 8-K
                         dated June 25, 1990).
           (r)*     --   Second Supplemental Indenture dated November 29, 1990,
                         between Transco Energy Company and The Bank of New York, as
                         Trustee (filed as an Exhibit to Transco Energy Company's
                         Form 8-K dated December 7, 1990).
</Table>

                                       150
<PAGE>

<Table>
<Caption>
EXHIBIT NO.                                    DESCRIPTION
- -----------                                    -----------
<S>                 <C>  <C>
           (s)*     --   Third Supplemental Indenture dated April 23, 1991, between
                         Transco Energy Company and The Bank of New York, as Trustee
                         (filed as an Exhibit to Transco Energy Company's Form 8-K
                         dated April 30, 1991).
           (t)*     --   Fourth Supplemental Indenture dated August 22, 1991, between
                         Transco Energy Company and The Bank of New York, as Trustee
                         (filed as an Exhibit to Transco Energy Company's Form 8-K
                         dated August 27, 1991).
           (u)*     --   Fifth Supplemental Indenture dated May 1, 1995, among
                         Transco Energy Company, Williams and The Bank of New York,
                         as Trustee (filed as Exhibit 4(l) to Form 10-K for the
                         fiscal year ended December 31, 1998).
           (v)*     --   Form of Senior Debt Indenture between Williams Holdings of
                         Delaware, Inc. and Citibank, N.A., as Trustee (filed as
                         Exhibit 4.1 to Williams Holdings of Delaware, Inc.'s Form
                         10-Q filed October 18, 1995).
           (w)*     --   First Supplemental Indenture dated as of July 31, 1999,
                         among Williams Holdings of Delaware, Inc., Williams and
                         Citibank, N.A., as Trustee (filed as Exhibit 4(o) to Form
                         10-K for the fiscal year ended December 31, 1999).
           (x)*     --   Indenture dated March 31, 1990, between MAPCO Inc. and
                         Bankers Trust Company, as Trustee (filed as Exhibit 4.0 to
                         MAPCO Inc.'s Form 8-K filed February 19, 1991).
           (y)*     --   First Supplemental Indenture dated March 31, 1998, among
                         MAPCO Inc., Williams Holdings of Delaware, Inc. and Bankers
                         Trust Company, as Trustee (filed as Exhibit 4(f) to Williams
                         Holdings of Delaware, Inc.'s Form 10-K for the fiscal year
                         ended December 31, 1998).
           (z)*     --   Second Supplemental Indenture dated as of July 31, 1999,
                         among Williams Holdings of Delaware, Inc., Williams and
                         Bankers Trust Company, as Trustee (filed as Exhibit 4(p) to
                         Form 10-K for the fiscal year ended December 31, 1999).
           (aa)*    --   Senior Indenture dated February 25, 1997, between MAPCO Inc.
                         and Bank One Trust Company, N.A. (formerly The First
                         National Bank of Chicago), as Trustee (filed as Exhibit
                         4.5.1 to MAPCO Inc.'s Amendment No. 1 to Form S-3 dated
                         February 25, 1997).
           (bb)*    --   Supplemental Indenture No. 1 dated March 5, 1997, between
                         MAPCO Inc. and Bank One Trust Company, N.A. (formerly The
                         First National Bank of Chicago), as Trustee (filed as
                         Exhibit 4.(o) to MAPCO Inc.'s Form 10-K for the fiscal year
                         ended December 31, 1997).
           (cc)*    --   Supplemental Indenture No. 2 dated March 5, 1997, between
                         MAPCO Inc. and Bank One Trust Company, N.A. (formerly The
                         First National Bank of Chicago), as Trustee (filed as
                         Exhibit 4.(p) to MAPCO Inc.'s Form 10-K for the fiscal year
                         ended December 31, 1997).
           (dd)*    --   Supplemental Indenture No. 3 dated March 31, 1998, among
                         MAPCO Inc., Williams Holdings of Delaware, Inc. and Bank One
                         Trust Company, N.A. (formerly The First National Bank of
                         Chicago), as Trustee (filed as Exhibit 4(j) to Williams
                         Holdings of Delaware, Inc.'s Form 10-K for the fiscal year
                         ended December 31, 1998).
           (ee)*    --   Supplemental Indenture No. 4 dated as of July 31, 1999,
                         among Williams Holdings of Delaware, Inc., Williams and Bank
                         One Trust Company, N.A. (formerly The First National Bank of
                         Chicago), as Trustee (filed as Exhibit 4(q) to Form 10-K for
                         the fiscal year ended December 31, 1999).
           (ff)*    --   Revised Form of Indenture between Barrett Resources
                         Corporation, as Issuer, and Bankers Trust Company, as
                         Trustee, with respect to Senior Notes including specimen of
                         7.55% Senior Notes (filed as Exhibit 4.1 to Barrett
                         Resources Corporation's Amendment No. 2 to Registration
                         Statement on Form S-3 filed February 10, 1997).
           (gg)*    --   First Supplemental Indenture dated 2001, between Barrett
                         Resources Corporation, as Issuer, and Bankers Trust Company,
                         as Trustee (filed as Exhibit 4.3 to Form 10-Q filed November
                         13, 2001).
           (hh)*    --   Second Supplemental Indenture dated as of August 2, 2001,
                         among Barrett Resources Corporation, as Issuer, Resources
                         Acquisition Corp., The Williams Companies, Inc. and Bankers
                         Trust Company, as Trustee (filed as Exhibit 4.4 to Form 10-Q
                         filed November 13, 2001).
</Table>

                                       152
<PAGE>

<Table>
<Caption>
EXHIBIT NO.                                    DESCRIPTION
- -----------                                    -----------
<S>                 <C>  <C>
           (ii)*    --   Rights Agreement dated as of February 6, 1996, between
                         Williams and First Chicago Trust Company of New York (filed
                         as Exhibit 4 to Form 8-K filed January 24, 1996).
           (jj)*    --   Certificate of Increase of Authorized Number of Shares of
                         Series A Junior Participating Preferred Stock (filed as
                         Exhibit 3(f) to Form 10-K for the fiscal year ended December
                         31, 1995).
           (kk)*    --   Certificate of Increase of Authorized Number of Shares of
                         Series A Junior Participating Preferred Stock (filed as
                         Exhibit 3(g) to Form 10-K for the fiscal year ended December
                         31, 1997).
           (ll)*    --   Form of Note (filed as Exhibit 4.2 and included in Exhibit
                         4.1 to Form 8-K filed January 23, 2002).
           (mm)*    --   Purchase Contract Agreement dated January 14, 2002, between
                         Williams and JPMorgan Chase Bank, as Purchase Contract Agent
                         (filed as Exhibit 4.3 to Form 8-K filed January 23, 2002).
           (nn)*    --   Form of Income PACS Certificate (filed as Exhibit 4.4 and
                         included in Exhibit 4.3 to Form 8-K filed January 23, 2002).
           (oo)*    --   Pledge Agreement dated January 14, 2002, among Williams,
                         JPMorgan Chase Bank, as Collateral Agent, and JPMorgan Chase
                         Bank, as Purchase Contract Agent (filed as Exhibit 4.5 to
                         Form 8-K filed January 23, 2002).
           (pp)*    --   Remarketing Agreement dated January 14, 2002, among
                         Williams, JPMorgan Chase Bank, as Purchase Contract Agent,
                         and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
                         Smith Incorporated, as Remarketing Agent (filed as Exhibit
                         4.6 to Form 8-K filed January 23, 2002).
           (qq)     --   Trust Indenture dated as of August 13, 2001 among Kern River
                         Funding Corporation, as Issuer, Kern River Gas Transmission
                         Company, as Guarantor, and The Chase Manhattan Bank as
                         Trustee.
           (rr)*    --   Indenture dated as of August 27, 2001, between
                         Transcontinental Gas Pipe Line Corporation and Citibank,
                         N.A. (filed as Exhibit 4.1 to Transco's Registration
                         Statement on Form S-4 filed November 8, 2001).
        10(a)*      --   Credit Agreement dated as July 25, 2000, among Williams and
                         certain of its subsidiaries, the banks named therein and
                         Citibank, N.A., as agent (filed as Exhibit 4.1 to Form 10-Q
                         filed August 11, 2000).
           (b)*     --   Waiver and First Amendment to Credit Agreement dated as of
                         January 31, 2001, to Credit Agreement dated July 25, 2000,
                         among Williams and certain of its subsidiaries, the banks
                         named therein and Citibank, N.A., as agent (filed as Exhibit
                         4(jj) to Form 10-K for the fiscal year ended December 31,
                         2000).
           (c)      --   Second Amendment to Credit Agreement dated as of February 7,
                         2002, among Williams and certain of its subsidiaries, the
                         banks named therein and Citibank, N.A., as agent.
           (d)*     --   Credit Agreement dated as of July 25, 2000, among Williams,
                         the banks named therein and Citibank, N.A., as agent (filed
                         as Exhibit 4.2 to Form 10-Q filed August 11, 2000).
           (e)*     --   Waiver and First Amendment to Credit Agreement dated as of
                         January 31, 2001, to Credit Agreement dated July 25, 2000,
                         among Williams, the banks named therein and Citibank, N.A.,
                         as agent.
           (f)      --   Limited Waiver and Second Amendment to Credit Agreement
                         dated July 24, 2001, among Williams, the banks named therein
                         and Citibank, N.A., as agent.
           (g)      --   Third Amendment to Credit Agreement dated as of February 7,
                         2002, among Williams, the banks named therein and Citibank,
                         N.A., as agent.
           (h)*     --   U.S. $400,000,000 Term Loan Agreement dated April 7, 2000,
                         among Williams, the lenders named therein and Credit
                         Lyonnais New York Branch, as administrative agent (filed as
                         Exhibit 4(r) to Form 10-K for the fiscal year ended December
                         31, 1999).
</Table>

                                       153
<PAGE>

<Table>
<Caption>
EXHIBIT NO.                                    DESCRIPTION
- -----------                                    -----------
<S>                 <C>  <C>
           (i)*     --   First Amendment dated as of August 21, 2000, to Term Loan
                         Agreement dated April 7, 2000, among Williams, the lenders
                         named therein and Credit Lyonnais New York Branch, as
                         administrative agent (filed as Exhibit 4(nn) to Form 10-K
                         for the fiscal year ended December 31, 2000).
           (j)*     --   Form of Waiver and Second Amendment dated as of January 31,
                         2001, to Term Loan Agreement dated April 7, 2000, among
                         Williams, the lenders named therein and Credit Lyonnais New
                         York Branch, as administrative agent (filed as Exhibit 4(oo)
                         to Form 10-K for the fiscal year ended December 31, 2000).
           (k)      --   Third Amendment dated as of February 7, 2002, to Term Loan
                         Agreement dated April 7, 2000, among Williams, the lenders
                         named therein and Credit Lyonnais New York Branch, as
                         administrative agent.
           (l)*     --   Underwriting Agreement dated January 16, 2001, among
                         Williams and the underwriters named therein (filed as
                         Exhibit 10(a) to Form 10-K for the fiscal year ended
                         December 31, 2000).
           (m)*     --   Participation Agreement among Williams, Williams
                         Communications Group, Inc., Williams Communications, LLC,
                         WCG Note Trust, WCG Note Corp., Inc., Williams Share Trust,
                         United States Trust Company of New York and Wilmington Trust
                         Company dated as of March 22, 2001 (filed as Exhibit 10(a)
                         to Form 10-Q filed May 15, 2001).
           (n)*     --   Williams Preferred Stock Remarketing, Registration Rights
                         and Support Agreement among Williams, Williams Share Trust,
                         WCG Note Trust, United States Trust Company of New York and
                         Credit Suisse First Boston Corporation dated as of March 28,
                         2001 (filed as Exhibit 10(b) to Form 10-Q filed May 15,
                         2001).
           (o)*     --   Indenture dated as of March 28, 2001, among WCG Note Trust,
                         Issuer, WCG Note Corp., Inc., Co-Issuer, and United States
                         Trust Company of New York, Indenture Trustee and Securities
                         Intermediary (filed as Exhibit 10.8 to Form 10-Q filed
                         November 13, 2001).
           (p)*     --   Intercreditor Agreement dated as of September 8, 1999, among
                         Williams, Williams Communications Group, Inc., Williams
                         Communications, LLC and Bank of America N.A. (filed as
                         Exhibit 10.7 to Form 10-Q filed November 13, 2001).
           (q)      --   Amendment and Consent dated as of August 17, 2000, to the
                         Amended and Restated Participation Agreement, attaching as
                         Exhibit A the Second Amended and Restated Guaranty Agreement
                         dated as of August 17, 2000, between Williams, State Street
                         Bank and Trust Company of Connecticut, National Association,
                         State Street Bank and Trust Company and Citibank, N.A., as
                         Agent.
           (r)      --   Amendment, Waiver and Consent dated as of January 31, 2001,
                         to Second Amended and Restated Guaranty Agreement between
                         Williams, State Street Bank and Trust Company of
                         Connecticut, National Association, State Street Bank and
                         Trust Company and Citibank, N.A., as Agent.
           (s)      --   Amendment and Consent dated as of February 7, 2002, to
                         Second Amended and Restated Guaranty Agreement between
                         Williams, State Street Bank and Trust Company of
                         Connecticut, National Association, State Street Bank and
                         Trust Company and Citibank, N.A., as Agent.
           (t)      --   Membership Interest Purchase Agreement dated as of September
                         13, 2001, between Williams Communications, LLC and Williams
                         Aircraft, Inc.
           (u)      --   Aircraft Dry Lease, N352WC, dated as of September 13, 2001,
                         between Williams Communications Aircraft, LLC and Williams
                         Communications, LLC.
           (v)      --   Aircraft Dry Lease, N358WC, dated as of September 13, 2001,
                         between Williams Communications Aircraft, LLC and Williams
                         Communications, LLC.
           (w)      --   Aircraft Dry Lease, N359WC, dated as of September 13, 2001,
                         between Williams Communications Aircraft, LLC and Williams
                         Communications, LLC.
</Table>

                                       154
<PAGE>

<Table>
<Caption>
EXHIBIT NO.                                    DESCRIPTION
- -----------                                    -----------
<S>                 <C>  <C>
           (x)      --   Agreement of Purchase and Sale dated as of September 13,
                         2001, among Williams Technology Center, LLC, Williams
                         Headquarters Building Company and Williams Communications,
                         LLC.
           (y)      --   Master Lease dated as of September 13, 2001, among Williams
                         Technology Center, LLC, Williams Headquarters Building
                         Company and Williams Communications, LLC.
           (z)*     --   The Williams Companies, Inc. Supplemental Retirement Plan
                         effective as of January 1, 1988 (filed as Exhibit 10(iii)(c)
                         to Form 10-K for the fiscal year ended December 31, 1987).
           (aa)*    --   Form of The Williams Companies, Inc. Change in Control
                         Protection Plan among Williams and employees (filed as
                         Exhibit 10(iii)(e) to Form 10-K for the fiscal year ended
                         December 31, 1989).
           (bb)*    --   The Williams Companies, Inc. 1985 Stock Option Plan (filed
                         as Exhibit A to the Proxy Statement dated March 13, 1985).
           (cc)*    --   The Williams Companies, Inc. 1988 Stock Option Plan for
                         Non-Employee Directors (filed as Exhibit A to the Proxy
                         Statement dated March 14, 1988).
           (dd)*    --   The Williams Companies, Inc. 1990 Stock Plan (filed as
                         Exhibit A to the Proxy Statement dated March 12, 1990).
           (ee)*    --   The Williams Companies, Inc. Stock Plan for Non-Officer
                         Employees (filed as Exhibit 10(iii)(g) to Form 10-K for the
                         fiscal year ended December 31, 1995).
           (ff)*    --   The Williams Companies, Inc. 1996 Stock Plan (filed as
                         Exhibit A to the Proxy Statement dated March 27, 1996).
           (gg)*    --   The Williams Companies, Inc. 1996 Stock Plan for
                         Non-Employee Directors (filed as Exhibit B to the Proxy
                         Statement dated March 27, 1996).
           (hh)*    --   Indemnification Agreement effective as of August 1, 1986,
                         among Williams, members of the Board of Directors and
                         certain officers of Williams (filed as Exhibit 10(iii)(e) to
                         Form 10-K for the year ended December 31, 1986).
           (ii)*    --   The Williams International Stock Plan (filed as Exhibit
                         10(iii)(l) to Form 10-K for the fiscal year ended December
                         31, 1998).
           (jj)*    --   Form of Stock Option Secured Promissory Note and Pledge
                         Agreement among Williams and certain employees, officers and
                         non-employee directors (filed as Exhibit 10(iii)(m) to Form
                         10-K for the fiscal year ended December 31, 1998).
           (kk)*    --   The Williams Companies, Inc. 2001 Stock Plan (filed as
                         Exhibit 4.1 to Form S-8 filed August 1, 2001).
           (ll)*    --   Amended and Restated Separation Agreement dated April 23,
                         2001, between Williams and Williams Communications Group,
                         Inc. (filed as Exhibit 99.1 to Form 8-K filed May 3, 2001).
           (mm)*    --   Amended and Restated Administrative Services Agreement dated
                         April 23, 2001, between Williams and certain subsidiaries of
                         Williams and Williams Communications Group, Inc., and
                         certain subsidiaries of Communications (filed as Exhibit
                         99.2 to Form 8-K filed May 3, 2001).
           (nn)*    --   Tax Sharing Agreement dated as of September 30, 1999, and
                         amended and restated as of April 23, 2001, between Williams
                         and Williams Communications Group, Inc. (filed as Exhibit
                         99.3 to Form 8-K filed May 3, 2001).
           (oo)*    --   Amended and Restated Indemnification Agreement dated April
                         23, 2001, between Williams and Williams Communications
                         Group, Inc. (filed as Exhibit 99.4 to Form 8-K filed May 3,
                         2001).
           (pp)*    --   Shareholder Agreement dated April 23, 2001, between Williams
                         and Williams Communications Group, Inc. (filed as Exhibit
                         99.5 to Form 8-K filed May 3, 2001).
           (qq)*    --   Amended and Restated Employee Benefits Agreement dated April
                         23, 2001, between Williams and Williams Communications
                         Group, Inc. (filed as Exhibit 99.6 to Form 8-K filed May 3,
                         2001).
           (rr)*    --   Deferral Letter dated April 23, 2001, between Williams and
                         Williams Communications Group, Inc. (filed as Exhibit 99.7
                         to Form 8-K filed May 3, 2001).
</Table>

                                       155
<PAGE>

<Table>
<Caption>
EXHIBIT NO.                                    DESCRIPTION
- -----------                                    -----------
<S>                 <C>  <C>
           (ss)*    --   Underwriting Agreement dated January 7, 2002, between
                         Williams and the several underwriters named therein (filed
                         as Exhibit 1.1 to Form 8-K filed January 23, 2002).
        12          --   Computation of Ratio of Earnings to Combined Fixed Charges
                         and Preferred Stock Dividend Requirements.
        20*         --   Definitive Proxy Statement of Williams for 2002 (to be filed
                         with the Securities and Exchange Commission on or before
                         March 31, 2002).
        21          --   Subsidiaries of the registrant.
        23          --   Consent of Independent Auditors, Ernst & Young LLP.
        24          --   Power of Attorney together with certified resolution.
</Table>

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

 * Each such exhibit has heretofore been filed with the Securities and Exchange
   Commission as part of the filing indicated and is incorporated herein by
   reference.

** Williams agrees upon request to furnish each such exhibit to the Securities
   and Exchange Commission. The total amount of the securities authorized under
   each such exhibit does not exceed ten percent of the total assets of Williams
   and its subsidiaries taken as a whole.

                                       156

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.(QQ)
<SEQUENCE>3
<FILENAME>d93687ex4-qq.txt
<DESCRIPTION>TRUST INDENTURE DATED 8/13/01
<TEXT>
<PAGE>


                                                                   EXHIBIT 4(qq)



                                 TRUST INDENTURE


                           DATED AS OF AUGUST 13, 2001



                                      AMONG



                         KERN RIVER FUNDING CORPORATION,
                                   AS ISSUER,



                      KERN RIVER GAS TRANSMISSION COMPANY,
                                  AS GUARANTOR,



                                       AND



                            THE CHASE MANHATTAN BANK
                                   AS TRUSTEE





                                    INCLUDING
                    $510,000,000 6.676% SENIOR NOTES DUE 2016


<PAGE>



                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                        PAGE
                                                                                                        ----
<S>                                                                                                  <C>


                                                 ARTICLE 1

                                     DEFINITIONS AND OTHER PROVISIONS
                                          OF GENERAL APPLICATION

SECTION 1.1.  Definitions..................................................................................1
SECTION 1.2.  Compliance Certificates and Opinions........................................................20
SECTION 1.3.  Form of Documents Delivered to Trustee......................................................20
SECTION 1.4.  Acts of Holders; Record Dates...............................................................21
SECTION 1.5.  Notices, Etc., to Trustee, Company and Partnership..........................................23
SECTION 1.6.  Notice to Holders; Waiver...................................................................23
SECTION 1.7.  Effect of Headings and Table of Contents....................................................23
SECTION 1.8.  Successors and Assigns......................................................................23
SECTION 1.9.  Separability Clause.........................................................................24
SECTION 1.10.  Benefits of Indenture......................................................................24
SECTION 1.11.  Governing Law..............................................................................24
SECTION 1.12.  Legal Holidays.............................................................................24
SECTION 1.13.  Counterparts...............................................................................24
SECTION 1.14.  Agency.....................................................................................24

                                                  ARTICLE 2

                                               THE SECURITIES

SECTION 2.1.  Forms Generally.............................................................................24
SECTION 2.2.  Legends on Restricted Securities............................................................25
SECTION 2.3.  Amount Unlimited; Issuable in Series........................................................27
SECTION 2.4.  Denominations...............................................................................29
SECTION 2.5.  Execution, Authentication, Delivery and Dating..............................................29
SECTION 2.6.  Temporary Securities........................................................................30
SECTION 2.7.  Registration, Registration of Transfer and Exchange.........................................31
SECTION 2.8.  Mutilated, Destroyed, Lost and Stolen Securities............................................37
SECTION 2.9.  Payments; Interest Rights Preserved.........................................................38
SECTION 2.10.  Persons Deemed Owners......................................................................39
SECTION 2.11.  Cancellation...............................................................................39
SECTION 2.12.  Computation of Interest....................................................................39
SECTION 2.13.  Certification Forms........................................................................39
</TABLE>


                                        i


<PAGE>


<TABLE>
<S>                                                                                                  <C>
SECTION 2.14.  CUSIP Numbers..............................................................................40

                                                  ARTICLE 3

                                         SATISFACTION AND DISCHARGE

SECTION 3.1.  Satisfaction and Discharge of Indenture.....................................................40
SECTION 3.2.  Application of Trust Money..................................................................41

                                                  ARTICLE 4

                                                  REMEDIES

SECTION 4.1.  Events of Default...........................................................................42
SECTION 4.2.  Acceleration of Maturity; Rescission and Annulment..........................................44
SECTION 4.3.  Collection of Indebtedness and Suits for Enforcement by Trustee.............................45
SECTION 4.4.  Trustee May File Proofs of Claim............................................................46
SECTION 4.5.  Trustee May Enforce Claims Without Possession of Securities.................................46
SECTION 4.6.  Application of Money Collected..............................................................47
SECTION 4.7.  Limitation on Suits.........................................................................47
SECTION 4.8.  Unconditional Right of Holders to Receive Principal, Premium and Interest...................48
SECTION 4.9.  Restoration of Rights and Remedies..........................................................48
SECTION 4.10.  Rights and Remedies Cumulative.............................................................48
SECTION 4.11.  Delay or Omission Not Waiver...............................................................48
SECTION 4.12.  Control by Holders.........................................................................48
SECTION 4.13.  Waiver of Past Defaults....................................................................49
SECTION 4.14.  Undertaking for Costs......................................................................49
SECTION 4.15.  Waiver of Usury, Stay or Extension Laws....................................................49
SECTION 4.16.  Securities Held by Certain Persons Not to Share in Distribution............................49
SECTION 4.17.  The Collateral Agency Agreement............................................................49

                                                  ARTICLE 5

                                                 THE TRUSTEE

SECTION 5.1.  Certain Duties and Responsibilities.........................................................50
SECTION 5.2.  Notice of Defaults..........................................................................51
SECTION 5.3.  Certain Rights of Trustee...................................................................51
SECTION 5.4.  Not Responsible for Recitals or Issuance of Securities......................................52
SECTION 5.5.  May Hold Securities.........................................................................52
SECTION 5.6.  Money Held in Trust.........................................................................53
SECTION 5.7.  Compensation and Reimbursement..............................................................53
</TABLE>


                                       ii


<PAGE>


<TABLE>
<S>                                                                                                  <C>
SECTION 5.8.  Corporate Trustee Required; Eligibility.....................................................54
SECTION 5.9.  Resignation and Removal; Appointment of Successor...........................................54
SECTION 5.10.  Acceptance of Appointment by Successor.....................................................55
SECTION 5.11.  Merger, Conversion, Consolidation or Succession to Business................................56
SECTION 5.12.  Appointment of Paying Agent and Authenticating Agent.......................................56
SECTION 5.13.  Rights and Obligations of Trustee as Representative of the Holders under the
               Security Agreements........................................................................59

                                                  ARTICLE 6

                              HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 6.1.  Company to Furnish Trustee Names and Addresses of Holders...................................59
SECTION 6.2.  Preservation of Information; Communications to Holders......................................59

                                                  ARTICLE 7

                                           SUPPLEMENTAL INDENTURES

SECTION 7.1.  Supplemental Indentures Without Consent of Holders..........................................60
SECTION 7.2.  Supplemental Indentures With Consent of Holders.............................................61
SECTION 7.3.  Execution of Supplemental Indentures........................................................62
SECTION 7.4.  Effect of Supplemental Indentures...........................................................63
SECTION 7.5.  Reference in Securities to Supplemental Indentures..........................................63

                                                  ARTICLE 8

                                                  COVENANTS

SECTION 8.1.  Financial Statements, Etc...................................................................63
SECTION 8.2.  Payment of Principal, Premium and Interest..................................................65
SECTION 8.3.  Existence, Etc..............................................................................65
SECTION 8.4.  Money for Securities Payments to be Held in Trust...........................................65
SECTION 8.5.  Insurance...................................................................................66
SECTION 8.6.  Prohibition of Fundamental Changes..........................................................68
SECTION 8.7.  Ownership of the Company; No Other Subsidiaries.............................................68
SECTION 8.8.  Limitation on Liens.........................................................................68
SECTION 8.9.  Indebtedness................................................................................69
SECTION 8.10.  Investments................................................................................70
SECTION 8.11.  Distributions..............................................................................71
SECTION 8.12.  Affiliate Subordinated Debt................................................................71
SECTION 8.13.  Lines of Business; Single-Purpose Entity...................................................71
SECTION 8.14.  Transactions with Affiliates and Related Parties...........................................71
</TABLE>


                                       iii


<PAGE>


<TABLE>
<S>                                                                                                  <C>
SECTION 8.15.  Modifications of Certain Documents.........................................................71
SECTION 8.16.  Mandatory Obligor Actions..................................................................72
SECTION 8.17.  Rule 144A Information......................................................................72
SECTION 8.18.  Maintenance of Office or Agency............................................................72
SECTION 8.19.  Use of Proceeds............................................................................73
SECTION 8.20.  Expansion..................................................................................73
SECTION 8.21.  Compliance with Law........................................................................74
SECTION 8.22.  Property...................................................................................74
SECTION 8.23.  FERC Filings...............................................................................74
SECTION 8.24.  Transportation Service Agreement...........................................................74
SECTION 8.25.  Collateral Agency Agreement................................................................74
SECTION 8.26.  Transfers..................................................................................74
SECTION 8.27.  Amendment to Partnership Security Agreement................................................74
SECTION 8.28.  Debt Service Notices to Collateral Agent...................................................75

                                                  ARTICLE 9

                                          REDEMPTION OF SECURITIES

SECTION 9.1.  Applicability of Article....................................................................75
SECTION 9.2.  Election to Redeem; Notice to Trustee.......................................................75
SECTION 9.3.  Selection by Trustee of Securities to Be Redeemed...........................................75
SECTION 9.4.  Notice of Redemption........................................................................76
SECTION 9.5.  Deposit of Redemption Price.................................................................77
SECTION 9.6.  Securities Payable on Redemption Date.......................................................77
SECTION 9.7.  Securities Redeemed in Part.................................................................77
SECTION 9.8.  Mandatory Redemption Upon a Casualty Event..................................................77
SECTION 9.9.  Redemption at Company's Option..............................................................78

                                                 ARTICLE 10

                                                SINKING FUNDS

SECTION 10.1.  Applicability of Article...................................................................78
SECTION 10.2.  Satisfaction of Sinking Fund Payments with Securities......................................78
SECTION 10.3.  Redemption of Securities for Sinking Fund..................................................79

                                                 ARTICLE 11

                                    DEFEASANCE AND COVENANT DEFEASANCE

SECTION 11.1.  Company's Option to Effect Defeasance or Covenant Defeasance...............................79
SECTION 11.2.  Defeasance and Discharge...................................................................79
</TABLE>


                                       iv


<PAGE>


<TABLE>
<S>                                                                                                  <C>
SECTION 11.3.  Covenant Defeasance........................................................................79
SECTION 11.4.  Conditions to Defeasance or Covenant Defeasance............................................80
SECTION 11.5.  Deposited Money and U.S. Government Obligations to Be Held in Trust; Miscellaneous
               Provisions.................................................................................82
SECTION 11.6.  Reinstatement..............................................................................82

                                                 ARTICLE 12

                                            PARTNERSHIP GUARANTEE

SECTION 12.1.  Obligations Guaranteed.....................................................................83
SECTION 12.2.  Obligations Unconditional..................................................................83
SECTION 12.3.  No Waiver or Set-off.......................................................................84
SECTION 12.4.  Waiver of Notice; Expenses.................................................................84
SECTION 12.5.  Benefit and Enforcement....................................................................84
SECTION 12.6.  Survival of Partnership Guarantee Obligation; Waiver of Subrogation........................84
SECTION 12.7.  Pledge of Partnership Collateral...........................................................85

                                                 ARTICLE 13

                                           LIMITATION OF LIABILITY

SECTION 13.1.  Company....................................................................................85
SECTION 13.2.  Partnership................................................................................85
</TABLE>






                                        v


<PAGE>


                                    EXHIBITS


EXHIBIT A   FORM OF NOTE
EXHIBIT B   FORM OF TRANSFER CERTIFICATE FOR EXCHANGE
            OR TRANSFER FROM RESTRICTED GLOBAL SECURITY
            TO REGULATION S GLOBAL SECURITY
EXHIBIT C   FORM OF TRANSFER CERTIFICATE FOR TRANSFER OR
            EXCHANGE FROM REGULATION S GLOBAL SECURITY
            TO RESTRICTED GLOBAL SECURITY
EXHIBIT D   FORM OF TRANSFER CERTIFICATE FOR TRANSFER OR
            EXCHANGE OF RESTRICTED SECURITY
EXHIBIT E   FORM OF INSTITUTIONAL ACCREDITED INVESTOR
            TRANSFEREE COMPLIANCE LETTER





                                       vi


<PAGE>


                This TRUST INDENTURE, dated as of August 13, 2001, among KERN
RIVER FUNDING CORPORATION, a corporation duly organized and validly existing
under the laws of the State of Delaware, as issuer (the "Company"), having its
principal office at Tulsa, Oklahoma, Kern River Gas Transmission Company, a
general partnership duly organized and existing under the laws of the State of
Texas, as guarantor (the "Partnership"), having its principal office at Salt
Lake City, Utah, and The Chase Manhattan Bank, a New York corporation, as
trustee (the "Trustee").

                              W I T N E S S E T H:


                WHEREAS, the Company has duly authorized the execution and
delivery of this Indenture to provide for the issuance in its individual
capacity and as agent for the Partnership from time to time of the Company's
debentures, notes or other evidences of indebtedness in one or more series as in
this Indenture provided herein (the "Securities"); and

                WHEREAS, the Company wishes to lend all of the proceeds of the
sale of the Securities to the Partnership; and

                WHEREAS, the Partnership wishes to provide its guarantee to
secure the payment of the principal of, premium on, if any, and interest on, all
the Securities authenticated and delivered hereunder and issued by the Company
and the performance of the covenants therein and herein contained; and

                WHEREAS, all things necessary to make this Indenture a valid
agreement of the Company and the Partnership, in accordance with its terms, have
been done;

                NOW, THEREFORE, for and in consideration of the premises and the
purchase of the Securities by the Holders thereof, it is mutually covenanted and
agreed, for the equal and proportionate benefit of all Holders of the Securities
or of series thereof, as follows:


                                    ARTICLE 1

                        DEFINITIONS AND OTHER PROVISIONS
                             OF GENERAL APPLICATION

                SECTION 1.1. Definitions. For all purposes of this Indenture,
except as otherwise expressly provided or unless the context otherwise requires:

                (1)     the terms defined in this Article have the meanings
        assigned to them in this Article and include the plural as well as the
        singular;


                                       1
<PAGE>


                (2)     all accounting terms not otherwise defined herein have
        the meanings assigned to them in accordance with regulatory accounting
        principles (whether or not such is indicated herein), and, except as
        otherwise herein expressly provided, the term "required accounting
        practices" with respect to any computation required or permitted
        hereunder means such accounting practices as are required by the Company
        and the Partnership, at the date of such computation;

                (3)     unless otherwise specifically set forth herein, all
        calculations or determinations of a Person shall be performed or made in
        accordance with RAP;

                (4)     unless the context otherwise requires, any reference to
        an "Article" or a "Section" refers to an Article or a Section, as the
        case may be, of this Indenture;

                (5)     the words "herein," "hereof" and "hereunder" and other
        words of similar import refer to this Indenture as a whole and not to
        any particular Article, Section or other subdivision;

                (6)     unless the context clearly intends to the contrary,
        pronouns having a masculine or feminine gender shall be deemed to
        include the other; and

                (7)     unless otherwise expressly specified, any agreement,
        contract or document defined or referred to herein shall mean such
        agreement, contract or document as in effect as of the date hereof, as
        the same may thereafter be amended, supplemented or otherwise modified
        from time to time in accordance with the terms of this Indenture and the
        other Project Agreements (as hereinafter defined) and shall include any
        agreement, contract or document in substitution or replacement of any of
        the foregoing entered into in accordance with the terms of this
        Indenture and the other Project Agreements.

                "2002 Expansion" means the expansion for which the Partnership
filed an application with the FERC in Docket No. CP01-31-000 on November 15,
2000.

                "Acceptable Letter of Credit" means an irrevocable standby
letter of credit provided on behalf of an LTFT Shipper for the benefit of the
Partnership with a stated amount equal, at any time, to one year's reservation
charges due under the applicable LTFT Agreement and issued by a bank whose
long-term unsecured and unguaranteed debt is rated at least "A" by S&P and "A2"
by Moody's. Such letter of credit shall have a term of at least a year and shall
be subject to draw if not renewed or replaced at the end of such term.

                "Account Bank" has the meaning assigned to such term in the
Collateral Agency Agreement.

                "Act," when used with respect to any Holder, has the meaning
specified in Section 1.4.


                                       2
<PAGE>


                "Additional Senior Indebtedness" means Indebtedness of the
Company or the Partnership for borrowed money ranking pari passu in right of
payment with the Senior Debt. For the avoidance of doubt, any indebtedness
incurred in respect of an Expansion and described in the proviso to the
definition of Indebtedness shall not constitute Additional Senior Indebtedness
until such time as it constitutes Indebtedness in accordance with the definition
thereof and the Completion Guaranty in respect of such Expansion has been
released.

                "Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

                "Affiliate Subordinated Debt" means Indebtedness of the
Partnership held by any Partner or an Affiliate of any Partner and subordinated
to the Senior Debt.

                "Agency Agreement" means the agreement entered into on the
Closing Date between the Company and the Partnership pursuant to which the
Company agrees to act as agent for the Partnership with respect to the issuance
of the Securities.

                "Agent Member" has the meaning specified in Section
2.7(c)(v)(B).

                "Applicable Procedures" has the meaning specified in Section
2.7(c)(v)(B).

                "Authenticating Agent" means any Person authorized by the
Trustee pursuant to Section 5.12 to act on behalf of the Trustee to authenticate
Securities of one or more series.

                "Authorized Agent" has the meaning specified in Section 5.12(a).

                "Bankruptcy Code" means the United States Bankruptcy Code of
1978, as amended from time to time.

                "Basic Agreements" means, collectively, this Indenture, the
Securities and the Security Agreements.

                "Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.

                "Business Day" means any day other than (a) a Saturday or Sunday
or (b) a day on which commercial banks in New York City or any other city in
which the Trustee's


                                       3
<PAGE>


Corporate Trust Office, any Place of Payment or the Collateral Agent's principal
office is located, are authorized or required to close.

                "California Action Project" means the expansion for which the
Partnership filed an application with the FERC in Docket No. CP01-106-000 on
March 15, 2001.

                "Capital Expenditures" means, for any period, expenditures
(including, without limitation, the aggregate amount of Capital Lease
Obligations incurred during such period) made by the Partnership to acquire or
construct fixed assets, plant and equipment (including renewals improvements and
replacements) during such period that in accordance with RAP are required to be
capitalized on the Partnership's balance sheet.

                "Capital Lease Obligations" means, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under RAP, and, for purposes of this Indenture
the amount of such obligations shall be the capitalized amount thereof
determined in accordance with RAP.

                "Capital Stock" of any Person means any and all shares,
interests, participations or other equivalents (however designated) of corporate
stock of, or partnership or other ownership interests in, such Person.

                "Casualty Event" means, with respect to any Property of any
Person, any event that causes all or a portion of such Property to be damaged,
destroyed or rendered unfit for normal use for any reason whatsoever, including,
without limitation, any compulsory transfer or taking or transfer under threat
of compulsory transfer or taking of any material part of such Property by any
Governmental Authority.

                "Catastrophic Loss" means any Casualty Event with respect to the
Project for which the replacement value of the lost or damaged Property (as
determined by the Executive Committee of the Partnership reasonably and in good
faith) is greater than the greater of (x) 10% of the gross book value of the
Partnership's plant, property and equipment, taken as a whole, and (y)
$100,000,000, as Escalated.

                "Clearstream" means Clearstream Banking, societe anonyme.

                "Closing Date" means August 13, 2001.

                "CO&M Agreement" means the Construction, Operation and
Maintenance Agreement dated as of August 29, 1989, as amended, by and among
MPOC, Mojave Pipeline and the Partnership under which MPOC operates the Common
Facilities.


                                       4
<PAGE>


                "Code" means the Internal Revenue Code of 1986, as amended from
time to time.

                "Collateral" has the meaning assigned to such term in the
Collateral Agency Agreement.

                "Collateral Agency Agreement" means the Collateral Agency
Agreement dated as of the Closing Date by and among the Partnership, the
Company, the Trustee and the Collateral Agent.

                "Collateral Agent" means The Chase Manhattan Bank, in its
capacity as Partnership Collateral Agent or Funding Collateral Agent under the
Collateral Agency Agreement.

                "Common Facilities" means the facilities from Daggett,
California, to termination points in Kern County, California, consisting of
approximately 219 miles of pipe jointly owned by the Partnership and Mojave
Pipeline as tenants-in-common.

                "Company" means Kern River Funding Corporation.

                "Company Order" or "Company Request" means a written order or
request signed in the name of the Company by the Chairman of the Board, a Vice
Chairman of the Board, the President, a Vice President, the Treasurer or the
Assistant Treasurer, and delivered to the Trustee.

                "Company Security Agreement" means the Assignment of Contracts,
Pledge and Security Agreement dated as of the Closing Date between the Company
and the Collateral Agent.

                "Completion" means, with respect to any Expansion, that (i)
pursuant to FERC certificate compliance requirements and 18 C.F.R. Section
157.20(c)(3), the Partnership has filed with the FERC notice that such
Expansion's facilities have been constructed and placed into service or that
service has commenced on such facilities, (ii) pursuant to the LTFT Agreements
entered into in connection with such Expansion, the Partnership may begin
invoicing the applicable LTFT Shippers the full amount of their periodic
reservation charge payments and (iii) the equity investment, if any, described
in clause (z) of the proviso to the definition of Indebtedness and required so
that the percentage of the costs of such Expansion that are financed with
Indebtedness incurred by the Partnership does not exceed the Applicable
Expansion Debt Level, has been contributed to the Partnership.

                "Completion Guaranty" means, with respect to any Expansion, an
unconditional undertaking by Williams, or another entity that has a public debt
rating equal to


                                       5
<PAGE>


at least "BBB-" from S&P and "Baa3" from Moody's, that ensures Completion of
such Expansion.

                "Corporate Trust Office" means the office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered which office as of the date of execution of this Indenture is
located at 450 West 33rd Street, New York, NY 10001.

                "Covenant Defeasance" has the meaning specified in Section 11.3.

                "Debt Service Coverage Ratio" means, for any period, the ratio
of (a) Operating Cash Flow for such period to (b) Mandatory Senior Debt Service
(excluding the amount of the Final Principal Payment) for such period.

                "Debt Service Letter of Credit" means one or more irrevocable,
direct pay letters of credit issued by the Debt Service LOC Provider.

                "Debt Service Letter of Credit Obligation" means all obligations
of the Partnership under the Debt Service LOC Reimbursement Agreement including
without limitation all obligations in respect of the Debt Service Letter of
Credit, interest, principal in respect of any notes or bonds issued thereunder
together with any obligation or indemnity for fees, expenses or damages.

                "Debt Service LOC Account" means the special irrevocable
collateral account and funds within such account, established and maintained
pursuant to Section 7.1 of the Collateral Agency Agreement.

                "Debt Service LOC Loan" means each loan made by a Debt Service
LOC Provider to the Partnership pursuant to the Debt Service LOC Reimbursement
Agreement.

                "Debt Service LOC Provider" means the commercial banks or
financial institutions issuing the Debt Service Letter of Credit.

                "Debt Service LOC Reimbursement Agreement" means the Debt
Service LOC Reimbursement Agreement, among the Partnership, the Company and the
Debt Service LOC Provider, dated as of the Closing Date.

                "Debt Service Payment Date" means the final day of each month,
commencing on August 31, 2001, provided that payments in respect of principal on
the Securities issued on the Closing Date will not commence until the Debt
Service Payment Date occurring on January 31, 2002.


                                       6
<PAGE>


                "Default" means an Event of Default or an event that with notice
or lapse of time or both would become an Event of Default

                "Defaulted Interest" has the meaning specified in Section 2.9.

                "Defeasance" has the meaning specified in Section 11.2.

                "Depository" means, with respect to Securities of any series
issuable in whole or in part in the form of one or more Global Securities, a
clearing agency registered under the Exchange Act that is designated to act as
Depository for such Securities as contemplated by Section 2.3.

                "Determination Date" means the second Business Day prior to the
Redemption Date.

                "Distribution" means (a) all partnership distributions of the
Partnership (in cash, property of the Partnership or obligations) on, or other
payments or distributions on account of, or the setting apart of money for a
sinking or other analogous fund for, or the purchase, redemption, retirement or
other acquisition by the Partnership of, any portion of any partnership interest
in the Partnership, (b) all dividends (in cash, property or obligations) on, or
other payments or distributions on account of, or the setting apart of money for
a sinking or other analogous fund for, or the purchase, redemption, retirement,
or other acquisition of, any shares of any class of stock of the Company or of
any warrant options or other rights to acquire the same, but excluding dividends
payable solely in shares of common stock of the Company and (c) all payments (in
cash, property of the Partnership or obligations) of principal of, interest on
and other amounts with respect to, or other payments on account of, or the
setting apart of money for a sinking or other analogous fund for, or the
purchase, redemption, retirement or other acquisition by the Partnership of, any
Affiliate Subordinated Debt.

                "Dollars" and "$" means lawful money of the United States of
America.

                "Economic Make-Whole Premium" means,

        (a)     with respect to all of the Securities of any series, an amount
calculated by the Company as of the second Business Day prior to the Redemption
Date (the "Determination Date") of the Securities of such series as follows:

                (i)     the average life of the remaining scheduled payments of
        principal in respect of the Outstanding Securities (the "Remaining
        Average Life") shall be calculated as of the Redemption Date;


                                       7
<PAGE>


                (ii)    the yield to maturity shall be calculated for the United
        States Treasury security having an average life equal to the Remaining
        Average Life and trading in the secondary market at the price (on the
        Determination Date) closest to par (the "Primary Issue"); provided,
        however, that if no United States Treasury security has an average life
        equal to the Remaining Average Life, the yields (the "Other Yields') for
        the two maturities of the United States Treasury securities having
        average lives most closely corresponding to such Remaining Average Life
        and trading in the secondary market at the price (on the Determination
        Date) closest to par shall be calculated and the yield to maturity for
        the Primary Issue shall be the yield interpolated or extrapolated from
        such Other Yields on a straight-line basis, rounding in each of such
        relevant periods to the nearest month;

                (iii)   the discounted present value of the then remaining
        scheduled payments of principal and interest (but excluding that portion
        of any scheduled payment of interest that is actually due and paid on
        the Redemption Date) in respect of Outstanding Securities shall be
        calculated as of the Redemption Date using a discount factor equal to
        the sum of (a) the yield to maturity for the Primary Issue, plus (b) 50
        basis points; and

                (iv)    the amount of premium in respect of Securities to be
        redeemed shall be an amount equal to (a) the discounted present value of
        such Securities to be redeemed determined in accordance with clause
        (iii) above minus (b) the unpaid principal amount of such Securities;
        provided, however, that the premium shall not be less than zero; and,

        (b)     with respect to any Security in any series, the amount obtained
by multiplying (i) the aggregate Economic Make-Whole Premium determined as set
forth above by (ii) the ratio of the Outstanding principal amount of such
Security on the Redemption Date to the aggregate Outstanding principal amount of
all Securities of such series on the Redemption Date.

                "Environmental Laws" means any and all present and future
federal, state, local and foreign laws, rules or regulations, and any orders or
decrees in each case as now or hereafter in effect, relating to the regulation
or protection of human health, safety or the environment or to emissions,
discharges, releases or threatened releases of Hazardous Materials into the
indoor or outdoor environment, including, without limitation, ambient air, soil
surface water, ground water, wetlands, land or subsurface strata, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials.

                "Escalated" means, with respect to any amount and as at any date
of determination, such amount as multiplied by a fraction (a) the numerator of
which is the Consumer Price Index for All Urban Consumers (CPI/U), as published
by the Bureau of


                                       8
<PAGE>


Statistics of the Department of Labor (or if the publication of such Consumer
Price Index is discontinued, a comparable index similar in nature to the
discontinued index which clearly reflects the change in the real value of the
purchasing power of the Dollar (hereafter in this definition referred to as the
"index")) reported for the calendar year immediately preceding such date and (b)
the denominator of which is equal to the index reported for 2001, provided,
however, that if an Escalation has to be determined in a particular year at a
time prior to the time that such Consumer Price Index is published, the figure
used immediately prior thereto shall be used.

                "Euroclear" means Euroclear Bank, S.A./N.V., as operator of the
Euroclear System, or any successor to Euroclear Bank, S.A./N.V., as operator
thereof.

                "Event of Default" has the meaning specified in Section 4.1.

                "Exchange Act" means, the Securities Exchange Act of 1934 and
any statute successor thereto, in each case as amended from time to time.

                "Existing 144A Debt" means existing 144A indebtedness
outstanding under the Trust Indenture, dated as of March 15, 1996, among Kern
River Funding Corporation, as Issuer, Kern River Gas Transmission Company, as
Guarantor, and The Chase Manhattan Bank (formerly called Chemical Bank) as
Trustee.

                "Expansion" means any capital investment project that (i)
involves Capital Expenditures in excess of $100,000,000, as Escalated and (ii)
increases the transportation capacity of the Pipeline by at least 100 MMcf per
day.

                "Expiration Date" has the meaning specified in Section 1.4.

                "FERC" means the Federal Energy Regulatory Commission.

                "Final Maturity Date" means, as at any date of determination,
the latest Stated Maturity of any Security then Outstanding.

                "Final Principal Payment" means the payment to be made in
respect of principal of the Securities (established by the Partnership pursuant
to Section 2.1 and issued on the Closing Date) on the Final Maturity Date with
respect to such Securities.

                "Fitch" means Fitch, Inc. and its successors.

                "Global Security" means a Security that evidences all or part of
the Securities of any series or tranche and bears the appropriate legend set
forth in Exhibit A (or such legend as may be specified as contemplated by
Section 2.2 for such Securities).


                                       9
<PAGE>


                "Governmental Approval" means any authorization of or by,
consent of, approval of, license from, ruling of, permit from, tariff by, rate
of certification by, exemption from, filing with (except any filing relating to
the perfection of security interests), variance from, claim of, order from,
judgment from, decree of, publication to or by, notice to, declaration of or
with or registration by or with any Governmental Authority.

                "Governmental Authority" means any federal, state, municipal
local, territorial or other government department, commission, board, bureau,
agency, regulatory authority, instrumentality, judicial or administrative body,
domestic or foreign.

                "Governmental Rule" means any statute, law, regulation,
ordinance, rule, final and nonappealable judgment, order, decree, permit,
concession, grant, franchise, license, directive, guideline, policy,
requirement, or other government restriction or any similar form of decision of
or determination by, or any interpretation of any of the foregoing by, any
Governmental Authority, whether now or hereafter in effect (including, without
limitation, any Environmental Law).

                "Gross Book Value" means, with respect to any Person, the gross
book value of such Person's plant, property and equipment, taken as a whole.

                "Guarantee" means a guarantee, an endorsement, a contingent
agreement to purchase or to furnish funds for the payment or maintenance of, or
otherwise to be or become contingently liable under or with respect to, the
Indebtedness, other obligations, net worth, working capital or earnings of any
Person, or a guarantee of the payment of dividends or other distributions upon
the stock or equity interests of any Person, or an agreement to purchase, sell
or lease (as lessee or lessor) Property, products, materials, supplies or
services primarily for the purpose of enabling a debtor to make payment of such
debtor's obligations or an agreement to assure a creditor against loss, and
including, without limitation, causing a bank or other financial institution to
issue a letter of credit or other similar instrument for the benefit of another
Person, but excluding endorsements for collection or deposit in the ordinary
course of business. The terms "Guarantee" and "Guaranteed" used as a verb and
the term "Guarantor" shall have correlative meanings.

                "Hazardous Material" means, at any time, collectively, (a) any
petroleum or petroleum products, flammable materials, explosives, radioactive
materials, asbestos, urea formaldehyde foam insulation, and transformers or
other equipment that contain polychlorinated biphenyls, (b) any chemicals or
other materials or substances that, at such time, become defined as or included
in the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous wastes," "toxic
substances," "toxic pollutants," "contaminants," "pollutants" or words of
similar import under any Environmental Law and (c) any other chemical or other
material or substance, exposure to which, at such time, is prohibited, limited
or contemplated under any Environmental Law.


                                       10
<PAGE>


                "Holder" and "Securityholder" means a Person in whose name a
Security is registered in the Security Register.

                "Indebtedness" means, for any Person (without duplication)
whether recourse is to all or a portion of the assets of such Person and whether
or not contingent, (a) every obligation of such Person for money borrowed, (b)
every obligation of such Person evidenced by bonds, debentures, notes or other
similar instruments, (c) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person, (d) every obligation of such Person issued or
assumed as the deferred purchase price of Property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business), (e) every Capital Lease Obligation of such Person, (f) the maximum
fixed redemption or repurchase price of Redeemable Stock of such Person, if any,
at the time of determination plus accrued but unpaid dividends, (g) every
obligation of such Person with respect to interest rate and currency hedging
agreements, and (h) every obligation of the type referred to in clauses (a)
through (g) of another Person and all dividends of another Person the payment of
which, in either case, such Person has Guaranteed or is responsible or liable
for, directly or indirectly, as obligor, Guarantor or otherwise; provided,
however, that "Indebtedness" shall not include any indebtedness incurred with
respect to an Expansion provided that, and only for so long as, (x) a Completion
Guaranty with respect to such Expansion is in full force and effect, (y) the
recourse of the holders of such indebtedness is limited as set forth in clause
(b) of Section 8.20 and (z) the Partners are obligated under the terms of the
financing for such Expansion to contribute equity upon Completion in an amount,
if any, that, if such equity were contributed at the time such indebtedness was
incurred and such indebtedness was included in the definition of Indebtedness,
would enable the Partnership to satisfy the tests set forth in clause (a)(iv) of
Section 8.9 and clause (c) of Section 8.20.

                "Indenture" means this instrument as originally executed and as
it may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
The term "Indenture" shall also include the terms of particular series of
Securities established as contemplated by Section 2.3.

                "Installment Security" means a Security, the principal of which
is payable in installments.

                "institutional accredited investors" has the meaning specified
in Section 2.1.

                "interest," when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, means interest
payable after Maturity.

                  "Interest Payment Date," when used with respect to any
Security, means the Stated Maturity of an installment of interest on such
Security.


                                       11
<PAGE>


                "Investment" by any Person means any direct or indirect loan,
advance or other extension of credit or capital contribution to (by means of
transfers of cash or other Property to others or payments for Property or
services for the account or use of others, or otherwise), or purchase or
acquisition of Capital Stock, bonds, notes, debentures or other securities or
evidence of Indebtedness issued by, any other Person, and any Capital
Expenditures.

                "Investment Company Act" means the Investment Company Act of
1940 and any statute successor thereto, in each case as amended from time to
time.

                "Investment Grade" means with respect to any Person, that such
Person's long-term senior unsecured debt is rated at least Baa3 by Moody's, BBB-
by S&P, BBB (low) by Dominion Bond Rating Service, or B++ (low) by Canadian Bond
Rating Service.

                "KR Acquisition" means Kern River Acquisition, LLC, a subsidiary
of Williams, and owner of a general partnership interest in the Partnership with
WWPC.

                "Lien" means, with respect to any Property, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
Property. For purposes of this Indenture and the other Project Agreements, a
Person shall be deemed to own subject to a Lien any Property that it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
(other than an operating lease) relating to such Property.

                "Loss Proceeds Account" has the meaning assigned to such term in
Section 3.1 of the Collateral Agency Agreement.

                "LTFT Agreements" means those long-term firm gas transportation
service agreements providing for the transportation of natural gas, entered into
by and among the Partnership and the long-term firm transportation Shippers and
includes, without limitation (i) any long-term firm transportation service
agreements entered into in connection with an expansion of the Pipeline and (ii)
any such agreement entered into after the Closing Date.

                "LTFT Shipper" means a Shipper party to an LTFT Agreement.

                "Mandatory Senior Debt Service" means, for any period, the sum
of all scheduled interest premium (if any) and principal due and payable during
such period in respect of all Senior Debt, provided that fees payable in
connection with the issuance of any Additional Senior Indebtedness shall be
excluded.

                "Material Adverse Effect" means a material adverse effect on (a)
the property, business, operations, financial condition, liabilities or
capitalization of any of the Partnership or the Company, (b) the ability of
either such Person to perform any of its payment obligations or any of its other
material obligations under any of the Project Agreements to


                                       12
<PAGE>


which such Person is a party, (c) the validity or enforceability of any of the
Project Agreements or the Senior Debt Agreements, unless immediately after
giving effect to such adverse effect on validity or enforceability, there shall
be No Ratings Downgrade, (d) the material rights and remedies of the Senior
Party under any of the Senior Debt Agreements or (e) the timely payment of any
principal of or interest on any of the Senior Debt.

                "Material Loss" means any Casualty Event with respect to the
Project for which the replacement value of the lost or damaged Property (as
determined by the Executive Committee of the Partnership reasonably and in good
faith) is (A) equal to or greater than the greater of (x) 2% of the Gross Book
Value of the Partnership and (y) $10,000,000, as Escalated, and (B) less than
the greater of (i) 10% of the Gross Book Value of the Partnership and (ii)
$100,000,000, as Escalated.

                "Maturity," when used with respect to any Security, means the
date on which the principal of such Security or an instalment of principal
becomes due and payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, call for redemption or otherwise.

                "Mojave Pipeline" means Mojave Pipeline Company.

                "Moody's" means Moody's Investors Service, Inc. and its
successors.

                "MPOC" means the Mojave Pipeline Operating Company, an affiliate
of Mojave Pipeline and operator of the Common Facilities.

                "No Ratings Downgrade" means that the ratings on the Securities
are reaffirmed as being equal to or higher than the rating on the Securities
before the applicable event, by both of the Required Rating Agencies.

                "Notice of Default" means a written notice of the kind specified
in Section 5.2.

                "NRSRO" means any Nationally Recognized Statistical Ratings
Organization.

                "Obligor" means, individually and collectively, the Partnership
and the Company.

                "Officer's Certificate" means a certificate signed by the
Chairman of the Board, a Vice Chairman of the Board, the President, a Vice
President, the Treasurer or the Assistant Treasurer of the Company or a Senior
Officer of the Partnership, as applicable, and delivered to the Trustee.

                "Operating Cash Flow" means, for any period, the excess, if any,
of (a) all Project Revenues received during such period over (b) all Operating
Expenses paid during


                                       13
<PAGE>


such period other than any nonrecurring Operating Expenses incurred in
connection with the issuance of any Additional Senior Indebtedness.

                "Operating Expenses" means, for any period, the sum, computed
without duplication, of all cash operating and maintenance expenses and required
reserves in respect of such expenses of the Project including, without
limitation, (a) expenses of administering and operating the Project and of
maintaining it in good repair and operating condition payable by the Partnership
during such period, (b) direct operating and maintenance costs of the Project
(including, without limitation, all payments due and payable under the CO&M
Agreement and any ground leases) payable by the Partnership during such period,
(c) insurance costs payable by the Partnership during such period, (d) sales and
excise taxes payable by the Partnership with respect to the transportation of
natural gas during such period, (e) franchise taxes payable by the Partnership
during such period, (f) federal, state and local income taxes payable by the
Partnership, if any, during such period, (g) costs and fees attendant to the
obtaining and maintaining in effect the government approvals payable by the
Partnership during such period and (h) legal, accounting and other professional
fees attendant to any of the foregoing items payable by the Partnership during
such period. Operating Expenses excludes, to the extent otherwise included,
depreciation and other non-cash expenditures for such period.

                "Operative Agreements" means the LTFT Agreements, the Shipper
Guarantees and the Partnership Guarantee.

                "Opinion of Counsel" means a written opinion of counsel who may
be in-house counsel for the Company or the Partnership, and who and which shall
be reasonably acceptable to the Trustee.

                "Original Issue Discount Security" means any Security which
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant to
Section 4.2.

                "Outstanding," when used with respect to Securities, means, as
of the date of determination, all Securities therefore authenticated and
delivered under this Indenture, except:

                (1)     Securities theretofore canceled by the Trustee or
        delivered to the Trustee for cancellation;

                (2)     Securities for whose payment or redemption money in the
        necessary amount has been therefore deposited with the Trustee or any
        Paying Agent (other than the Company) in trust or set aside and
        segregated in trust by the Company (if the Company shall act as its own
        Paying Agent) for the Holders of such Securities; provided that, if such
        Securities are to be redeemed, notice of such redemption has


                                       14
<PAGE>


        been duly given pursuant to this Indenture or provision therefor
        satisfactory to the Trustee has been made;

                (3)     Securities as to which Defeasance has been effected
        pursuant to Section 11.2; and

                (4)     Securities which have been paid pursuant to Section 2.8
        or in exchange for or in lieu of which other Securities have been
        authenticated and delivered pursuant to this Indenture, other than any
        such Securities in respect of which there shall have been presented to
        the Trustee proof satisfactory to it that such Securities are held by a
        bona fide purchaser in whose hands such Securities are valid obligations
        of the Company;

provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given, made or taken any
request, demand, authorization, direction, notice, consent, waiver or other
action hereunder as of any date, (A) the principal amount of an Original Issue
Discount Security which shall be deemed to be Outstanding shall be the amount of
the principal thereof which would be due and payable as of such date upon
acceleration of the Maturity thereof to such date pursuant to Section 4.2, (B)
if, as of such date, the principal amount payable at the Stated Maturity of a
Security is not determinable, the principal amount of such Security which shall
be deemed to be Outstanding shall be the amount as specified or determined as
contemplated by Section 2.3, (C) the principal amount of a Security denominated
in one or more foreign currencies or currency units which shall be deemed to be
Outstanding shall be the U.S. dollar equivalent, determined as of such date in
the manner provided as contemplated by Section 2.3, of the principal amount of
such Security (or, in the case of a Security described in clause (A) or (B)
above, of the amount determined as provided in such clause), and (D) Securities
owned by the Obligors or any other obligor upon the Securities or any Affiliate
of either Obligor or of such other obligor shall be disregarded and deemed not
to be Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent, waiver or other action, only Securities which the Trustee knows
to be so owned shall be so disregarded. Securities so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act with respect to
such Securities and that the pledgee is not either of the Obligors or any other
obligor upon the Securities or any Affiliate of either Obligor or of such other
obligor.

                "Partner Agreements" means the Partnership Agreement and the
Purchase Agreement.

                "Partners" means WWPC and KR Acquisition and such other Person
or Persons as may become general partners of the Partnership from time to time.


                                       15
<PAGE>

                "Partnership" means the Person named as the "Partnership" in the
first paragraph of this instrument until a successor Person shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Partnership' means such successor Person.

                "Partnership Agreement" means the General Partnership Agreement,
dated May 29, 1985 as amended, among Kern River Corporation, WWPC and KR
Acquisition.

                "Partnership Guarantee" means the Guarantee of the Partnership
hereunder.

                "Partnership Loan Agreement" means the loan agreement, dated as
of the Closing Date, between the Partnership and the Company, pursuant to which
the Company will lend the proceeds of the sale of the Securities to the
Partnership.

                "Partnership Loan" means the loan made by the Company to the
Partnership from the proceeds of the sale of the Securities.

                "Partnership Security Agreement" means the Assignment of
Contracts, Pledge and Security Agreement dated as of the Closing Date between
the Partnership and the Collateral Agent.

                "Paying Agent" means any Person authorized by the Company to pay
the principal of or any premium or interest on any Securities on behalf of the
Company pursuant to Section 5.12.

                "Peril" means, collectively, fire, lightning, flood, windstorm,
hail, earthquake, explosion, vandalism and malicious mischief, damage from
aircraft, vehicles and smoke.

                "Permitted Investments" means:

        (c)     direct obligations of the United States of America, or of any
agency or instrumentality thereof or obligations guaranteed or insured as to
principal and interest by the United States of America or by any agency or
instrumentality thereof in either case maturing not more than 365 days from the
date of acquisition thereof, or

        (d)     commercial paper or bankers acceptances having (on the date of
acquisition thereof) a rating from S&P of at least "A-1" or from Moody's of at
least "P-1" (or an equivalent rating from another NRSRO if neither of such
corporations is then in the business of rating commercial paper) maturing not
more than 180 days from the date of acquisition thereof, or

        (e)     certificates of deposit and other time deposits issued by any
bank or trust company having capital surplus and undivided profits of at least
$500,000,000 whose long-term unsecured senior indebtedness is rated "A-" or
better by S&P or "A-3" or better by


                                       16
<PAGE>


Moody's (or an equivalent rating from another NRSRO if neither of such
corporations is then in the business of rating such obligations); or

        (f)     repurchase agreements with respect to (and secured by a pledge
of) securities described in clause (a) above and entered into with any
commercial bank described in clause (c) above or any securities broker-dealer of
recognized national standing.

                "Person" means any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated organization or
government (or any agency, instrumentality or political subdivision thereof).

                "Pipeline" or "Project" means the 926 mile United States
interstate pipeline system that transports natural gas produced in the Rocky
Mountain areas to major gas consuming markets in Utah, Nevada and California
with an approximate capacity of 700 Mmcf per day, plus the California Action
Project and any expansions financed in whole or in part with Additional Senior
Indebtedness.

                "Place of Payment," when used with respect to the Securities of
any series, means New York, New York, and the place or places where the
principal of and any premium and interest on the Securities of that series are
payable as specified as contemplated by Section 2.3.

                "Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 2.8 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.

                "Principal Amount" means the principal sum of Dollars.

                "Proceeds" means, in the case of any Casualty Event, the
aggregate amount of proceeds of insurance, condemnation awards and other
compensation received by the Partnership and the Company in respect of such
Casualty Event, in each case net of reasonable expenses incurred by the
Partnership and the Company in connection therewith and any income and transfer
taxes payable by the Partnership or the Company in respect of such Casualty
Event.

                "Project Agreements" means the Operative Agreements, the
Partnership Agreement and the CO&M Agreement.

                "Project Revenues" means revenues received by the Partnership
pursuant to the Operative Agreements.


                                       17
<PAGE>


                "Projected Debt Service Coverage Ratio" means, at any time of
determination thereof, a projection of the Debt Service Coverage Ratio for a
period which includes, or consists entirely of, future periods, prepared by the
Partnership in good faith based upon assumptions reasonably believed by the
Partnership to be consistent in all material respects with the Transaction
Agreements and the historical operating results of the Project as adjusted by
reasonable assumptions as to future operating results including any changes in
efficiency or capacity.

                "Property" means any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.

                "Purchase Agreement" means the Purchase Agreement, to be entered
into on or about the Closing Date, between the initial purchasers of the
Securities, the Company, the Partnership, and the Partners, providing for the
sale of the Securities to the initial purchasers.

                "QIB" has the meaning ascribed thereto in Rule 144A under the
Securities Act.

                "Qualified Transaction" means any transaction made in accordance
with the following:

                (a) with the prior written consent of the Required Senior
Parties; or

                (b) with respect to which the Partnership or the Company shall
have obtained, and shall have delivered to the Collateral Agent a copy thereof
certified by the Partnership or the Company, as applicable, the prior written
affirmation from the Required Ratings Agencies that there is No Ratings
Downgrade; provided, that, to the extent such Qualified Transaction involves a
merger, consolidation or amalgamation of an Obligor, the successor in interest
to such Obligor agrees to assume by an instrument in form satisfactory to the
Required Senior Parties all obligations of such Obligor under the Indenture,
pursuant to the Securities and pursuant to all other agreements entered into by
such Obligor in connection with the offering of the Securities.

                "Qualified Transferee" means any person that shall acquire after
the Closing Date, directly or indirectly, ownership of membership interests in
the Partnership so long as (i) such person has, or is controlled by a person
that has, (a) significant experience in the business of owning and operating
pipeline systems similar to the Pipeline and (b) a public debt rating equal to
at least "BBB-" by S&P and "Baa3" by Moody's, (ii) after giving effect to such
transfer, no Default or Event of Default shall have occurred and be continuing,
and (iii) such transfer could not reasonably be expected to result in a Material
Adverse Effect.

                "RAP" means regulatory accounting principles as in effect in the
United States from time to time.


                                       18
<PAGE>


                "Rate Refund" means any refunds owed to Shippers or any other
Person or tariffs charged to such Shippers by the Partnership during a pending
FERC rate proceeding as determined by FERC pursuant to a Rate Review.

                "Rate Review" means a FERC rate proceeding reviewing the tariff
set by the Partnership for firm transportation services.

                "Redeemable Stock" of any Person means any Capital Stock of such
Person that by its terms or otherwise is required to be redeemed on or prior to
the Final Maturity Date.

                "Redemption Date," when used with respect to any Security to be
redeemed, means the date set for such redemption by or pursuant to this
Indenture.

                "Redemption Price," when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.

                "Regular Record Date" for the interest payable on any Interest
Payment Date on the Securities of any series means the date specified for that
purpose as contemplated by Section 2.3 (whether or not a Business Day).

                "Regulation D" means Regulation D under the Securities Act and
any successor thereto, in each case as amended from time to time.

                "Regulation S" means Regulation S under the Securities Act and
any successor thereto, in each case as amended from time to time.

                "Regulation S Global Security" means the Temporary Regulation S
Global Security or the Regulation S Unrestricted Global Security, as applicable.

                "Regulation S Unrestricted Global Security" has the meaning
specified in Section 2.1.

                "Relevant Party" means the Partnership, the Company and the
Partners.

                "Repayment Period" means the one month period beginning with
each Debt Service Payment Date and ending on the date immediately prior to the
next Debt Service Payment Date.

                "Required Amount Condition" means that any of (i) the undrawn
available amount under the Debt Service Letter of Credit as in effect at the
date of a proposed Distribution, (ii) the Partnership's unrestricted cash or
(iii) the sum of (i) and (ii) equals the


                                       19
<PAGE>


aggregate of the Debt Service Payments due during the six Repayment Periods
following the date of such proposed Distribution.

                "Required Rating Agencies" means S&P and Moody's.

                "Required Senior Parties" has the meaning assigned to such term
in the Collateral Agency Agreement.

                "Responsible Officer" when used with respect to the Trustee,
means any officer within the Institutional Trust Services department (or any
successor department or group) of the Trustee, including, without limitation,
any senior trust officer, any trust officer, any vice president, any assistant
vice president, any assistant secretary, or any assistant treasurer or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.

                "Restricted Global Security" has the meaning specified in
Section 2.1.

                "Restricted Period" has the meaning specified in Section 2.1.

                "Restricted Securities" has the meaning specified in Section
2.2.

                "Rule 144A" means Rule 144A under the Securities Act and any
rule or regulation successor thereto, in each case as amended from time to time.

                "Rule 144A Information" has the meaning specified in Section
8.17.

                "S&P" means Standard & Poor's Ratings Group, a division of
McGraw-Hill, and its successors.

                "Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and delivered
under this Indenture.

                "Securities Act" means the Securities Act of 1933 and any
statute successor thereto, in each case as amended from time to time.

                "Security Agreements" means, collectively, the Collateral Agency
Agreement, the Company Security Agreement and the Partnership Security
Agreement.

                "Securities Account" has the meaning assigned to such term in
the Collateral Agency Agreement.


                                       20
<PAGE>


                "Securities Percentage" means, at any date of determination, the
ratio (expressed as a percentage) of (a) the aggregate Principal Amount of
Securities Outstanding as at such date to (b) the sum of the then outstanding
Senior Debt.

                "Security Register" and "Security Registrar" have the respective
meanings specified in Section 2.7.

                "Senior Debt" has the meaning assigned to such term in the
Collateral Agency Agreement.

                "Senior Debt Agreements" has the meaning assigned to such term
in the Collateral Agency Agreement.

                "Senior Officer" means (a) with respect to the Partnership, the
President, any Vice President, Treasurer or Assistant Treasurer of the
Partnership or any Partner and any other individual who is directly responsible
for the general oversight and management of the business of the Partnership
designated in writing to the Trustee by a Senior Officer of the Partnership and
(b) with respect to the Company, the Chairman of the Board, President, any Vice
President, the Treasurer or Assistant Treasurer of the Company and any other
individual who is directly responsible for the general oversight and management
of the business of the Company designated in writing to the Trustee by a Senior
Officer of the Company.

                "Senior Parties" has the meaning assigned to such term in the
Collateral Agency Agreement.

                "Shipper Guarantees" means those agreements providing financial
and performance guarantees to certain of the long-term firm transportation
Shippers.

                "Shippers" means those Persons party to the Transportation
Service Agreements with the Partnership.

                "Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Company pursuant to Section 2.9.

                "Stated Maturity," when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.

                "Subsidiary" means, with respect to any Person, any corporation,
partnership or other entity of which at least a majority of the securities or
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions of such corporation, partnership or other entity


                                       21
<PAGE>


(irrespective of whether or not at the time securities or other ownership
interests of any other class or classes of such corporation, partnership or
other entity shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
such Person or one or more Subsidiaries of such Person or by such Person and one
or more Subsidiaries of such Person.

                "Surrendered Securities" has the meaning specified in Exhibit D
attached hereto.

                "Temporary Regulation S Global Security" has the meaning
specified in Section 2.1.

                "Total Capitalization"shall mean, with respect to any Person,
the sum, without duplication, of (i) total common stock equity or analogous
ownership interests of such Person, (ii) preferred stock and preferred
securities of such Person, (iii) additional paid-in capital or analogous
interest of such Person, (iv) retained earnings of such Person and (v) the
aggregate principal amount of Indebtedness of such Person then outstanding.

                "Transaction Agreements" means, collectively, the Senior Debt
Agreements, the Project Agreements and the Security Agreements.

                "Transfer" means any (a) direct or indirect sale, pledge, lease,
assignment, transfer, merger, dissolution or other disposition effecting a
transfer of any of a Partner's partnership interest in the Partnership or (b) a
dissolution, wind-up, liquidation or other termination of the existence of the
Partnership.

                "Transfer Certificate" means a certificate in the form of
Exhibits B, C and D, as applicable.

                "Transferor" has the meaning specified in Exhibits B-E.

                "Transportation Service Agreements" means those shipper
contracts pursuant to which the Partnership provides for the transportation of
natural gas for the Shippers.

                "Trust Indenture Act" means the Trust Indenture Act of 1939 as
in force at the date as of which this instrument was executed.

                "Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and the "Trustee" means
or includes each Person who is then a Trustee hereunder, and if at any time
there is more than one such Person, "Trustee" as used with respect to the
Securities of any series means the Trustee with respect to Securities of that
series.


                                       22
<PAGE>


                "U.S. Government Obligation" has the meaning specified in
Section 11.4.

                "Vice President," when used with respect to the Company means
any vice president, whether or not designated by a number or a word or words
added before or after the title "vice president."

                "Wholly Owned Subsidiary" means, with respect to any Person, any
corporation, partnership or other entity of which all of the equity securities
or other ownership interests (other than, in the case of a corporation,
directors' qualifying shares) are directly or indirectly owned or controlled by
such Person or one or more Wholly Owned Subsidiaries of such Person or by such
Person and one or more Wholly Owned Subsidiaries of such Person.

                "Williams" means The Williams Companies, Inc.

                "WWPC" means Williams Western Pipeline Company, LLC, a
subsidiary of Williams and owner of a general partnership interest in the
Partnership with KR Acquisition.

                SECTION 1.2. Compliance Certificates and Opinions. Upon any
application or request by the Company or the Partnership to the Trustee to take
any action under any provision of this Indenture, the Company or the
Partnership, as the case may be, shall furnish to the Trustee such certificates
and opinions as may be reasonably requested by the Trustee. Each such
certificate or opinion shall be given in the form of an Officer's Certificate,
if to be given by an officer of the Company or a Senior Officer of the
Partnership, as the case may be, or an Opinion of Counsel, if to be given by
counsel and shall satisfy the requirements set forth in this Indenture.

                Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:

        (a)     a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;

        (b)     a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based,

        (c)     a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
complied with; and

        (d)     a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.


                                       23
<PAGE>


        SECTION 1.3. Form of Documents Delivered to Trustee. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to
other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.

                Any certificate or opinion of an officer of the Company or of
the Partnership may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such officer
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate or Opinion
of Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Company or a Senior Officer of the Partnership, as the case may be, stating that
the information with respect to such factual matters is in the possession of the
Company or the Partnership, as the case may be, unless such counsel knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.

                Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.

                SECTION 1.4. Acts of Holders; Record Dates. Any request, demand,
authorization, direction, notice, consent, waiver or other action provided or
permitted by this Indenture to be given, made or taken by Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by agent duly appointed in writing,
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is hereby expressly required, to the Company and the Partnership. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 5.1) conclusive in favor of the Trustee, the
Company and the Partnership, if made in the manner provided in this Section.

                The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the


                                       24
<PAGE>


Person executing the same, may also be proved in any other manner which the
Trustee deems sufficient.

                The ownership of Securities shall be proved by the Security
Register.

                Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee, the
Company or the Partnership in reliance thereon, whether or not notation of such
action is made upon such Security.

                The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
give, make or take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this Indenture to be
given, made or taken by Holders of Securities of such series, provided that the
Company may not set a record date for, and the provisions of this paragraph
shall not apply with respect to, the giving or making of any notice,
declaration, request or direction referred to in the next paragraph. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of the relevant series on such record date, and no other Holders,
shall be entitled to take or revoke the relevant action, whether or not such
Holders remain Holders after such record date; provided that no such action
shall be effective hereunder unless taken on or prior to the applicable
Expiration Date (as defined below) by Holders of the requisite principal amount
of Outstanding Securities of such series on such record date. Nothing in this
paragraph shall be construed to prevent the Company from setting a new record
date for any action for which a record date has previously been set pursuant to
this paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities of the relevant
series on the date such action is taken. Promptly after any record date is set
pursuant to this paragraph, the Company, at its own expense, shall cause notice
of such record date, the proposed action by Holders and the applicable
Expiration Date to be given to the Trustee in writing and to each Holder of
Securities of the relevant series in the manner set forth in Section 1.6.

                The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to join
in the giving or making of (i) any declaration of acceleration referred to in
Section 4.2, (ii) any request to institute proceedings referred to in Section
4.7(b) or (iii) any direction referred to in Section 4.12, in each case with
respect to Securities of such series. If any record date is set pursuant to this
paragraph, the Holders of Outstanding Securities of such series on such record
date, and no other Holders, shall be entitled to join in such declaration,
request or direction or any revocation thereof, whether or not such Holders
remain Holders after such record date;


                                       25
<PAGE>


provided that no such action shall be effective hereunder unless taken on or
prior to the applicable Expiration Date by Holders of the requisite principal
amount of Outstanding Securities of such series on such record date. Nothing in
this paragraph shall be construed to prevent the Trustee from setting a new
record date for any action for which a record date has previously been set
pursuant to this paragraph (whereupon the record date previously set shall
automatically and with no action by any Person be canceled and of no effect),
and nothing in this paragraph shall be construed to render ineffective any
action taken by Holders of the requisite principal amount of Outstanding
Securities of the relevant series on the date such action is taken. Promptly
after any record date is set pursuant to this paragraph, the Trustee, at the
Company's expense, shall cause notice of such record date, the proposed action
by Holders and the applicable Expiration Date to be given to the Company in
writing and to each Holder of Securities of the relevant series in the manner
set forth in Section 1.6.

                With respect to any record date set pursuant to this Section
1.4, the party hereto which sets such record date may designate any day as the
"Expiration Date" and from time to time may change the Expiration Date to any
earlier or later day; provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other parties hereto
in writing, and to each Holder of Securities of the relevant series in the
manner set forth in Section 1.6, on or prior to the existing Expiration Date. If
an Expiration Date is not designated with respect to any record date set
pursuant to this Section, the party hereto which set such record date shall be
deemed to have initially designated the 180th day after such record date as the
Expiration Date with respect thereto, subject to its right to change the
Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no
Expiration Date shall be later than the 180th day after the applicable record
date.

                Without limiting the foregoing, a Holder entitled hereunder to
take any action hereunder with regard to any particular Security may do so with
regard to all or any part of the Principal Amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount.

                SECTION 1.5. Notices, Etc., to Trustee, Company and Partnership.
Any request demand, authorization, direction, notice, consent, waiver or Act of
Holders or other document provided or permitted by this Indenture to be made
upon, given or furnished to, or filed with,

        (a)     the Trustee by any Holder, by the Company or by the Partnership
shall be sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office, 450 West
33rd Street, 15th Floor, New York, NY, 10001, Attention: Institutional Trust
Services, or

        (b)     the Company by the Trustee, by any Holder or by the Partnership
shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
the Company at One Williams Center,


                                       26
<PAGE>


Tulsa, Oklahoma, 74102, Attention: Treasurer or at any other address previously
furnished in writing to the Trustee and the Partnership, or

        (c)     the Partnership by the Trustee, by any Holder or by the Company
shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
the Partnership at 295 Chipeta Way, Salt Lake City, Utah, 84108, Attention:
General Counsel or at any other address previously furnished in writing to the
Trustee and the Company.

                SECTION 1.6. Notice to Holders; Waiver. Where this Indenture
provides for notice to Holders of any event, such notice shall be sufficiently
given (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at its
address as it appears in the Security Register, not later than the latest date
(if any), and not earlier than the earliest date (if any), prescribed for the
giving of such notice. In any case where notice to Holders is given by mail
neither the failure to mail such notice, nor any defect in any notice so mailed,
to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.

                In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.

                SECTION 1.7. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.

                SECTION 1.8. Successors and Assigns. All covenants and
agreements in this Indenture by the Obligors shall bind their successors and
assigns, whether so expressed or not.

                SECTION 1.9. Separability Clause. In case any provision in this
Indenture or in the Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

                SECTION 1.10. Benefits of Indenture. Nothing in this Indenture
or in the Securities, express or implied, shall give to any Person, other than
the parties hereto and their successors hereunder and the Holders, any benefit
or any legal or equitable right, remedy or claim under this Indenture.

                SECTION 1.11. Governing Law. This Indenture and the Securities
shall be governed by and construed in accordance with the laws of the State of
New York without giving effect to the principles thereof relating to conflicts
of law except Section 5-1401 of the New York General Obligation Law.


                                       27
<PAGE>


                SECTION 1.12. Legal Holidays. In any case where any Interest
Payment Date, Redemption Date or Stated Maturity of any Security shall not be a
Business Day at any Place of Payment, then (notwithstanding any other provision
of this Indenture or of the Securities (other than a provision of any Security
which specifically states that such provision shall apply in lieu of this
Section 1.12)) payment of interest or principal (and premium, if any) need not
be made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and effect
as if made on the Interest Payment Date or Redemption Date or at the Stated
Maturity, and no interest shall accrue on such payment for the period from and
after such date.

                SECTION 1.13. Counterparts. This instrument may be executed in
any number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.

                SECTION 1.14. Agency. In executing the Securities and this
Indenture, the Company will be acting both as principal and as agent for the
Partnership to the extent of the Partnership's obligations under the Indenture.
As used in this Indenture, references to the "Company" shall be interpreted to
include the Company in its capacity as principal and the Company in its capacity
as agent pursuant to the Agency Agreement.


                                    ARTICLE 2

                                 THE SECURITIES

                SECTION 2.1. Forms Generally. The Securities of each series
shall be in substantially the form set forth in Exhibit A or in such other form
as shall, subject to Section 2.5, be established by or pursuant to an Officer's
Certificate or in one or more indentures supplemental hereto, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture, and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon as
may be required to comply with the rules of any securities exchange or
Depository therefor or as may, consistently herewith, be determined by the
officers executing such Securities as evidenced by their execution thereof.

                The definitive Securities shall be printed, lithographed or
engraved on steel engraved borders or may be produced in any other manner, all
as determined by the officers executing such Securities, as evidenced by their
execution of such Securities.

                Except as otherwise provided pursuant to Section 2.3, Restricted
Securities shall bear the applicable legends as set forth in Exhibit A and as
provided in Section 2.2 and Installment Securities shall bear the following
legend:

"THIS SECURITY IS AN INSTALLMENT SECURITY (AS DEFINED IN THE INDENTURE
HEREINAFTER REFERRED TO). ACCORDINGLY, THE FACE AMOUNT HEREOF MAY EXCEED THE
UNPAID PRINCIPAL AMOUNT HEREOF AND ANY TRANSFEREE OF THIS SECURITY MAY NOT RELY
ON THE FACE


                                       28
<PAGE>


AMOUNT HEREOF AS EVIDENCE OF THE AMOUNT DUE AND OWING ON THIS SECURITY BUT IS
ADVISED TO DETERMINE SUCH UNPAID PRINCIPAL AMOUNT FROM THE RECORDS OF THE
COMPANY OR ITS PAYING AGENT."

and shall set forth either on the face or the reverse thereof or, if a Global
Security, on a schedule attached thereto, such Security's schedule of principal
installments.

                Except as otherwise provided pursuant to Section 2.3, Securities
of any series offered and sold in their initial distribution in reliance on Rule
144A shall be issued in the form of one or more Global Securities of such series
(each a "Restricted Global Security") in definitive, fully registered form
without interest coupons, substantially in the form set forth in Exhibit A, or
in such other form as shall, subject to Section 2.5, be established by or
pursuant to an Officer's Certificate or in one or more indentures supplemental
hereto, with such applicable legends as are provided for in Exhibit A. Such
Global Securities shall be registered in the name of the Depository for such
Global Securities or its nominee and deposited with the Trustee, at its
Corporate Trust Office, as custodian for such Depository, duly executed on
behalf of the Company and authenticated by the Trustee as herein provided. The
aggregate principal amount of any Restricted Global Security may from time to
time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for the Depository for such Global Security, as provided
in Section 2.7, which adjustments shall be conclusive as to the aggregate
principal amount of any such Global Securities. Except as otherwise provided
pursuant to Section 2.3 or agreed by the Company, no Restricted Global Security
shall be issued except as provided in this paragraph to evidence Securities
offered and sold in their initial distribution in reliance on Rule 144A.

                Except as otherwise provided pursuant to Section 2.3, Securities
of any series offered and sold in their initial distribution in reliance on
Regulation S under the Securities Act shall be issued initially in the form of
one or more temporary global Securities (a "Temporary Regulation S Global
Security") of such series in definitive, fully registered form without interest
coupons, substantially in the form set forth in Exhibit A, or in such other form
as shall, subject to Section 2.5, be established by or pursuant to an Officer's
Certificate or in one or more indentures supplemental hereto, with such
applicable legends as are provided for in Exhibit A. Such Temporary Regulation S
Global Securities shall be issued to the Depository and registered in the name
of the Depository for such Global Securities or its nominee and deposited with
the Trustee, at its Corporate Trust Office, as custodian for such Depository,
duly executed by the Company and authenticated by the Trustee as herein
provided, for credit to the respective accounts of beneficial owners of such
Securities (or to such other accounts as they may direct) at Euroclear Bank,
S.A./N.V., as operator of Euroclear or Clearstream. Beneficial interests in any
Temporary Regulation S Global Security may be held only through Euroclear or
Clearstream. Within a reasonable period of time after the expiration of the
40-day restricted period (within the meaning of Rule 903(c)(3) of Regulation S
under the Securities Act) (the "Restricted Period"), any Temporary Regulation S
Global Security will be exchanged for a permanent Regulation S Global


                                       29
<PAGE>


Security (the "Regulation S Unrestricted Global Security," together with the
Temporary Regulation S Global Security, the "Regulation S Global Security")
substantially in the form set forth in Exhibit A with such applicable legends as
are provided for in Exhibit A, but without the Restricted Securities Legend set
forth in Exhibit A upon delivery to the Depository of certification of
non-United States ownership and compliance with Regulation S under the
Securities Act. The Regulation S Unrestricted Global Security will be deposited
with the Trustee at its Corporate Trust Office, as custodian for the Depository
and registered in the name of the nominee of the Depository. Clearstream and
Euroclear will hold beneficial interests in the Regulation S Unrestricted Global
Security on behalf of their participants through their respective depositories,
which in turn will hold such beneficial interests in the Regulation S
Unrestricted Global Security in participants' securities accounts in the
depositories' names on the books of the Depository. The aggregate principal
amount of any Temporary Regulation S Global Security and any Regulation S
Unrestricted Global Security may from time to time be increased or decreased by
adjustments made on the records of the Trustee, as custodian for the Depository
for such Global Security, as provided in Section 2.7, which adjustments shall be
conclusive as to the aggregate principal amount of any such Global Security. As
used herein, the term "Restricted Period," with respect to Global Securities of
any series (or of any identifiable tranche of any series) offered and sold in
reliance on Regulation S, means the period of 40 consecutive days beginning on
and including the later of (i) the day on which the Securities of such series
(or tranche) are first offered to persons other than distributors (as defined in
Regulation S) in reliance on Regulation S (according to a notice to the Company
and the Trustee by the underwriter(s), if any, of the offering of such
Securities) and (ii) the date of the closing of the offering. Except as
otherwise provided pursuant to Section 2.3 or agreed by the Company, no
Temporary Regulation S Global Security or Regulation S Unrestricted Global
Security shall be issued except as provided in this paragraph to evidence
Securities offered and sold in their initial distribution in reliance on
Regulation S under the Securities Act.

                Except as otherwise provided pursuant to Section 2.3, Securities
of any series offered and sold in their initial distribution to a limited number
of institutions that are accredited investors (which are not qualified
institutional buyers, as defined under Rule 144A) within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act (and institutions in which
all the equity owners are such accredited investors) (together referred to as
"institutional accredited investors") in transactions exempt from registration
under the Securities Act shall be issued in definitive, fully registered form
without interest coupons, substantially in the form set forth in Exhibit A, with
such applicable legends as are provided for in Exhibit A. Such Securities shall
be delivered to such institutional accredited investors only upon the execution
and delivery to the Company and the underwriter(s), if any, of the offering of
such Securities of a purchaser's letter, substantially in the form set forth in
Exhibit E. Such Securities may not be exchanged for interests in a Global
Security except as provided in Section 2.7(c)(v)(E).


                                       30
<PAGE>


                SECTION 2.2. Legends on Restricted Securities. Except as
otherwise provided pursuant to Section 2.3, all Securities of any series (or any
identifiable tranche of any series) issued pursuant to this Indenture (including
Securities issued upon registration of transfer, in exchange for or in lieu of
such Securities) shall be "Restricted Securities," and shall bear the applicable
legend(s) setting forth restrictions on transfer provided in Exhibit A;
provided, however, that the term "Restricted Securities" shall not include (i)
Temporary Regulation S Global Securities or Regulation S Unrestricted Global
Securities, (ii) Securities as to which such restrictive legend(s) shall have
been removed pursuant to Section 2.7 and (iii) Securities issued upon
registration of transfer of, in exchange for, or in lieu of, Securities that are
not Restricted Securities.

                SECTION 2.3. Amount Unlimited; Issuable in Series. Subject to
the provisions of Section 8.9, the aggregate principal amount of Securities
which may be authenticated and delivered under this Indenture is unlimited.

                The Securities may be issued in one or more series. There shall
be established, subject to Section 2.5, by or pursuant to an Officer's
Certificate, or established in one or more indentures supplemental hereto, prior
to the issuance of Securities of any series,

        (a)     the title of the Securities of the series (which shall
distinguish the Securities of the series from Securities of any other series);

        (b)     any limit upon the aggregate principal amount of the Securities
of the series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities of the series pursuant
to Section 2.6, 2.7, 2.8 or 9.7 and except for any Securities which pursuant to
Section 2.5, are deemed never to have been authenticated and delivered
hereunder);

        (c)     the Person to whom any interest on a Security of the series
shall be payable, if other than the Person in whose name that Security (or one
or more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest;

        (d)     the date or dates on which the principal of any Securities of
the series is payable and whether such Securities shall constitute Installment
Securities;

        (e)     the rate or rates at which any Securities of the series shall
bear interest, if any, the date or dates from which any such interest shall
accrue, the Interest Payment Dates on which any such interest shall be payable
and the Regular Record Date for any such interest payable on any interest
payment;

        (f)     the place or places where the principal of and any premium and
interest on any Securities of the series shall be payable;


                                       31
<PAGE>


        (g)     the period or periods within which, the price or prices at
which, and the terms and conditions upon which, any Securities of the series may
be redeemed, in whole or in part, at the option of the Company and the manner in
which any election by the Company to redeem the Securities shall be evidenced;

        (h)     the obligation, if any, of the Company to redeem or purchase any
Securities of the series pursuant to any sinking fund or analogous provisions or
at the option of the Holder thereof and the period or periods within which, the
price or prices at which, and the terms and conditions upon which, any
Securities of the series shall be redeemed or purchased, in whole or in part,
pursuant to such obligation;

        (i)     whether the Securities of the series shall initially be
represented by Global Securities or definitive Securities and, if other than
denominations of $100,000 and any integral multiple of $1,000 in excess thereof,
the denominations in which any Securities of the series shall be issuable;

        (j)     if the amount of principal of or any premium or interest on any
Securities of the series may be determined with reference to an index or
pursuant to a formula or other measure, the manner in which such amounts shall
be determined;

        (k)     if other than the currency of the United States of America, the
currency, currencies or currency units in which the principal of or any premium
or interest on any Securities of the series shall be payable and the manner of
determining the equivalent thereof in the currency of the United States of
America for any purpose, including for purposes of the definition of
"Outstanding" in Section 1.1;

        (l)     if the principal of or any premium or interest on any Securities
of the series is to be payable, at the election of the Company or the Holder
thereof, in one or more currencies or currency units other than that or those in
which such Securities are stated to be payable, the currency, currencies or
currency units in which the principal of or any premium or interest on such
Securities as to which such election is made shall be payable, the periods
within which and the terms and conditions upon which such election is to be made
and the amount so payable (or the manner in which such amount shall be
determined);

        (m)     if other than the entire Principal Amount thereof, the portion
of the Principal Amount of any Securities of the series which shall be payable
upon declaration of acceleration of the Maturity thereof pursuant to Section
4.2;

        (n)     if the Principal Amount payable at the Stated Maturity of any
Securities of the series will not be determinable as of any one or more dates
prior to the Stated Maturity, the amount which shall be deemed to be the
Principal Amount of such Securities as of any such date for any purpose
thereunder or hereunder, including the Principal Amount thereof which shall be
due and payable upon any Maturity other than the Stated Maturity or which shall
be


                                       32
<PAGE>


deemed to be Outstanding as of any date prior to the Stated Maturity (or, in any
such case, the manner in which such amount deemed to be the Principal Amount
shall be determined);

        (o)     if applicable, that the Securities of the series, in whole or
any specified part, shall be defeasible pursuant to Section 11.2 or 11.3 or both
such Sections and the manner in which any election by the Company to defease
such Securities shall be evidenced;

        (p)     if applicable, that any Securities of the series shall be
issuable in whole or in part in the form of one or more Global Securities and,
in such case, the respective Depositaries for such Global Securities, the form
of any legend or legends which shall be borne by any such Global Security in
addition to or in lieu of that set forth in Exhibit A or pursuant to Section 2.2
and any circumstances in addition to or in lieu of those set forth in Section
2.7 in which any such Global Security may be exchanged in whole or in part for
Securities registered and any transfer of such Global Security in whole or in
part may be registered, in the name or names of Persons other than the
Depository for such Global Security or a nominee thereof,

        (q)     the form of any legend(s) which shall be borne by any Restricted
Securities in addition to or in lieu of that set forth in Exhibit A, any
circumstances in addition to or in lieu of those set forth in Section 2.7 in
which such legend(s) may be removed or modified, and any circumstances in
addition to or in lieu of those set forth in Section 2.7 in which Restricted
Securities may be registered for transfer or may be transferred to a Person who
takes delivery thereof in the form of a beneficial interest in a Global Security
and any related certificates in addition to or in lieu of those set forth in
Section 2.13;

        (r)     any addition to or change in the Events of Default which applies
to any Securities of the series and any change in the right of the Trustee or
the requisite Holders of such Securities to declare the principal amount thereof
due and payable pursuant to Section 4.2;

        (s)     any addition to a change in the covenants set forth in Article 8
which applies to Securities of the series: and

        (t)     any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, except as permitted by
Section 7.1(e)).

                All Securities of any one series shall be substantially
identical except as to denomination and except as may otherwise be provided by
or pursuant to the Officer's Certificate referred to above or in any such
indenture supplemental hereto.

                SECTION 2.4. Denominations. The Securities of each series shall
be issuable only in registered form without coupons and only in such
denominations as shall be specified as contemplated by Section 2.3. In the
absence of any such specified denomination with


                                       33
<PAGE>


respect to the Securities of any series pursuant to Section 2.3, the Securities
of such series shall be issuable in denominations of $100,000 and any integral
multiple of $1,000 in excess thereof. The denomination of an Installment
Security shall be deemed to be the Dollar amount set forth on the face thereof
and not the unpaid Principal Amount thereof. The Dollar amount set forth on the
face of an Installment Security shall be the Principal Amount of such Security
(or any Predecessor Security) upon the original issuance thereof.

                SECTION 2.5. Execution, Authentication, Delivery and Dating. The
Securities shall be executed on behalf of the Company by a Senior Officer of the
Company and on behalf of the Partnership by a Senior Officer of the Partnership.
The signature of any of these officers on the Securities may be manual or
facsimile.

                Securities bearing the manual or facsimile signature of
individuals who were at the time of execution the Senior Officers of the Company
or the Partnership shall bind the Company or the Partnership, as the case may
be, notwithstanding that such individuals or any of them have ceased to hold
such offices prior to the authentication and delivery of such Securities or did
not hold such offices at the date of such Securities.

                At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of any series
executed by the Company to the Trustee for authentication, together with a
Company Order for the authentication and delivery of such Securities, and the
Trustee in accordance with the Company Order shall authenticate and deliver such
Securities. If the form or terms of the Securities of the series have been
established by or pursuant to an Officer's Certificate as permitted by Sections
2.1 and 2.3, in authenticating such Securities, and accepting any additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and (subject to Section 5.1) shall be
fully protected in relying upon, an Opinion of Counsel stating,

        (a)     that such form has been established in conformity with the
provisions of this Indenture;

        (b)     that such terms have been established in conformity with the
provisions of this Indenture; and

        (c)     that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any conditions
specified in such Opinion of Counsel, will constitute valid and legally binding
obligations of the Company, enforceable against the Company in accordance with
their terms (subject to customary qualifications or exceptions).

                The Trustee shall also be entitled to receive an Officer's
Certificate of each of the Company and the Partnership stating that, immediately
after the authentication and delivery of such Securities, no Default or Event of
Default will have occurred.


                                       34
<PAGE>


                If such form or terms have been so established, the Trustee
shall not be required to authenticate such Securities if the issue of such
Securities pursuant to this Indenture will affect the Trustee's own rights,
duties or immunities under the Securities and this Indenture or otherwise in a
manner which is not reasonably acceptable to the Trustee.

                Notwithstanding the provisions of Section 2.3 and of the
preceding paragraph, if all Securities of a series are not to be originally
issued at one time, it shall not be necessary to deliver the Officer's
Certificate otherwise required pursuant to Section 2.3 or the Company Order and
Opinion of Counsel otherwise required pursuant to such preceding paragraph at or
prior to the authentication of each Security of such series if such documents
are delivered at or prior to the authentication upon original issuance of the
Security of such series to be issued.

                Each Security shall be dated the date of its authentication.

                No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the form provided for
herein executed by the Trustee by manual signature of an authorized officer, and
such certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder. Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company shall deliver such Security to the Trustee for cancellation as
provided in Section 2.1, for all purposes of this Indenture such Security shall
be deemed never to have been authenticated and delivered hereunder and shall
never be entitled to the benefits of this Indenture.

                SECTION 2.6. Temporary Securities. Pending the preparation of
definitive Securities of any series, the Company may execute, and upon Company
Order the Trustee shall authenticate and deliver, temporary Securities which are
printed, lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive Securities
in lieu of which they are issued and with such appropriate insertions,
omissions, substitutions and other variations as the officers of the Company
executing the same may determine, as evidenced by their execution of such
Securities.

                If temporary Securities of any series are issued, the Company
will cause definitive Securities of that series to be prepared without
unreasonable delay. After the preparation of definitive Securities of such
series, the temporary Securities of such series shall be exchangeable for
definitive Securities of such series upon surrender of the temporary Securities
of such series at the office or agency of the Company in a Place of Payment for
that series, without charge to the Holder. Upon surrender for cancellation of
any one or more temporary Securities of any series, the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor one or more
definitive Securities of the same series of any authorized denominations and of
like tenor and aggregate principal amount.


                                       35
<PAGE>


Until so exchanged, the temporary Securities of any series shall in all respects
be entitled to the same benefits under this Indenture as definitive Securities
of such series and tenor.

                SECTION 2.7. Registration, Registration of Transfer and
Exchange.

        (a)     General. The Company shall cause to be kept at the Corporate
Trust Office of the Trustee a register (the register maintained in such office
or in any other office or agency of the Company in a Place of Payment being
herein sometimes referred to as the "Security Register") in which, subject to
such reasonable regulations as it may prescribe, the Company shall provide for
the registration of Securities and of transfers of Securities. The Trustee is
hereby appointed "Security Registrar" for the purpose of registering Securities
and transfers of Securities as herein provided.

                Notwithstanding anything to the contrary set forth herein, the
Trustee shall not be required and shall have no obligation to monitor compliance
with any federal or state securities laws.

                Upon surrender for registration of transfer of any Security of a
series at the office or agency of the Company in a Place of Payment for that
series, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Securities of the same series, of any authorized denominations and of like
tenor and aggregate principal amount.

                At the option of the Holder, Securities of any series may be
exchanged for other Securities of the same series, of any authorized
denominations and of like tenor and aggregate principal amount, upon surrender
of the Securities to be exchanged at such office or agency. Whenever any
Securities are so surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver, the Securities which the Holder making
the exchange is entitled to receive.

                All Securities issued upon any registration of Transfer or
exchange of Securities shall be the valid obligations of the Company, evidencing
the same debt, and entitled to the same benefits under this Indenture as the
Securities surrendered upon such registration of transfer or exchange.

                Every Security presented or surrendered for registration of
transfer or for exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar duly executed by the Holder thereof or his attorney duly authorized in
writing.

                No service charge shall be made for any registration of Transfer
or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of


                                       36
<PAGE>


transfer or exchange of Securities, other than exchanges pursuant to Section
2.6, 7.5 or 9.7 not involving any transfer.

                If the Securities of any series (or of any series and specified
tenor) are to be redeemed in part, the Company shall not be required (A) to
issue, register the Transfer of, or exchange, any Securities of that series (or
of that series and specified tenor, as the case may be) during a period
beginning at the opening of business 15 days before the day of the mailing of a
notice of redemption of any such Securities selected for redemption under
Section 9.3 and ending at the close of business on the day of such mailing or
(B) to register the Transfer of or exchange any Security so selected for
redemption in whole or in part, except the unredeemed portion of any Security
being redeemed in part.

        (b)     Restricted Securities. Every Restricted Security shall be
subject to the restrictions on offers provided in the applicable legend(s)
required to be set forth on the face of each Restricted Security pursuant to
Exhibit A and Section 2.2 or as provided pursuant to Section 2.3, unless such
restrictions on transfer shall be waived by the written consent of the Company,
and the Holder of each Restricted Security, by such Holder's acceptance thereof,
agrees to be bound by such restrictions on transfer. Whenever any Restricted
Security is presented or surrendered for registration of transfer or for
exchange for a Security registered in a name other than that of the Holder, such
Restricted Security must be accompanied by an appropriately completed
certificate in substantially the form set forth in or contemplated by Section
2.13(d) (which may be attached to or set forth in the Restricted Security),
appropriately completed, dated the date of such surrender and signed by the
Holder of such Restricted Security, as to compliance with such restrictions on
transfer, unless the Company shall have notified the Trustee pursuant to this
Section 2.7 that there is an effective registration statement under the
Securities Act with respect to such Restricted Security. The Security Registrar
shall not be required to accept for such registration of transfer or exchange
any Restricted Security not so accompanied by a properly completed certificate.

                Except as otherwise provided in the preceding paragraph or
pursuant to Section 2.3, if Securities are issued upon the transfer, exchange or
replacement of Securities bearing a legend or legends setting forth restrictions
on transfer, or if a request is made to remove such legend(s) on a Security, the
Securities so issued shall bear such legend(s) or such legend(s) shall not be
removed, as the case may be, unless the transferor delivers to the Company such
satisfactory evidence (which may include an opinion of independent counsel
experienced in matters of United States securities law as may be reasonably
satisfactory to the Company), as may be reasonably required by the Company, that
neither such legend(s) nor the restrictions on transfer set forth therein are
required to ensure that transfers thereof comply with the provisions of Rule
144A or Rule 144 or Regulation S under the Securities Act or that such
Securities are not "Restricted Securities" within the meaning of Rule 144 under
the Securities Act. Upon provision of such satisfactory evidence to the Company,
the Trustee, at the written direction of the Company set forth in an Officer's
Certificate, shall authenticate and deliver a Security that does not bear such
legend(s). In the absence of bad faith on its part, the Trustee


                                       37
<PAGE>


may conclusively rely upon such direction of the Company in authenticating and
delivering a Security that does not bear such legend(s).

                Upon registration of Transfer of or exchange of Securities that
are no longer Restricted Securities, the Company shall execute, and the Trustee
shall authenticate and deliver, a Security that does not bear restrictive
legends.

                As used in this Section 2.7(b), the term "Transfer" encompasses
any sale, pledge or other transfer of any Securities referred to herein.

        (c)     Global Securities.  Except as otherwise provided pursuant to
Section 2.3, this Section 2.7(c) shall apply to Global Securities.

                (i)     Each Global Security authenticated under this Indenture
        shall be registered in the name of the Depository designated for such
        Global Security or a nominee thereof and delivered to such Depository or
        a nominee thereof or custodian therefor, and each such Global Security
        shall constitute a single Security for all purposes of this Indenture.
        The Securities of each series may be represented by one or more Global
        Securities, and such Global Securities may be Restricted Global
        Securities, Temporary Regulation S Global Securities or Regulation S
        Unrestricted Global Securities, or any combination thereof.

                (ii)    Notwithstanding any other provision in this Indenture,
        no Global Security may be exchanged in whole or in part for Securities
        registered, and no transfer of a Global Security in whole or in part may
        be in the name of any Person other than the Depository for such Global
        Security or a nominee thereof unless (A) such Depository (1) has
        notified the Company that it is unwilling or unable to continue as
        Depository for such Global Security or (2) has ceased to be a clearing
        agency registered under the Exchange Act, and, in either case, a
        successor Depository is not appointed within 90 days thereof, (B) the
        Company executes and delivers to the Trustee a Company Order providing
        that such Global Security shall be so transferable, registrable and
        exchangeable, (C) there shall have occurred and be continuing an Event
        of Default with respect to the Securities of such series or (D) there
        shall exist such circumstances if any, in addition to or in lieu of the
        foregoing as have been specified for this purpose by Section 2.3. Any
        Global Security exchanged pursuant to subclause (A) above shall be so
        exchanged in whole and not in part and any Global Security exchanged
        pursuant to subclause (B), (C) or (D) above may be exchanged in whole or
        from time to time in part as directed by the Depository for such Global
        Security. Notwithstanding any other provision in this Indenture, a
        Global Security to which the restriction set forth in the second
        preceding sentence shall have ceased to apply may be transferred only
        to, and may be registered and exchanged for Securities registered only
        in the name or names of, such Person or Persons as the Depository for


                                       38
<PAGE>


        such Global Security shall have directed and no transfer thereof other
        than such a transfer may be registered.

                (iii)   Subject to clause (ii) above, any exchange of a Global
        Security for other Securities may be made in whole or in part, and all
        Securities issued in exchange for a Global Security or any portion
        thereof shall be registered in such name or names as the Depository for
        such Global Security shall direct.

                (iv)    Every Security authenticated and delivered upon
        registration of transfer of, or in exchange for or in lieu of, a Global
        Security or any portion thereof, whether pursuant to this Section 2.7,
        Section 2.6, 2.9 or 9.7 or otherwise shall be authenticated and
        delivered in the form of, and shall be, a Global Security, unless such
        Security is registered in the name of a Person other than the Depository
        for such Global Security or a nominee thereof.

                (v)     Except as otherwise provided pursuant to Section 2.3,
        notwithstanding any other provision of this Indenture or of the
        Securities, transfers of interests in a Global Security of the kind
        described in Section 2.1 and in subclauses (B), (C), (D) and (E) of this
        clause (v) below shall be made only in accordance with this clause (v),
        and all transfers of an interest in a Temporary Regulation S Global
        Security shall comply with subclause (G) of this clause (v). The
        provisions of this clause (v) providing for transfers of Securities of a
        series or beneficial interests in Global Securities of such series to
        Persons who wish to take delivery in the form of beneficial interests in
        a Restricted Global Security, Temporary Regulation S Global Security or
        Regulation S Unrestricted Global Security shall only apply if there is a
        Restricted Global Security, Temporary Regulation S Global Security or
        Regulation S Unrestricted Global Security, as the case may be, for such
        series.

                        (A)     Transfer of Global Security. A Global Security
                may not be transferred, in whole or in part to any Person other
                than the Depository or a nominee thereof, and no such transfer
                to any such other Person may be registered; provided that this
                subclause (A) shall not prohibit any transfer of a Security that
                is issued in exchange for a Global Security but is not itself a
                Global Security. No transfer of a Security to any Person shall
                be effective under this Indenture or the Securities unless and
                until such Security has been registered in the name of such
                Person. Nothing in this Section 2.7 shall prohibit or render
                ineffective any transfer of a beneficial interest in a Global
                Security effected in accordance with the other provisions of
                this Section 2.7(c)(v).

                        (B)     Restricted Global Security to Regulation S
                Global Security. If the holder of a beneficial interest in a
                Restricted Global Security wishes at any time to transfer such
                interest to a person who wishes to take


                                       39
<PAGE>


                delivery thereof in the form of a beneficial interest in a
                Regulation S Global Security, such transfer may be effected,
                subject to the rules and procedures of the Depository for such
                Global Security, Euroclear and Clearstream, in each case to the
                extent applicable (the "Applicable Procedures"), only in
                accordance with the provisions of this Section 2.7(c)(v)(B).
                Upon receipt by the Trustee, as Security Registrar, at the
                Corporate Trust Office of (1) written instructions given in
                accordance with the Applicable Procedures from a member of, or
                participant in, the Depository for such Global Security (each,
                an "Agent Member") directing the Trustee to credit or cause to
                be credited to a specified Agent Member's account a beneficial
                interest in a Regulation S Global Security in a principal amount
                equal to that of the beneficial interest in the Restricted
                Global Security to be so transferred, (2) a written order given
                in accordance with the Applicable Procedures containing
                information regarding the account of the Agent Member (and the
                Euroclear or Clearstream account, as the case may be) to be
                credited with, and the account of the Agent Member to be debited
                for, such beneficial interest and (3) an appropriately completed
                certificate in substantially the form set forth in or
                contemplated by Section 2.13(a) given by the holder of such
                beneficial interest, the Trustee, as Security Registrar, shall
                instruct the Depository for such Securities to reduce the
                principal amount of the Restricted Global Security, and to
                increase the principal amount of the Regulation S Global
                Security, by the principal amount of the beneficial interest in
                the Restricted Global Security to be so transferred, and to
                credit or cause to be credited to the account of the Person
                specified in such instructions (which shall be the Agent Member
                for Euroclear or Clearstream or both, as the case may be) a
                beneficial interest in the Regulation S Global Security having a
                principal amount equal to the amount by which the principal
                amount of the Restricted Global Security was reduced upon such
                transfer.

                        (C)     [Intentionally Omitted]

                        (D)     Regulation S Global Security to Restricted
                Global Security. If the holder of a beneficial interest in a
                Regulation S Global Security wishes at any time to transfer such
                interest to a Person who wishes to take delivery thereof in the
                form of a beneficial interest in a Restricted Global Security,
                such transfer may be effected, subject to the Applicable
                Procedures, only in accordance with this Section 2.7(c)(v)(D).
                Upon receipt by the Trustee, as Security Registrar, at the
                Corporate Trust Office of (1) written instructions given in
                accordance with the Applicable Procedures from an Agent Member
                directing the Trustee, as Security Registrar, to credit or cause
                to be credited to a specified Agent Member's account a
                beneficial interest in the Restricted Global Security equal to
                that of the beneficial interest in the Regulation S Global
                Security to be so transferred, (2) a written order given in


                                       40
<PAGE>


                accordance with the Applicable Procedures containing information
                regarding the account of the Agent Member to be credited with,
                and the account of the Agent Member (or, if such account is held
                for Euroclear or Clearstream, the Euroclear or Clearstream
                account, as the case may be) to be debited for, such beneficial
                interest and (3) with respect to a transfer of a beneficial
                interest in the Regulation S Global Security, an appropriately
                completed certificate in substantially the form set forth in or
                contemplated by Section 2.13(c) given by the holder of such
                beneficial interest, the Trustee, as Security Registrar, shall
                instruct the Depository for such Securities to reduce the
                principal amount of the Regulation S Global Security and to
                increase the principal amount of the Restricted Global Security,
                by the principal amount of the beneficial interest in the
                Regulation S Global Security to be so transferred, and to credit
                or cause to be credited to the account of the Person specified
                in such instructions a beneficial interest in the Restricted
                Global Security having a principal amount equal to the amount by
                which the principal amount of the Regulation S Global Security
                was reduced upon such transfer.

                        (E)     Restricted Security (other than a Restricted
                Global Security) to Global Security. If the Holder of a
                Restricted Security (other than a Restricted Global Security)
                wishes at any time to transfer such Security to a Person who
                wishes to take delivery thereof in the form of a beneficial
                interest in a Restricted Global Security or an Unrestricted
                Global Security, such transfer may be effected, subject to the
                Applicable Procedures, only in accordance with this Section
                2.7(c)(v)(E). Upon receipt by the Trustee, as Security
                Registrar, at the Corporate Trust Office of (1) the Restricted
                Security to be transferred, (2) written instructions given in
                accordance with the Applicable Procedures from an Agent Member
                directing the Trustee to credit or cause to be credited to a
                specified Agent Member's account a beneficial interest in the
                Restricted Global Security or the Unrestricted Global Security,
                as the case may be, in a principal amount equal to the principal
                amount of the Restricted Security to be so transferred (3) a
                written order given in accordance with the Applicable Procedures
                containing information regarding the account of the Agent Member
                (and, in the case of any Transfer pursuant to Regulation S, the
                Euroclear or Clearstream account for which such Agent Member's
                account is held or, if such account is held for Euroclear or
                Clearstream, the Euroclear or Clearstream account, as the case
                may be) to be credited with such beneficial interest and (4) an
                appropriately completed certificate in substantially the form
                set forth in or contemplated by Section 2.13(d) (which may be
                attached to or set forth in the Restricted Security), the
                Trustee, as Security Registrar, shall cancel the Restricted
                Security, the Company shall execute, and the Trustee shall
                authenticate and deliver, a new definitive Security for the
                principal amount, if any, of the Restricted Security not so
                transferred, registered in the name of the Holder transferring
                such Restricted


                                       41
<PAGE>


                Security, and the Trustee shall instruct the Depository for such
                Securities to increase the principal amount of the Restricted
                Global Security or the Unrestricted Global Security, as the case
                may be, by the principal amount of the Restricted Security so
                transferred, and to credit or cause to be credited to the
                account of the Person specified in such instructions (which, in
                the case of any increase of the principal amount of an
                Unrestricted Global Security as the result of a Transfer
                pursuant to Regulation S, shall be the Agent Member for
                Euroclear or Clearstream or both, as the case may be) a
                corresponding principal amount of the Restricted Global Security
                or the Unrestricted Global Security. The transfer of a
                Restricted Security to a Person who wishes to take delivery
                thereof in the form of a beneficial interest in a Global
                Security other than a Restricted Global Security may be effected
                only in accordance with Regulation S or Rule 144A under the
                Securities Act (as evidenced by the certificate delivered
                pursuant to Section 2.13(d)).

                        (F)     Other Exchanges. In the event that a Global
                Security or any portion thereof is exchanged for Securities
                other than Global Securities, the Trustee, as Security
                Registrar, shall instruct the Depository for the Global Security
                to reduce the principal amount of the Global Security by the
                principal amount of the Securities other than Global Securities
                issued upon such exchange. Such other Securities may in turn be
                exchanged (on transfer or otherwise) for beneficial interests in
                a Global Security (if any are then outstanding) only in
                accordance with such procedures, which shall be substantially
                consistent with the provisions of subclauses (A) through (E)
                above (including the certification requirements intended to
                insure that transfers of beneficial interests in a Global
                Security comply with Rule 144A, Rule 144 or Regulation S under
                the Securities Act, as the case may be) and any other procedures
                as may be from time to time adopted by the Company and the
                Trustee.

                        (G)     Interests in Temporary Regulation S Global
                Security to be Held Through Euroclear or Clearstream. Until the
                termination of the Restricted Period with respect to Securities
                of a series, interests in any Temporary Regulation S Global
                Security of such series may be held only through Agent Members
                acting for and on behalf of Euroclear and Clearstream, provided
                that this subclause (G) shall not prohibit any transfer in
                accordance with subclause (D) of this Section 2.7(c)(v).

                SECTION 2.8. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company shall
execute and, upon the Company's request, the Trustee shall authenticate and
deliver a new definitive Security, of like tenor and aggregate principal amount
and equal face amount of principal, registered in the same manner, dated the
date of its authentication and bearing interest from the date to which




                                       42
<PAGE>


interest has been paid on such Security, in exchange and substitution for such
Security (upon surrender and cancellation thereof); provided, that the applicant
for such new Security shall furnish to the Company and to the Trustee such
reasonable security or indemnity as may be required by them to save each of them
harmless.

                If there shall be delivered to the Company and the Trustee (a)
evidence to their satisfaction of the destruction, loss or theft of any Security
and (b) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice to
the Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and, upon the Company's request, the
Trustee shall authenticate and deliver a new definitive Security, of like tenor
and aggregate principal amount and equal face amount of principal registered in
the same manner, dated the date of its authentication and bearing interest from
the date to which interest has been paid on such Security, in lieu of and
substitution for such Security.

                In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security (without surrender
thereof, except in the case of a mutilated Security) if the applicant for such
payment shall furnish to the Company and the Trustee such reasonable security or
indemnity as they may require to save each of them harmless, and in case of
destruction, loss or theft, evidence to the satisfaction of the Company and the
Trustee of the destruction, loss or theft of such Security.

                Upon the issuance of any new Security under this Section 2.8,
the Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.

                Every new Security of any series issued pursuant to this Section
2.8 in lieu of any destroyed, lost or stolen Security shall constitute an
original additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities of that series duly issued
hereunder.

                The provisions of this Section 2.8 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.

                SECTION 2.9. Payments; Interest Rights Preserved. Except as
otherwise provided as contemplated by Section 2.3 with respect to any series of
Securities, interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more


                                       43
<PAGE>


Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest.


                Any interest on any Security of any series which is payable; but
is not punctually paid or duly provided for, on any Interest Payment Date
(herein called "Defaulted Interest") shall forthwith cease to be payable to the
Holder on the relevant Regular Record Date by virtue of having been such Holder,
and such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in clause (a) or (b) below:

        (a)     The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities of such series (or their respective
Predecessor Securities) are registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest, which shall be set in
the following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Security of such series
and the date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this clause (a)
provided. Thereupon, the Company shall fix a Special Record Date for the payment
of such Defaulted Interest which shall be not more than 15 days and not less
than 10 days prior to the date of the proposed payment and not less than 10 days
after the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly, in the name and at the expense of the Company, cause
notice of the proposed payment of such Defaulted Interest and the Special Record
Date therefor to be given to each Holder of Securities of such series in the
manner set forth in Section 1.6, not less than 10 days prior to such Special
Record Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such Defaulted Interest
shall be paid to the Persons in whose names the Securities of such series (or
their respective Predecessor Securities) are registered at the close of business
on such Special Record Date and shall no longer be payable pursuant to the
following clause (b).

        (b)     The Company may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may be listed,
and upon such notice as may be required by such exchange, if, after notice given
by the Company to the Trustee of the proposed payment pursuant to this clause
(b), such manner of payment shall be deemed practicable by the Trustee.

                Subject to the foregoing provisions of this Section 2.9, each
Security delivered under this Indenture upon registration of transfer of, or in
exchange for, or in lieu of, any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.


                                       44

<PAGE>
                Except as otherwise specified as contemplated by Section 2.3 for
the Securities of any series, all payments of principal, premium, if any, and
interest on Securities of such series will be made by check drawn on a bank in
The City of New York or, for a Holder of at least $1,000,000 in initial
aggregate principal amount of Securities of such series, by wire transfer to an
account maintained by the payee with a bank in The City of New York, provided
that a written request from such Holder to such effect designating such account
is received by the Trustee no later than the thirtieth day immediately preceding
the date of payment. Unless such designation is revoked in writing, any
designation made by such Holder with respect to such Securities will remain in
effect with respect to any future payments with respect to such Securities
payable to such Holder. The Company will indemnify and hold the Trustee harmless
against any loss, liability or expense (including attorneys' fees) resulting
from any act or omission to act on the part of the Trustee or any such Holder in
connection with any such designation or which the Paying Agent or Trustee may
incur as a result of making any payment in accordance with any such designation.

                Except as otherwise specified as contemplated by Section 2.3,
all payments of principal and premium, if any, on the Securities of any series
(other than installments of principal due with respect to Installment Securities
prior to the Maturity thereof) shall be made upon presentation and surrender
thereof at the office or agency of the Company maintained for such purpose in
the Borough of Manhattan, The City of New York.

                SECTION 2.10. Persons Deemed Owners. Prior to due presentment of
a Security for registration of transfer, the Company, the Trustee and any agent
of the Company or the Trustee shall treat the Person in whose name such Security
is registered as the owner of such Security for the purpose of receiving payment
of principal of and any premium and (subject to Section 2.9) any interest on
such Security and for all other purposes whatsoever, whether or not such
Security be overdue, and neither the Company, the Trustee nor any agent of the
Company or the Trustee shall be affected by notice to the contrary.

                SECTION 2.11. Cancellation. All Securities surrendered for
payment, redemption, registration of transfer or exchange, or for credit against
any sinking fund payment shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee and shall be promptly canceled by it. The
Company may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and may deliver to the Trustee (or to any
other Person for delivery to the Trustee for cancellation) any Securities
previously authenticated hereunder which the Company has not issued and sold,
and all Securities so delivered shall be promptly canceled by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any Securities
canceled as provided in this Section 2.11, except as expressly permitted by this
Indenture. All canceled Securities held by the Trustee shall be disposed of as
directed by a Company Order.

                SECTION 2.12. Computation of Interest. Except as otherwise
specified as contemplated by Section 2.3 for Securities of any series, interest
on the Securities of each series shall be computed on the basis of a 360-day
year of twelve 30-day months.

                                       45
<PAGE>

                SECTION 2.13. Certification Forms.

        (a)     Except as otherwise specified as contemplated by Section 2.3 for
the Securities of any series, whenever any certification is to be given by a
beneficial owner of a portion of a Restricted Global Security pursuant to
Section 2.7(c)(v)(B) in connection with the initial transfer of a beneficial
interest in a Restricted Global Security to a Person who wishes to take delivery
thereof in the form of a beneficial interest in a Regulation S Global Security,
such certification shall be provided substantially in the form set forth in
Exhibit B hereto, with only such changes as shall be approved in writing by the
Company and the lead underwriters or purchasers, if any, of the initial offering
of such Securities being transferred.

        (b)     INTENTIONALLY OMITTED.

        (c)     Except as otherwise specified as contemplated by Section 2.3 for
the Securities of any series, whenever any certification is to be given by a
beneficial owner of a portion of a Regulation S Global Security pursuant to
Section 2.7(c)(v)(D) in connection with the initial transfer of a beneficial
interest in the Regulation S Global Security to a Person who wishes to take
delivery thereof in the form of a beneficial interest in the Restricted Global
Security, such certification shall be provided substantially in the form set
forth in Exhibit C hereto, with only such changes as may be approved in writing
by the Company and the lead underwriters or purchasers, if any, of the initial
offering of such Securities being transferred.

        (d)     Except as otherwise specified as contemplated by Section 2.3 for
the Securities of any series, whenever any certification is to be given by a
beneficial owner of a Restricted Security pursuant to Section 2.7(b) or
2.7(c)(v)(E) in connection with the transfer or exchange of a Restricted
Security, such certification shall be provided substantially in the form set
forth in Exhibit D (which may be attached to or set forth on the Restricted
Security), with only such changes as may be approved in writing by the Company
and the lead underwriters or purchasers, if any, of the initial offering of such
Securities being transferred.

                SECTION 2.14. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" or"ISIN" numbers (if then generally in use), and, if
so, the Trustee shall use "CUSIP" or "ISIN" numbers in notices of redemption as
a convenience to Holders; provided that the Trustee shall assume no
responsibility for the accuracy of such numbers and any such redemption shall
not be affected by any defect in or omission of such numbers.

                                    ARTICLE 3

                           SATISFACTION AND DISCHARGE

                SECTION 3.1. Satisfaction and Discharge of Indenture. This
Indenture shall upon Company Request cease to be of further effect (except as to
any surviving rights of registration of transfer or exchange of Securities
herein expressly provided for), and the

                                       46
<PAGE>

Trustee, at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when:

        (a)     either:

                (i)     all Securities theretofore authenticated and delivered
        (other than (A) Securities which have been destroyed, lost or stolen and
        which have been replaced or paid as provided in Section 2.8 and (B)
        Securities for whose payment money has theretofore been deposited in
        trust or segregated and held in trust by the Company and thereafter
        repaid to the Company or discharged from such trust, as provided in
        Section 8.4) have been delivered to the Trustee for cancellation; or

                (ii)    all such Securities not theretofore delivered to the
        Trustee for cancellation

                                (1)     have become due and payable, or

                                (2)     will become due and payable at their
                        Stated Maturity within one year, or

                                (3)     are to be called for redemption within
                        one year under arrangements satisfactory to the Trustee
                        for the giving of irrevocable notice of redemption by
                        the Trustee in the name, and at the expense of the
                        Company,

        and the Company, in the case of (1), (2) or (3) above, has deposited or
        caused to be deposited with the Trustee as trust funds in trust for the
        purpose of making the following payments, specifically pledged as
        security for and dedicated solely to, the benefits of the Holders of
        such Securities, money in an amount sufficient to pay and discharge the
        entire indebtedness on such Securities not theretofore delivered to the
        Trustee for cancellation, for principal and any premium and interest to
        the date of such deposit (in the case of Securities which have become
        due and payable) or to the Stated Maturity or Redemption Date, as the
        case may be;

        (b)     the Company has paid or caused to be paid all other sums payable
hereunder by the Company, and

        (c)     the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.

                Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company and the Partnership (through Section
12.1) to the Trustee under Section 5.7 and, if money shall have been deposited
with the Trustee pursuant to subclause

                                       47
<PAGE>

(ii) of clause (A) of this Section, the obligations of the Trustee under Section
3.2 and the last paragraph of Section 8.4 shall survive.

                The provisions of Section 11.6 shall apply to this Section 3.1
as if set forth herein.

                SECTION 3.2. Application of Trust Money. Subject to the
provisions of the last paragraph of Section 8.4, all money deposited with the
Trustee pursuant to Section 3.1 shall be held in trust and applied by it, in
accordance with the provisions of the Securities and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent), to the Persons entitled thereto, of the
principal and any premium and interest for whose payment such money has been
deposited with the Trustee.

                                    ARTICLE 4

                                    REMEDIES

                SECTION 4.1. Events of Default. "Event of Default," wherever
used herein with respect to Securities of any series, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, or order of any court or any order, rule or regulation of any
administrative or governmental body):

        (a)     the Company shall fail to pay (i) any principal or premium, if
any, on any Security when the same becomes due and payable, whether at stated
maturity or required prepayment or by acceleration or otherwise and such failure
shall continue for a period of more than 5 days or (ii) any interest on any
Security when the same becomes due and payable, whether at stated maturity or
required prepayment or by acceleration or otherwise and such failure shall
continue for a period of more than 15 days; or

        (b)     either Obligor shall fail to preserve and maintain its legal
existence (except as permitted in Article 8); or

        (c)     either Obligor shall fail to deposit any sinking fund payment,
when and as due by the terms of a Security of that series; or

        (d)     any representation, warranty or certification made herein or in
any other Basic Agreement (or in any modification or supplement hereto or
thereto) by either Obligor or any other Relevant Party, or in any certificate
furnished to the Trustee or the Collateral Agent pursuant to the provisions
hereof or thereof, shall prove to have been false as of the time made or
furnished in any material respect and such misrepresentation has resulted in a
Material Adverse Effect and shall continue uncured for 30 or more days; or

                                       48
<PAGE>

        (e)     any Relevant Party shall fail to perform or observe any of its
obligations or covenants contained herein or in any other Basic Agreement (or in
any modification or supplement hereto or thereto) (other than an obligation or
covenant, a default in which is otherwise expressly included in this Section
4.1), and such failure has resulted in a Material Adverse Effect and shall
continue uncured for 30 or more days; or

        (f)     (i) the Partnership shall default in the payment when due of any
principal of or interest on any of its other Indebtedness aggregating at least
the greater of (x) $20,000,000, as Escalated, or more and (y) 5% of the
Partnership's aggregate outstanding Indebtedness, (ii) the Company shall default
in the payment when due of any principal of or interest on any of its other
Indebtedness or (iii) the Partnership or the Company shall default in the
payment when due of any secured debt secured equally and ratably with the
Securities; or any event specified in any note, agreement, indenture or other
document evidencing or relating to any such Indebtedness shall occur if the
effect of such event is to cause, or (with the giving of any notice or the lapse
of time or both) to permit the holder or holders of such Indebtedness (or a
trustee or agent on behalf of such holder or holders) to cause, such
Indebtedness to become due, or to be prepaid in full (whether by redemption,
purchase, offer to purchase or otherwise), prior to its stated maturity and such
event is not cured or waived within 30 days after the date of its occurrence or
such Indebtedness is accelerated prior to the end of such 30-day period.

        (g)     the Partnership, the Company or any other Relevant Party shall
admit in writing its inability to, or be generally unable to, pay its debts as
such debts become due; or

        (h)     the Partnership, the Company or any other Relevant Party shall
(i) apply for or consent to the appointment of, or the taking of possession by,
a receiver, custodian, trustee, examiner or liquidator of itself or of all or a
substantial part of its Property, (ii) make a general assignment for the benefit
of its creditors, (iii) commence a voluntary case under the Bankruptcy Code,
(iv) file a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or
winding-up, or composition or readjustment of debts, (v) fail to controvert in a
timely and appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the Bankruptcy Code or (vi) take any
corporate action authorizing any of the foregoing; or

        (i)     a proceeding or case shall be commenced without the application
or consent of the affected Relevant Party, in any court of competent
jurisdiction, seeking (x) its reorganization, liquidation, dissolution,
arrangement or winding-up, or the composition or readjustment of its debts, (y)
the appointment of a receiver, custodian, examiner, liquidator or the like of
such Relevant Party or of all or any substantial part of its Property or (z)
similar relief in respect of such Relevant Party under any law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment
of debts, and such proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of

                                       49
<PAGE>

the foregoing shall be entered and continue unstayed and in effect, for a period
of 60 or more consecutive days;

        (j)     a final judgment or judgments for the payment of money, in the
aggregate, in excess of the greater of (x) $20,000,000, as Escalated, and (y) 5%
of the Gross Book Value of the Partnership, shall be rendered by one or more
courts, administrative tribunals or other bodies having jurisdiction against the
Partnership or the Company and the same shall not be discharged (or provision
shall not be made for such discharges or a stay of execution thereof shall not
be procured), within 60 days from the date of entry thereof and such Obligor
shall not, within said period of 60 days, or such longer period during which
execution of the same shall have been stayed, appeal therefrom and cause the
execution thereof to be stayed during such appeal; or

        (k)     one or more of the Basic Agreements (other than the Indenture)
shall fail to be in full force and effect (unless such failure is the result of
a termination of such Basic Agreement in accordance with its terms (other than a
termination due to a default by a party to such Basic Agreement) and such
failure continues for more than 30 days (provided that, if efforts to cure such
default have been commenced within such 30-day period, such cure period shall be
extended for an additional 30 days so long as no other Event of Default shall
occur and be continuing and the Partnership, or the Company, as applicable, is
diligently pursuing such cure) unless immediately after giving effect to such
failure to be in full force and effect there shall be No Ratings Downgrade; or

        (l)     If:

                (i)     any party (other than the Partnership) to a Project
Agreement (other than an LTFT Agreement or a Shipper Guaranty) shall default in
the performance of any term, covenant or agreement contained in such Project
Agreement, (and such default shall continue uncured for the length of the
applicable cure period set forth in such Project Agreement or a Shipper
Guaranty), and such party shall not have been replaced within 90 days of such
default with a Person capable of performing such term, covenant or agreement; or

                (ii)    any Project Agreement (other than an LTFT Agreement)
shall become invalid, illegal or unenforceable, or shall cease, for any reason,
to be in full force and effect in all material respects, and such Project
Agreement shall not have been replaced within 90 days of such cessation;

and, in either case, the failure to make such replacement could reasonably be
expected to result in a Material Adverse Effect; or

        (m)     any of the Liens created by the Security Agreements shall at any
time not constitute a valid and perfected Lien on the collateral intended to be
covered thereby (to the extent perfection by filing, registration, recordation
or possession is required herein or therein) in favor of the Collateral Agent
free and clear of all other Liens (other than Liens

                                       50
<PAGE>

permitted under Section 8.8), or, except for expiration in accordance with its
terms, any of the Security Agreements shall for whatever reason be terminated or
cease to be in full force and effect, or the enforceability thereof shall be
contested by either Obligor and any such event shall remain uncured for a period
of 15 days; or

        (n)     the Company shall cease to be a wholly owned Subsidiary of the
Partnership;

or

        (o)     any other Event of Default provided with respect to Securities
of that series.

                Any Partner shall have the right, but not the obligation, to
cure any payment default in clauses (a), (e), (f) or (j) above, including the
Partnership's payment obligations under Article 12 herein, within the respective
grace period set forth in such clauses and, if such payment default is cured,
such payment default shall not constitute an Event of Default under this
Indenture.

                SECTION 4.2. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in Section
4.1(g), (h) or (i)) with respect to Securities of any series at the time
Outstanding occurs and is continuing, then in every such case the Trustee or the
Holders of not less than 25% in Principal Amount of the Outstanding Securities
of that series may declare the unpaid Principal Amount (including any premium)
of all the Securities of that series (or, if any Securities of that series are
Original Issue Discount Securities, such portion of the Principal Amount (and
premium) of such Securities as may be specified by the terms thereof) to be due
and payable immediately, by a notice in writing to the Company (and to the
Trustee, if given by Holders), and upon any such declaration such Principal
Amount (and premium) shall become immediately due and payable. If an Event of
Default specified in Section 4.1(g), (h) or (i) with respect to Securities of
any series at the time Outstanding occurs, the principal amount of all the
Securities of that series (or, if any Securities of that series are Original
Issue Discount Securities, such portion of the principal amount of such
Securities as may be specified by the terms thereof) shall automatically, and
without any declaration or other action on the part of the Trustee or any
Holder, become immediately due and payable. In either such case, the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding
Securities may then send a Default Notice pursuant to the Collateral Agency
Agreement requesting the Collateral Agent to take action against the Collateral.
Such request is subject to approval by the Required Senior Parties.

                At any time after such a declaration of acceleration with
respect to Securities of any series has been made and before a judgment or
decree for payment of the money due has been obtained by the Trustee as
hereinafter in this Article 4 provided, the Holders of a majority in Principal
Amount of the Outstanding Securities of that series, by written notice to the
Company and the Trustee, may rescind and annul such declaration and its
consequences if:

                                       51
<PAGE>

        (a)     there has been paid or deposited with the Trustee a sum
sufficient to pay the aggregate of:

                        (i)     all overdue interest on all Securities of that
                series,

                        (ii)    the principal of (and premium, if any, on) any
                Securities of that series which have become due otherwise than
                by such declaration of acceleration and any interest thereon at
                the rate or rates prescribed therefor in such Securities,

                        (iii)   to the extent that payment of such interest is
                lawful, interest upon overdue interest at the rate or rates
                prescribed therefor in such Securities, and

                        (iv)    all sums paid by the Trustee hereunder and the
                reasonable compensation, expenses and disbursements of the
                Trustee, its agents and counsel;

                and

        (b)     all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of Securities of that series which
have become due solely by such declaration of acceleration, have been cured or
waived as provided in Section 4.13.

                No such rescission shall affect any subsequent default or impair
any right consequent thereon.

                4.3. SECTION Collection of Indebtedness and Suits for
Enforcement by Trustee. The Company covenants that if:

        (a)     default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for a
period of 15 days and such default is not cured by any Partner pursuant to
Section 4.1(a), or

        (b)     default is made in the payment of the principal of (or premium,
if any, on) any Security at the Maturity thereof and such default continues for
a period of 5 days and such default is not cured by any Partner pursuant to
Section 4.1(a),

then the Company will, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Security the whole amount then due and payable on
such Securities for principal and any premium and interest and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal and premium and on any overdue interest (if any), at the rate
or rates prescribed therefor in such Securities, and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of

                                       52
<PAGE>

collection, including the reasonable compensation, expenses and disbursements of
the Trustee, its agents and counsel.

                If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon such Securities
and collect the moneys adjudged or decreed to be payable in the manner provided
by law out of the property of the Company or any other obligor upon such
Securities, wherever situated, subject to the Collateral Agency Agreement.

                If an Event of Default with respect to Securities of any series
occurs and is continuing, the Trustee may, subject to Section 4.12, in its
discretion proceed to protect and enforce its rights and the rights of the
Holders of Securities of such series by such appropriate judicial proceedings as
the Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any agreement in this Indenture or in
aid of the exercise of any power granted herein, or to enforce any other proper
remedy.

                SECTION 4.4. Trustee May File Proofs of Claim. In case of any
judicial proceeding relative to the Company or the Partnership (or any other
obligor upon the Securities), its property or its creditors, the Trustee shall
be entitled and empowered, by intervention in such proceeding or otherwise, to
file and prove a claim for the whole amount of principal, premium, if any, and
any interest owing and unpaid in respect of the Securities and to file such
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses and disbursements of the Trustee, its agents and counsel) and of the
Holders allowed in any such judicial proceeding. In particular, the Trustee
shall be authorized to collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses and disbursements of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 5.7.

                No provision of this Indenture shall be deemed to authorize the
Trustee (x) to authorize, consent to, accept, or adopt on behalf of any Holder,
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to (y) to vote in respect of
the claim of any Holder in any such proceeding; provided however, that the
Trustee may, on behalf of the Holders, vote for the election of a trustee in
bankruptcy or similar official and be a member of a creditors' or other similar
committee.

                                       53
<PAGE>

                SECTION 4.5. Trustee May Enforce Claims Without Possession of
Securities. All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses and
disbursements of the Trustee, its agents and counsel, be for the ratable benefit
of the Holders of the Securities in respect of which such judgment has been
recovered.

                SECTION 4.6. Application of Money Collected. Any money collected
by the Trustee pursuant to this Article 4 or the Collateral Agency Agreement
shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal
or any premium or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:

                FIRST, to the payment of all amounts due the Trustee under
        Section 5.7;

                SECOND, to the payment of the amounts then due and unpaid for
        principal of and any premium and interest on the Securities in respect
        of which or for the benefit of which such money has been collected
        ratably, without preference or priority of any kind, according to the
        amounts due and payable on such Securities for principal and any premium
        and interest, respectively; and

                THIRD, if any such money shall remain after the distributions
set forth in priorities FIRST and SECOND, to the Company.

                SECTION 4.7. Limitation on Suits. No Holder of any Security of
any series shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Securities of such series or this Indenture, or
for the appointment of a receiver or for any other remedy hereunder, unless:

        (a)     such Holder has previously given written notice to the Trustee
of a continuing Event of Default with respect to the Securities of that series;

        (b)     the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made a written request to the
Trustee to institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;

        (c)     such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;

        (d)     the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding; and

                                       54
<PAGE>

        (e)     no written direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a majority
in Principal Amount of the Outstanding Securities of that series;

it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.

                SECTION 4.8. Unconditional Right of Holders to Receive
Principal, Premium and Interest. Notwithstanding any other provision in this
Indenture, the Holder of any Security shall have the right, which is absolute
and unconditional, to receive payment of the principal of, premium, if any, and
(subject to Section 2.9) interest on such Security on the respective Stated
Maturities expressed in such Security (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such Holder.

                SECTION 4.9. Restoration of Rights and Remedies. If the Trustee
or any Holder has instituted any proceeding to enforce any right or remedy under
this Indenture and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Holder, then
and in every such case, subject to any determination in such proceeding, the
Company, the Partnership, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.

                SECTION 4.10. Rights and Remedies Cumulative. Except as
otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities in the last paragraph of Section 2.8 and
subject to Section 4.7, no right or remedy herein conferred upon or reserved to
the Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.

                SECTION 4.11. Delay or Omission Not Waiver. No delay or omission
of the Trustee or of any Holder of any Securities to exercise any right or
remedy accruing upon any Event of Default shall impair any such right or remedy
or constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article 4 or by law to the Trustee or to
the Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.

                SECTION 4.12. Control by Holders. The Holders of a majority in
principal amount of the Outstanding Securities of any series shall have the
right to direct the time,

                                       55
<PAGE>

method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee, with respect
to the Securities of such series, provided that

        (a)     such direction shall not be in conflict with any rule of law or
with this Indenture, and would not involve the Trustee in personal liability.

        (b)     the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction, provided, further, that,
any trust or power conferred on the Trustee in its capacity as representative of
the Holders as Partnership Senior Parties or Funding Senior Parties (as such
terms are defined in the Collateral Agency Agreement), shall be exercisable at
the direction of the Holders in accordance with Section 5.13 and not in
accordance with this Section 4.12.

                SECTION 4.13. Waiver of Past Defaults. The Holders of not less
than a majority in principal amount of the Outstanding Securities of any series
may on behalf of the Holders of all the Securities of such series waive any past
default hereunder with respect to such series and its consequences, except a
default:

        (a)     in the payment of the principal of, premium, if any, or interest
on any Security of such series; or

        (b)     in respect of a covenant or provision hereof which under
Article 7 cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected.

                Upon any such waiver, such default shall cease to exist, the
Company, the Partnership, the Trustee and the Holders of the Securities of that
series shall be restored to their former positions and rights hereunder, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.

                SECTION 4.14. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken, suffered or omitted by it as Trustee, a court
may require any party litigant in such suit to file an undertaking to pay the
costs of such suit, and may assess costs against any such party litigant, having
due regard to the merits and good faith of the claims or default made by such
party litigant; provided, that the provisions of this Section 4.14 shall not
apply to any suit instituted by the Trustee or to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in principal
amount of the Outstanding Securities of any series, or to any suit instituted by
any Holder of any Security for the enforcement of the payment of the principal
of, premium, if any, or interest on such Security on or after the Stated
Maturity thereof (including, in the case of redemption, on or after the
Redemption Date).

                                       56
<PAGE>

                SECTION 4.15. Waiver of Usury, Stay or Extension Laws. Each
Obligor covenants (to the extent that each may lawfully do so) that it will not
at any time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law wherever enacted, now
or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture or any obligations arising under the Securities of
any series issued hereunder, and each Obligor (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.

                SECTION 4.16. Securities Held by Certain Persons Not to Share in
Distribution. Any Securities known to a Responsible Officer of the Trustee
assigned to its Institutional Trust Services department (or any successor
department or group) to be owned or held by, or for the account or benefit of,
the Company or the Partnership or an Affiliate of either thereof shall not be
entitled to share in any payment or distribution provided for in this Article 4
until all Securities held by other Persons have been indefeasibly paid in full.

                SECTION 4.17. The Collateral Agency Agreement. Simultaneously
with the execution and delivery of this Indenture, the Trustee shall enter into
the Collateral Agency Agreement. All rights and remedies available to the
Trustee and the Holders of the Outstanding Securities, and all future Holders of
any of the Securities, with respect to the Collateral, or otherwise pursuant to
the Security Agreements, shall be subject to the Collateral Agency Agreement.

                                    ARTICLE 5

                                   THE TRUSTEE

                SECTION 5.1. Certain Duties and Responsibilities.

        (a)     Except during a continuance of an Event of Default:

                (i)     the Trustee undertakes to perform such duties and only
        such duties as are specifically set forth in this Indenture and the
        Collateral Agency Agreement, and no implied covenants or obligations
        shall be read into this Indenture and the Collateral Agency Agreement
        against the Trustee; and

                (ii)    in the absence of bad faith on its part, the Trustee may
        conclusively rely, as to the truth of the statements and the correctness
        of the opinions expressed therein, upon certificates, requests, orders
        or opinions furnished to the Trustee and conforming to the requirements
        of this Indenture and the Collateral Agency Agreement, as applicable;
        but in the case of any such certificates or opinions which by any
        provision hereof or of the Collateral Agency Agreement are specifically
        required to be furnished to the Trustee, the Trustee shall be under a
        duty to examine the same to

                                       57
<PAGE>

        determine whether or not they conform to the requirements of this
        Indenture, but need not verify the contents thereof.

        (b)     In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and the Collateral Agency Agreement, and use the same degree of care
and skill in their exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.

        (c)     No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own wilful misconduct, except that:

                (i)     this clause (c) shall not be construed to limit the
        effect of clause (a) of this Section 5.1;

                (ii)    the Trustee shall not be liable for any error of
        judgment made in good faith by a Responsible Officer, unless it shall be
        proved that the Trustee was negligent in ascertaining the pertinent
        facts;

                (iii)   the Trustee shall not be liable with respect to any
        action taken or omitted to be taken by it in good faith in accordance
        with the direction of the Holders of a majority in Principal Amount (or
        such other amount as may be provided in or pursuant to this Indenture)
        of the Outstanding Securities of any series relating to the time, method
        and place of conducting any proceeding for any remedy available to the
        Trustee or exercising any trust or power conferred upon the Trustee
        under this Indenture or the Collateral Agency Agreement; and

                (iv)    no provision of this Indenture or the Collateral Agency
        Agreement shall require the Trustee to expend or risk its own funds or
        otherwise incur any financial liability in the performance of any of its
        duties hereunder, or in the exercise of any of its rights or powers, if
        it shall have reasonable grounds for believing that repayment of such
        funds or adequate indemnity against such risk or liability is not
        reasonably assured to it (including, without limitation, adequate
        indemnity reasonably satisfactory to the Trustee against any
        environmental liabilities against the Trustee arising out of the
        performance of its duties hereunder and under the Collateral Agency
        Agreement).

        (d)     Whether or not therein expressly so provided, every provision of
this Indenture or the Collateral Agency Agreement relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section 5.1.

                SECTION 5.2. Notice of Defaults. Within 90 days after the
occurrence of any default hereunder, the Trustee shall transmit by mail to all
Holders, as their names and

                                       58
<PAGE>

addresses appear in the Security Register, notice of such default hereunder
known to the Trustee, unless such default shall have been cured or waived;
provided, however, that, except in the case of a default in the payment of the
principal of or interest on any Security, the Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the Trustee
in good faith determines that the withholding of such notice is in the best
interests of the Holders. For the purpose of this Section 5.2, the term
"default" means any event which is, or after notice or lapse of time or both
would become, an Event of Default.

                SECTION 5.3. Certain Rights of Trustee. Subject to the
provisions of Section 5.1:

        (a)     the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;

        (b)     any request or direction of the Company or the Partnership
mentioned herein shall be sufficiently evidenced by an Officer's Certificate,
or, in the case of the Company, a Company Request or Company Order;

        (c)     whenever in the administration of this Indenture or the
Collateral Agency Agreement the Trustee shall deem it desirable that a matter be
proved or established prior to taking, suffering or omitting to take any action
hereunder or under the Collateral Agency Agreement, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officer's Certificate;

        (d)     the Trustee may consult with counsel, and the written advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;

        (e)     the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture or the Collateral Agency
Agreement at the request or direction of any of the Holders pursuant to this
Indenture or the Collateral Agency Agreement, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;

        (f)     the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent order, bond,
debenture, note, other evidence of indebtedness or other paper or document, but
the Trustee in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be entitled to
examine the books, records

                                       59
<PAGE>

and premises of the Company or the Partnership, as applicable, personally or by
agent or attorney; and

        (h)     the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder or under the Collateral Agency Agreement either
directly or by or through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder.

                SECTION 5.4. Not Responsible for Recitals or Issuance of
Securities. The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company or the Partnership, as applicable, and neither the Trustee nor any
Authenticating Agent assumes any responsibility for their correctness. The
Trustee makes no representations as to the validity or sufficiency of this
Indenture or the Securities or any Collateral or Lien thereon or any Security
Agreement. Neither the Trustee nor any Authenticating Agent shall be accountable
for the use or application by the Company of Securities or the proceeds thereof.
The Trustee shall not be charged with knowledge of any Default or Event of
Default unless a Responsible Officer of the Trustee assigned to its
Institutional Trust Services department (or any successor department or group)
shall have actual knowledge thereof or shall have received written notice
thereof in accordance with Section 1.5 from the Company, the Partnership, the
Collateral Agent or any Holder. The Trustee shall not be responsible for
perfecting or maintaining the perfection of the Lien on the Collateral or for
filing, refiling or recording any document, notice or instrument in any public
office at any time. The Trustee shall not be responsible for calculating the
Economic Make-Whole Premium. The Trustee makes no representations as to the
value or condition of the Collateral or any part thereof, or as to the title of
the Partnership or the Company thereto or as to the security afforded by the
Security Agreements, or as to the validity, execution (except its own
execution), enforceability, priority, perfection, legality or sufficiency of the
Security Agreements or any Senior Debt Agreement, and the Trustee shall incur no
liability or responsibility in respect of any such matters. The Trustee shall
not be responsible for insuring the Collateral or any other Property or for
determining whether the Collateral or any other Property is properly insured or
for the payment of taxes, charges, assessments or liens upon the Collateral or
otherwise as to the maintenance of the Collateral.

                SECTION 5.5. May Hold Securities. The Trustee, any
Authenticating Agent, any Paying Agent, any Security Registrar or any other
agent of the Company or the Partnership, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with the Company and the Partnership with the same rights it would have if it
were not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such
other agent.

                SECTION 5.6. Money Held in Trust. Money held by the Trustee in
trust hereunder need not be segregated from other funds except to the extent
required by law. The Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed with the Company.

                                       60
<PAGE>

                SECTION 5.7. Compensation and Reimbursement. The Company agrees:

        (a)     to pay to the Trustee (all references in this Section 5.7 to the
Trustee shall be deemed to apply to the Trustee in its capacities as Trustee,
Paying Agent and Securities Registrar) from time to time such compensation as
shall be agreed to in writing for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);

        (b)     except as otherwise expressly provided herein or in any written
agreement between the Trustee and the Company, to reimburse the Trustee upon its
request for all reasonable and documented (in accordance with the standard
practices of the Trustee) expenses and disbursements incurred or made by the
Trustee in accordance with any provision of this Indenture or the Collateral
Agency Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense or
disbursement as may be attributable to its negligence or bad faith;

        (c)     to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of
the trust or trusts hereunder or in connection with the Securities of any
series, including the costs and expenses of defending itself against any claim
or liability in connection with the exercise or performance of any of its powers
or duties hereunder or under the Collateral Agency Agreement; and

        (d)     the obligations of the Company under this Section 5.7 to
compensate the Trustee, to pay or reimburse the Trustee for expenses and
disbursements and to indemnify and hold harmless the Trustee shall constitute
additional indebtedness hereunder and shall survive the satisfaction and
discharge of this Indenture.

                Without prejudice to any other rights available to the Trustee
under applicable law, when the Trustee incurs expenses or renders services after
the occurrence of an Event of Default under Section 4.1(g), (h) or (i), the
parties hereto and the Holders by their acceptance of the Securities hereby
agree that the expenses and the compensation for the services of the Trustee are
intended to constitute expenses of administration under any applicable
bankruptcy law.

                If the Trustee (or an agent thereof) takes title to the assets
of the Company or the Partnership pursuant to a foreclosure proceeding (as used
in this Section 5.7(d), a "Transfer"), then the Company and the Partnership will
indemnify the Trustee for liabilities arising out of any violation of
environmental law by the Company or the Partnership, as the case may be, whether
known at the time of the Transfer or discovered subsequent to the Transfer, with
respect to such assets that resulted from action occurring prior to the
Transfer. The foregoing indemnity shall be for the sole benefit of the Trustee
(and any agent thereof who takes title to assets of the Company or the
Partnership, as the case may be, in a foreclosure proceeding) and rights
thereunder may not be assigned or otherwise transferred

                                       61
<PAGE>

other than to a successor Trustee hereunder. Holders of Securities shall not
have any rights under the foregoing indemnity.

                SECTION 5.8. Corporate Trustee Required; Eligibility. There
shall at all times be one (and only one) Trustee hereunder with respect to the
Securities of each series, which may be Trustee hereunder for Securities of one
or more other series. Each Trustee shall be a corporation organized and doing
business under the laws of the United States of America, any State thereof or
the District of Columbia, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least $100,000,000 and
subject to supervision or examination by Federal or State authority. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of said supervising or examining authority, then, for the
purposes of this Section 5.8, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
with respect to the Securities of any series shall cease to be eligible in
accordance with the provisions of this Section 5.8, it shall resign immediately
in the manner and with the effect hereinafter specified in this Article 5.

                SECTION 5.9. Resignation and Removal; Appointment of Successor.
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article 5 shall become effective until the acceptance
of appointment by the successor Trustee in accordance with the applicable
requirements of Section 5.10.

                The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice thereof to the
Company. If the instrument of acceptance by a successor Trustee required by
Section 5.10 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may at the
expense of the Company petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.

                The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal amount
of the Outstanding Securities of such series, delivered to the Trustee and to
the Company.

                If at any time:

        (a)     the Trustee shall cease to be eligible under Section 5.8 and
shall fail to resign after written request therefor by the Company or by any
Holder; or

        (b)     the Trustee shall be incapable of acting or shall be adjudged as
bankrupt or insolvent, or a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation;

                                       62
<PAGE>
then, in any such case, (A) the Company by an Officer's Certificate may remove
the Trustee with respect to all Securities, or (B) subject to Section 4.14, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.

                If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any cause,
with respect to the Securities of one or more series, the Company, by an
Officer's Certificate, shall promptly appoint a successor Trustee or Trustees
with respect to the Securities of that or those series (it being understood that
any such successor Trustee may be appointed with respect to the Securities of
one or more or all of such series and that at any time there shall be only one
Trustee with respect to the Securities of any particular series) and shall
comply with the applicable requirements of Section 5.10. If, within one year
after such resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee with respect to the Securities of any series shall
be appointed by Act of the Holders of a majority in Principal Amount of the
Outstanding Securities of such series delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance
of such appointment in accordance with the applicable requirements of Section
5.10, become the successor Trustee with respect to the Securities of such series
and to that extent supersede the successor Trustee appointed by the Company. If
no successor Trustee with respect to such Securities of any series shall have
been so appointed by the Company or the Holders and accepted appointment in the
manner required by Section 5.10, any Holder who has been a bona fide Holder of a
Security of such series for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee with respect to the Securities of such
series.

                The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any series
to all Holders of Securities of such series in the manner provided in Section
1.6. Each notice shall include the name of the successor Trustee with respect to
the Securities of such series and the address of its Corporate Trust Office.

                SECTION 5.10. Acceptance of Appointment by Successor. In case of
the appointment hereunder of a successor Trustee with respect to all Securities,
every such successor Trustee so appointed shall execute, acknowledge and deliver
to the Company and the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the

                                       63
<PAGE>
retiring Trust and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder.

                In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
Partnership, the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such appointment
and which (a) shall contain such provisions as shall be necessary or desirable
to transfer and confirm to, and to vest in, each successor Trustee all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates, (b) if the retiring Trustee is not retiring with respect to all
Securities, shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series as to
which the retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (c) shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Trustee, it being understood that
nothing herein or in such supplemental indenture shall constitute such Trustee's
co-trustees of the same trust and that each such Trustee shall be trustee of a
trust or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee; and, upon the execution and delivery of
such supplemental indenture, the resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series to which the appointment of such
successor Trustee relates; but, on request of the Company or any successor
Trustee, such retiring Trustee shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee hereunder
with respect to the Securities of that or those series to which the appointment
of such successor Trustee relates.

                Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to in the first or second preceding paragraph, as the case may be.

                No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be eligible under this
Article.

                SECTION 5.11. Merger, Conversion, Consolidation or Succession to
Business. Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder (provided such
corporation shall be otherwise eligible under this Article 5), without the

                                       64
<PAGE>
execution or filing of any paper or any further act on the part of any of the
parties hereto. In case any Securities shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such authentication and
deliver the Securities so authenticated with the same effect as if such
successor Trustee had itself authenticated such Securities.

                SECTION 5.12. Appointment of Paying Agent and Authenticating
Agent. 5.12.

        (a)     There shall at all times be a Paying Agent hereunder. In
addition, the Trustee may appoint an Authenticating Agent or Agents with respect
to one or more series of Securities which shall be authorized to act on behalf
of the Trustee to authenticate Securities of such series issued upon exchange,
registration of transfer or partial redemption thereof or pursuant to Section
2.8, and Securities so authenticated shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes as if authenticated
by the Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. The Paying Agent and all Authenticating Agents shall
herein be referred to individually as an "Authorized Agent" and collectively as
the "Authorized Agents."

        (b)     Each Authorized Agent shall be acceptable to the Company and
shall at all times be a corporation organized and doing business under the laws
of the United States of America, any State thereof or the District of Columbia,
authorized under such laws to act as such Authorized Agent, having a combined
capital and surplus of not less than $50,000,000 and subject to supervision or
examination by Federal or State authority. If such Authorized Agent publishes
reports of condition at least annually, pursuant to law or to the requirements
of said supervising or examining authority, then, for the purposes of this
Section 5.12, the combined capital and surplus of such Authorized Agent shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time an Authorized Agent shall cease
to be eligible in accordance with the provisions of this Section 5.12, such
Authorized Agent shall resign immediately in the manner and with the effect
specified in this Section 5.12.

        (c)     Any corporation into which an Authorized Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authorized Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authorized Agent, shall continue to be an
Authorized Agent (provided such corporation shall be otherwise eligible under
this Section 5.12), without the execution or filing of any paper or any further
act on the part of the Trustee or such Authorized Agent.

        (d)     Any Paying Agent (other than the Trustee) from time to time
appointed hereunder shall execute and deliver to the Trustee an instrument in
which said Paying Agent

                                       65
<PAGE>

shall agree with the Trustee, subject to the provisions of this Section 5.12,
that such Paying Agent will:

                (i)     hold all sums held by it for the payment of principal
        of, and premium, if any, and interest on Securities in trust for the
        benefit of the Persons entitled thereto until such sums shall be paid to
        such Persons or otherwise disposed of as herein provided;

                (ii)    give the Trustee within five days thereafter notice of
        any default by any obligor upon the Securities in the making of any such
        payment of principal, premium, if any, or interest; and

                (iii)   at any time during the continuance of any such default,
        upon the written request of the Trustee, forthwith pay to the Trustee
        all sums so held in trust by such Paying Agent.

Notwithstanding any other provision of this Indenture any payment required to be
made to or received or held by the Trustee may, to the extent authorized by
written instructions of the Trustee, be made to or received or held by a Paying
Agent in the Borough of Manhattan, the City of New York, for the account of the
Trustee.

        (e)     An Authorized Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authorized Agent and to the Company and the Company may at any time
terminate the agency of a Paying Agent by giving written notice thereof to such
Authorized Agent and to the Trustee. Upon receiving such a notice of resignation
or upon such a termination, or in case at any time such Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section
5.12, the Trustee may appoint a successor Authenticating Agent which shall be
acceptable to the Company and the Company may appoint a successor Paying Agent
and give notice of such appointment to the Trustee and the Trustee, in the case
of an Authenticating Agent, and the Company, in the case of a Paying Agent,
shall give notice of such appointment in the manner provided in Section 1.6 to
all Holders of Securities of the series with respect to which such Authorized
Agent will serve. Any successor Authorized Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties
of its predecessor hereunder, with like effect as if originally named as such
Authorized Agent. No successor Authorized Agent shall be appointed unless
eligible under the provisions of this Section 5.12.

        (f)     The Company agrees to pay to each Authorized Agent from time to
time reasonable compensation for its services under this Section 5.12.

                                       66
<PAGE>
        (g)     If an appointment of an Authenticating Agent with respect to one
or more series is made pursuant to this Section 5.12, the Securities of such
series may have endorsed thereon, in addition to the Trustee's certificate of
authentication, a certificate of authentication in the following form:

                        This is one of the Securities of the series designated
        therein referred to in the within-mentioned Indenture.

                                            The Chase Manhattan Bank, as Trustee

                                            By
                                              ----------------------------------
                                              As Authenticating Agent


                                            By
                                              ----------------------------------
                                              Authorized Signatory

                If all of the Securities of a series may not be originally
issued at one time, and if the Trustee does not have an office capable of
authenticating Securities upon original issuance located in a Place of Payment
where the Company wishes to have Securities of such series authenticated upon
original issuance, the Trustee, if so requested by the Company in writing or by
facsimile, shall appoint at the expense of the Company in accordance with this
Section 5.12 and such procedures as shall be acceptable to the Trustee, an
Authenticating Agent having an office in a Place of Payment designated by the
Company with respect to such series of Securities.

        (h)     The Paying Agent will comply with all applicable withholding,
backup withholding and information reporting requirements imposed by the Code
and applicable Treasury Regulations issued thereunder (including, without
limitation, the collection of Internal Revenue Service Forms W-8 or W-9, as the
case may be, and the filing of Internal Revenue Service Forms 1099, 1042 and
1042-S).

                SECTION 5.13. Rights and Obligations of Trustee as
Representative of the Holders under the Security Agreements. Whenever any
Security Agreement provides that the Senior Parties are to take any action
thereunder, the Trustee, as representative of the Holders shall be obligated to
solicit consents from the Securityholders and consent on behalf of the
Securityholders in accordance with the results of such solicitation. The Trustee
shall be required to consent or not consent with respect to all matters
requiring the consent of Senior Parties in proportion to the aggregate Principal
Amount of Securities the Holders of which have consented affirmatively and
negatively to the proposed action. The Trustee shall consider any non-responses
a "no" vote with respect to that Securityholder. The expenses of any such
solicitation shall be borne by the Company and the Company shall be obligated,
at the request of the Trustee, to prepare all documents required to consummate
such solicitation,

                                       67
<PAGE>
including all documents required by applicable law, including applicable
securities laws. The Trustee shall have no liability to any Person, including,
without limitation, any Senior Party, the Company or the Partnership, for any
delay in consenting as a Senior Party caused by the solicitation requirements of
this Section 5.13. The Trustee may, but shall not be obligated to, give its
consent as representative of the Holders pursuant to this Section 5.13, if the
action so consented to affects the Trustee's own rights, duties or immunities
under this Indenture or otherwise. If the Collateral Agent requires indemnity
from the Trustee, as representative of the Holders, prior to taking any action
under the Security Agreements, the Trustee shall have no responsibility for
providing such indemnity but shall request such indemnity from the Holders and
shall have no liability to any Person for any inaction by the Collateral Agent
pending receipt of such indemnity from the Holders.

                                    ARTICLE 6

                HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

                SECTION 6.1. Company to Furnish Trustee Names and Addresses of
Holders. The Company will furnish or cause to be furnished to the Trustee:

        (a)     monthly, not later than each Interest Payment Date with respect
to the Securities of each series, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders of Securities of
such series as of the day 15 days preceding such Interest Payment Date; and

        (b)     at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the time
such list is furnished;

excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.

                SECTION 6.2. Preservation of Information; Communications to
Holders. The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 6.1 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 6.1 upon receipt of a new list so furnished.

                The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided by the
Trust Indenture Act (as if the provisions of the Trust Indenture Act applied to
this Indenture).

                Every Holder of Securities, by receiving and holding the same,
agrees with the Company, the Partnership and the Trustee that none of the
Company, the Partnership nor the

                                       68
<PAGE>

Trustee, nor any agent of either of them, shall be held accountable by reason of
any disclosure of information as to names and addresses of Holders made pursuant
to the Trust Indenture Act (as if the provisions of the Trust Indenture Act
applied to this Indenture).

                                    ARTICLE 7

                             SUPPLEMENTAL INDENTURES

                SECTION 7.1. Supplemental Indentures Without Consent of Holders.
Subject to the terms of the Collateral Agency Agreement that require the
Required Senior Parties to consent to certain amendments to the Indenture,
without the consent of any Holders, the Company and the Partnership, in each
case when authorized by an Officer's Certificate and the Trustee, at any time
and from time to time, may enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, for any of the following purposes:

        (a)     to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company herein and
in the Securities, or to evidence the succession of another entity to the
Partnership and the assumption by such successor of the covenants of the
Partnership contained herein; or

        (b)     to add to the covenants of the Company or the Partnership for
the benefit of the Holders of all or any series of Securities (and if such
covenants are to be for the benefit of less than all series of Securities,
stating that such covenants are expressly being included solely for the benefit
of such series) or to surrender any right or power herein conferred upon the
Company or the Partnership; or

        (c)     to add any additional Events of Default for the benefit of the
Holders of all or any series of Securities (and if such additional Events of
Default are to be for the benefit of less than all series of Securities, stating
that such additional Events of Default are expressly being included solely for
the benefit of such series); or

        (d)     to add to or change any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the issuance of
Securities in bearer form, registrable or not registrable as to principal, and
with or without interest coupons, or to permit or facilitate the issuance of
Securities in uncertificated form; or

        (e)     to add to, change or eliminate any of the provisions of this
Indenture in respect of one or more series of Securities provided that any such
addition, change or elimination (i) shall neither (A) apply to any Security of
any series created prior to the execution of such supplemental indenture and
entitled to the benefit of such provision nor (B) modify the rights of the
Holder of any such Security with respect to such provision or (ii) shall become
effective only when there is no such Security Outstanding; or

                                       69
<PAGE>

        (f)     to secure the Securities, including, without limitation, by
amending the Partnership Security Agreement in accordance with Section 8.27; or

        (g)     to establish the form of Securities of any series as permitted
by Section 2.1, and to establish the terms of Securities of any series as
permitted by Section 2.3; or

        (h)     to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or more
series and to add to or change any of the provisions of this Indenture as shall
be necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, pursuant to the requirements of Section
5.10; or

        (i)     to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision herein,
or to make any other provisions with respect to matters or questions arising
under this Indenture, provided that such action pursuant to this clause (i)
shall not adversely affect the interests of the Holders of Securities of any
series in any material respect; or

        (j)     to modify the restrictive legends set forth on the face of the
form of Security in Exhibit A or as are otherwise set forth or provided for
pursuant to Section 2.1, 2.2 or 2.3, or modify the forms of certification
provided for in Section 2.13; provided, however, that any such modification
shall not adversely affect the interest of the Holders of the Securities of any
series created prior to the execution of such supplemental indenture in any
material respect; or

        (k)     to permit the holders of any indebtedness incurred in respect of
an Expansion to secure such indebtedness with the collateral specifically
permitted under clauses (ii), (iii) and (iv) of Section 8.20(b), and upon
Completion of such Expansion and release of the related Completion Guaranty, to
permit such holders to share equally and ratably in the Collateral; or

        (l)     to make any other change that does not adversely affect the
interests of the Holders of the Securities of any series created prior to the
execution of such supplemental indenture in any material respect.

                SECTION 7.2. Supplemental Indentures With Consent of Holders.
Subject to the terms of the Collateral Agency Agreement that require the
Required Senior Parties to consent to certain amendments to the Indenture, with
the consent of the Holders of not less than a majority in principal amount of
the Outstanding Securities of each series affected by such supplemental
indenture, by Act of said Holders delivered to the Company, the Partnership and
the Trustee, the Company and the Partnership, in each case when authorized by an
Officer's Certificate, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Securities of such series
under this Indenture; provided, however, that no such supplemental

                                       70
<PAGE>

indenture shall, without the consent of the Holder of each Outstanding Security
affected thereby:

        (a)     change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Security, or reduce the
principal amount thereof or the rate of interest thereon or any premium payable
upon the redemption thereof, or reduce the amount of the principal of an
Original Issue Discount Security or any other Security which would be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant to
Section 4.2, or change any Place of Payment where, or the coin or currency in
which, any Security or any premium or interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date); or

        (b)     subject to Section 7.1(k), permit the creation of any lien prior
to the Lien of the Security Agreements with respect to any of the Collateral, or
terminate the Lien of the Security Agreements on any Collateral or deprive any
Holder of the security afforded by the Lien of the Security Agreements, except
to the extent expressly permitted by this Indenture or any of the Security
Agreements; or

        (c)     reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver of certain defaults hereunder and their consequences) provided for in
this Indenture; or

        (d)     modify any of the provisions of this Section 7.2 or Section
4.13, except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of
the Holder of each Outstanding Security affected thereby; provided, however,
that this clause (d) shall not be deemed to require the consent of any Holder
with respect to changes in the references to "the Trustee" and concomitant
changes in this Section 7.2, or the deletion of this proviso, in accordance with
the requirements of Sections 5.10 and 7.1(h).

                A supplemental indenture which changes or eliminates any
covenant or other provision of this Indenture which has expressly been included
solely for the benefit of one or more particular series of Securities, or which
modifies the rights of the Holders of Securities of such series with respect to
such covenant or other provision, shall be deemed not to affect the rights under
this Indenture of the Holders of Securities of any other series.

                It shall not be necessary for any Act of Holders under this
Section 7.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.

                SECTION 7.3. Execution of Supplemental Indentures. In executing,
or accepting the additional trusts created by, any supplemental indenture
permitted by this Article 7 or the

                                       71
<PAGE>

modifications thereby of the trusts created by this Indenture, the Trustee shall
be entitled to receive, and (subject to Section 5.1) shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture and that
such supplemental indenture is the legal, valid and binding obligation of the
Company and the Partnership, enforceable against the Company and the Partnership
in accordance with its terms (subject to customary qualifications and
exceptions) and that all necessary consents have been obtained. The Trustee may,
but shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise.

                SECTION 7.4. Effect of Supplemental Indentures. Upon the
execution of any supplemental indenture under this Article 7, this Indenture
shall be modified in accordance therewith, and such supplemental indenture shall
form a part of this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.

                SECTION 7.5. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article 7 may, and if required by the
Trustee shall, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company or the Partnership
shall so determine, new Securities of any series so modified as to conform, in
the opinion of the Trustee, the Company and the Partnership, to any such
supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities of such series.

                                    ARTICLE 8

                                    COVENANTS

                Each of the Partnership and the Company covenants and agrees
that so long as this Indenture is in effect and any Securities remain
Outstanding:

                SECTION 8.1. Financial Statements, Etc. The Partnership (for
itself and on behalf of the Company) shall deliver to the Trustee and upon the
request of a beneficial holder of the Securities shall thereafter deliver to
such beneficial holder without further request:

        (a)     as soon as available and in any event within 60 days after the
end of each of the first three quarterly fiscal periods of each fiscal year of
the Partnership, unaudited statements of income, retained earnings and cash
flows of each of the Partnership and the Company (commencing with the quarter
ending June 30, 2001) for such period and for the period from the beginning of
the respective fiscal year to the end of such period, and the related balance
sheets of each of the Partnership and the Company as at the end of such period,
setting forth in each case in comparative form the corresponding figures for the
corresponding periods in the preceding fiscal year (except that, in the case of
balance sheets, such comparison shall be to the last day of the prior fiscal
year);

                                       72
<PAGE>

        (b)     as soon as available and in any event within 120 days after the
end of each fiscal year of the Partnership, audited statements of income,
retained earnings and cash flows of each of the Partnership and the Company for
such fiscal year (commencing with the year ending December 31, 2001) and the
related balance sheet of the Partnership and the Company as at the end of such
fiscal year, setting forth in each case in comparative form the corresponding
figures for the preceding fiscal year, and accompanied by an opinion thereon of
independent certified public accountants of recognized national standing, which
opinion shall state that said financial statements fairly present in all
material respects the financial condition and results of operations of each of
the Partnership and the Company as at the end of and for, such fiscal year in
accordance with RAP;

        (c)     together with the first quarterly report under Section 8.1(a)
that is delivered after the publication in each year of the Consumer Price Index
for all Urban Consumers (CPI/U) or a comparable index, an annual Officer's
Certificate setting forth the Escalation over the previous year and the method
of calculation thereof.

        (d)     as soon as practicable and in any event within 10 days after the
Partnership becomes aware or should reasonably become aware of the occurrence of
an Event of Default or Default, an Officer's Certificate setting forth the
details of such Event of Default or Default, and the action which the
Partnership and the Company propose to take with respect thereto;

        (e)     promptly following the effectiveness thereof, copies of each
amendment, modification, supplement or waiver to any Project Agreement,
certified by a Senior Officer of the Partnership, to be a true and complete copy
of such amendment, modification, supplement or waiver, provided that, unless
requested by the Trustee, the foregoing shall not apply to any such amendment,
modification, supplement or waiver that could not reasonably be expected to have
a Material Adverse Effect;

        (f)     no later than the date of the consummation of any Transfer,
notice of such event;

        (g)     simultaneously with the delivery of each set of financial
statements pursuant to clauses (a) and (b) of this Section 8.1, a written
discussion prepared by the Partnership of the Partnership's financial condition,
changes in financial condition and results of operations, including a
description of (i) any material developments in the Partnership's business, (ii)
the Partnership's material commitments for Capital Expenditures (not including
Capital Expenditures in connection with maintenance of the Partnership's
Properties or other Capital Expenditures made in the ordinary course) (iii) any
unusual events or transactions or any significant changes that materially
affected the amount of reported income or cash flow from continuing operations
and any other significant components of revenues of expenses, (iv) Distributions
made during the period covered by such statements and, (v) loans and other
advances made by the Partnership to any of the Partners;

                                       73
<PAGE>

        (h)     written notice of the occurrence of any Material Loss or
Catastrophic Loss within 10 days of the occurrence of such loss.

                The Partnership will furnish to the Trustee at the time it
furnishes each set of financial statements pursuant to paragraph (a) or (b)
above, a certificate of a Senior Officer of the Partnership (i) to the effect
that no Default has occurred and is continuing (or, if any Default has occurred
and is continuing, describing the same in reasonable detail and describing the
action that the Partnership has taken or proposes to take with respect thereto),
(ii) setting forth in reasonable detail the computations necessary to determine
whether the Obligors are in compliance with Sections 8.9 and 8.11 hereof as of
the end of the respective quarterly fiscal period or fiscal year and (iii)
certifying that the amendments, modifications, supplements and waivers referred
to in Section 8.1(d) which have become effective since (in the case of the first
such certificate) the Closing Date or (in the case of each subsequent such
certificate) the date of the next preceding such certificate and copies of which
have not been delivered to the Trustee as provided above could not, taken as a
whole, reasonably be expected to have a Material Adverse Effect.

                The Trustee's sole responsibility with respect to any statement
or written discussion delivered to it pursuant to this Section 8.1 shall be to
make the same available for inspection by the Holders during normal business
hours.

                SECTION 8.2. Payment of Principal, Premium and Interest. The
Company covenants and agrees for the benefit of each series of Securities that
it will duly and punctually pay the principal of, premium, if any, and interest
on the Securities of that series in accordance with the terms of the Securities
and this Indenture.

                SECTION 8.3. Existence, Etc. Each Obligor will:

        (a)     Subject to Section 8.6, preserve and maintain its legal
existence, its general partnership form (in the case of the Partnership) or
corporate form (in the case of the Company), and obtain and maintain, or to
cause to be obtained or maintained, as the case may be, all of its rights,
licenses, permits, privileges and franchises necessary for the operation of the
Project and the conduct of its business unless each Partner shall have
determined that failure to maintain any of such rights, licenses, permits,
privileges and franchises could not reasonably be expected (either individually
or in the aggregate) to have a Material Adverse Effect (provided that nothing in
this Section 8.3 shall prohibit any transaction expressly permitted under
Section 8.6);

        (b)     operate and manage the Project (or cause it to be operated and
managed) and maintain, repair and preserve (or cause the maintenance, repair and
preservation of) the Project in each case (i) in compliance with, and otherwise
comply with the requirements of, all applicable Governmental Rules and
Governmental Approvals including, without limitation, all applicable laws
involving pipeline safety and environmental protection except for such failures
to comply as could not reasonably be expected to result in a Material

                                       74
<PAGE>

Adverse Effect, (ii) in accordance with the terms of the Project Agreements,
(iii) in accordance with generally accepted prudent pipeline industry standards,
and (iv) subject to Section 8.6, maintain and preserve the Project and all of
its other Properties used or useful in its business in good operating and
working order and condition, ordinary wear and tear excepted; provided however,
that nothing in this Section 8.3 shall prevent the Partnership or the Company
from discontinuing or suspending the operation or maintenance or preservation of
any of such properties if such discontinuance or suspension is, in the judgment
of each Partner, desirable in the conduct of the Partnership's business and not
disadvantageous in any material respect to the Holders; provided further, that,
except in the event of a Casualty Event, in which case the provisions of Section
9.8 shall apply with respect to the portion or portions of the Project lost,
damaged or condemned;

        (c)     pay and discharge all taxes, assessments and governmental
charges or levies imposed on it or on its income or profits or on any of its
Property when due except (i) for any such tax, assessment charge or levy the
payment of which is being contested in good faith and by proper proceedings and
against which adequate reserves are being maintained in accordance with RAP and
(ii) to the extent that failure to pay such taxes will not have a Material
Adverse Effect on the financial condition of the Partnership; and

        (d)     keep adequate records and books of account.

                SECTION 8.4. Money for Securities Payments to be Held in Trust.
If the Company shall at any time act as Paying Agent with respect to any series
of Securities, it will on or before each due date of the principal of or any
premium or interest on any of the Securities of that series, segregate and hold
in trust for the benefit of the Persons entitled thereto a sum sufficient to pay
the principal, premium, if any, and interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as herein provided, and
the Company will promptly notify the Trustee of its action or failure so to act.

                Whenever the Company shall have one or more Paying Agents for
any series of Securities, it will, on or prior to each due date of the principal
of, premium, if any, or interest on any Securities of that series, deposit with
a Paying Agent a sum sufficient to pay such amount, such sum to be held as
provided by the Trust Indenture Act (as if the provisions of the Trust Indenture
Act applied to this Indenture), and (unless such Paying Agent is the Trustee)
the Company will promptly notify the Trustee of its action or failure so to act.

                The Company will cause each Paying Agent for any series of
Securities other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will (a) comply with the
provisions of the Trust Indenture Act applicable to it as a Paying Agent (as if
the provisions of the Trust Indenture Act applied to this Indenture) and (b)
during the continuance of any default by the Company (or any other obligor upon
the Securities of that series) in the making of any payment in respect of the
Securities of that

                                       75
<PAGE>

series, upon the written request of the Trustee, forthwith pay to the Trustee
all sums held in trust by such Paying Agent for payment in respect of the
Securities of that series.

                The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
the Company by Company Order may direct any Paying Agent to pay, to the Trustee
all sums held in trust by the Company, or such Paying Agent, such sums to be
held by the Trustee upon the same trusts as those upon which such sums were held
by the Company or such Paying Agent; and, upon such payment by any Paying Agent
to the Trustee, such Paying Agent shall be released from all further liability
with respect to such money.

                Except as otherwise required by applicable law, any money
deposited with the Trustee or any Paying Agent, or then held by the Company, in
trust for the payment of the principal of, premium, if any, or interest on any
Security of any series and remaining unclaimed for two years after such
principal, premium or interest has become due and payable shall be paid to the
Company on demand, or (if then held by the Company) shall be discharged from
such trust; and the Holder of such Security shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in a newspaper published in the English language, customary
published on each Business Day and of general circulation in the Borough of
Manhattan, The City of New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.

                SECTION 8.5. Insurance.

        (a)     Except as expressly provided in the last paragraph of this
Section 8.5(a), the Partnership will maintain insurance with financially sound
and reputable insurance companies and with respect to Property and risks of a
character that, in the reasonable good faith opinion of the Partnership, are no
less favorable than the insurance coverage obtained by companies engaged in
similar businesses and owning similar properties as the Partnership; including
the following insurance:

                (i)     Property Insurance. Insurance against loss or damage
        covering the Project and other tangible real and personal Property and
        improvements of the Partnership and the Company by reason of any Peril.

                (ii)    Business Interruption Insurance. Business interruption
        insurance covering 100% of business income (defined as net profit before
        income taxes, continuing normal operating expenses including payroll and
        mandatory debt service)

                                       76
<PAGE>

        of the Project, for a period of 12 months, arising from loss insured by
        clause (i) above. The maximum deductible in respect of such business
        interruption insurance shall be no greater than $10,000,000.

                (iii)   Automobile Liability Insurance for Bodily Injury and
        Property Damage. Insurance against liability for bodily injury and
        property damage in respect of all vehicles (whether owned, hired or
        rented by the Partnership or the Company) at any time located at, or
        used in connection with, its Properties or operations, but in no event
        less than the amount required by applicable law.

                (iv)    Commercial General Liability Insurance. Insurance
        against claims for bodily injury, death or Property damage occurring on,
        in or about the Properties (and adjoining sidewalks and waterways) of
        the Partnership and the Company.

                (v)     Workers' Compensation Insurance. Workers' compensation
        insurance (including, without limitation, Employers' Liability
        Insurance) to the extent required by applicable law.

                (vi)    Other Insurance. Such other insurance in each case as
        generally carried by Williams for such similar facilities.

                Notwithstanding any provision in this Section 8.5 to the
contrary, (i) the Partnership shall have no obligation to maintain insurance
coverage on underground piping, and (ii) the Partnership and the Company will
not be obligated to maintain or cause to be maintained the insurance described
in this Section 8.5 during any period in which Williams extends its own
insurance or self-insurance to the Partnership and Company to the extent and in
the manner normal for companies of like size, type and financial condition as
the Partnership and the Company.

        (b)     The Collateral Agent shall be named as sole loss payee, under a
standard lenders loss payable clause or mortgage endorsement substantially
equivalent to the New York standard mortgage endorsement or lenders loss payable
endorsement form 438 BFU, without contribution, under insurance policies
required by Sections 8.5(a)(i) and (ii).

        (c)     On the Closing Date, the Company and the Partnership shall
furnish to the Trustee certification indicating procurement of all required
insurance. Such certification shall identify underwriters, the type of
insurance, the insurance limits, the risks covered thereby and the policy term.
Upon request by the Trustee, the Company and the Partnership will promptly
furnish to the Trustee copies of all insurance digests (or upon further request
insurance policies), binders and cover notes or other evidence of such insurance
relating to the Project.

                                       77
<PAGE>

                SECTION 8.6. Prohibition of Fundamental Changes. Except as
permitted by the Partnership Agreement:

        (a)     Neither Obligor will enter into any transaction of merger or
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), except pursuant to a Qualified
Transaction.

        (b)     Neither Obligor will acquire any business or Property from, or
capital stock of, or be a party to any acquisition of, any Person except (in the
case of the Partnership) for the acquisition of capital stock of the Company and
purchases of inventory and other Property to be sold or used in the ordinary
course of business.

        (c)     Subject to Section 8.6(a), neither Obligor will sell, transfer,
lease, abandon or otherwise dispose of, in one transaction or a series of
transactions, all or substantially all of its assets.

        (d)     Subject to Section 8.6(a), neither Obligor will convey, sell,
lease, transfer or otherwise dispose of, in one transaction or a series of
transactions, any of its business or Property, whether now owned or hereafter
acquired, that is material to the operation or maintenance of the Project
(including, without limitation, receivables and leasehold interests) excluding
(i) redundant, obsolete or worn-out Property, tools or equipment no longer used
or useful in its business and any inventory or other Property sold or disposed
of in the ordinary course of business and on ordinary business terms and (ii)
dispositions contemplated by the Project Agreements.

                SECTION 8.7. Ownership of the Company; No Other Subsidiaries.
The Partnership will at all times cause the Company to be a Wholly Owned
Subsidiary of the Partnership. The Partnership will at no time have any
Subsidiaries other than the Company, Subsidiaries with limited purposes similar
to those of the Company, Kern River Gas Supply Corporation and Kern River
Service Corp. and the Company will at no time have any Subsidiaries.

                SECTION 8.8. Limitation on Liens. Neither Obligor will create,
incur, assume or suffer to exist any Lien upon any of its Property, whether now
owned or hereafter acquired, except:

        (a)     Liens equally and ratably securing the Securities of each
series;

        (b)     any Lien that secures Additional Senior Indebtedness equally and
ratably with the Securities;

        (c)     Liens imposed by any Governmental Authority for taxes,
assessments or charges not yet due or that are being contested in good faith and
by appropriate proceedings if adequate reserves with respect thereto are
maintained on the books of the Partnership or the Company, as the case may be,
in accordance with RAP;

                                       78
<PAGE>

        (d)     carriers', warehousemen's, mechanics', materialmen's,
repairmen's, lessor's other than the lessor in a sale-leaseback transaction, or
other like Liens arising in the ordinary course of business or are incident to
the construction or improvement of any Property that are not overdue for a
period of more than 30 days or that are being contested in good faith and by
appropriate proceedings and Liens securing judgments as to which all rights of
appeal have not terminated and are bonded or pledged or enforcement of which
will not have a Material Adverse Effect on the Company or the Partnership but
only to the extent, for an amount and for a period not resulting in an Event of
Default under Section 4.1(k) hereof;

        (e)     pledges or deposits under worker's compensation, unemployment
insurance and other social security legislation;

        (f)     easements, rights-of-way, actions and other similar encumbrances
incurred in the ordinary course of business and encumbrances consisting of
zoning restrictions, easements, licenses, restrictions on the use of Property or
minor imperfections in title thereto that, in the aggregate, are not material in
amount, and that do not in any case materially detract from the value of the
Property subject thereto or interfere with the ordinary conduct of the business
of the Partnership or the Company;

        (g)     Liens upon real and/or tangible personal Property acquired after
the date hereof (by purchase, construction or otherwise) by the Partnership,
each of which Liens either (i) existed on such Property before the time of its
acquisition and was not created in anticipation thereof or (ii) was created
solely for the purpose of securing Indebtedness representing, or incurred to
finance, refinance or refund, the cost (including the cost of construction,
repair or improvement) of such Property; provided that for clause (ii) above,
(A) no such Lien shall extend to or cover any Property of the Partnership other
than the Property so acquired and improvements thereon, (B) the principal amount
of Indebtedness secured by any such Lien shall at no time exceed 100% of the
purchase price or cost or fair market value (as determined in good faith by a
Senior Officer of the Partnership) of such Property at the time it was acquired
(by purchase construction or otherwise), (C) the Indebtedness secured by the
Lien may not be incurred more than one year after the acquisition, completion of
construction, repair, improvement, or commencement of full operation of the
Property subject to the Lien, and (D) the principal amount of all such
Indebtedness secured by such Liens shall not exceed 5% of the Total
Capitalization of the Partnership in the aggregate at any one time outstanding;

        (h)     any Lien securing a Debt Service Letter of Credit Obligation;

        (i)     any Lien that extends, or renews or replaces in whole or in part
a Lien referred to herein;

        (j)     additional Liens upon real and/or personal Property created
after the date hereof (including Indebtedness for capitalized lease
obligations), provided that the aggregate principal amounts of the Indebtedness
secured thereby and incurred on and after the date

                                       79
<PAGE>

hereof, excluding the principal amount of Indebtedness secured by Liens provided
by clauses (a) - (h) above, shall not exceed 3% of total capitalization of the
Partnership in the aggregate at any one time outstanding; and

        (k)     any Lien permitted by the foregoing that is created pursuant to
the Security Agreements.

                SECTION 8.9. Indebtedness.

        (a)     Limit on Indebtedness. Neither Obligor will create, incur or
suffer to exist or guarantee any Indebtedness except any one or more of the
following:

                (i)     Indebtedness incurred in connection with the Securities
        (including the Partnership Loan, the Partnership Guarantee and the Debt
        Service LOC Loans);

                (ii)    trade or other similar Indebtedness incurred in the
        ordinary course of business;

                (iii)   Additional Senior Indebtedness to be used for working
        capital purposes of up to the greater of (x) $15,000,000 and (y) 120% of
        Project Revenues for the month immediately preceding the incurrence of
        such Indebtedness;

                (iv)    Additional Senior Indebtedness, the proceeds of which
        are applied to fund Capital Expenditures (including, without limitation,
        Capital Expenditures previously made for which the FERC requires a
        different percentage of Indebtedness than was originally sought by the
        Partnership in an application to the FERC) provided that, after giving
        effect to the incurrence of such Indebtedness, the ratio of Indebtedness
        to Total Capitalization of the Partnership does not exceed 70/100;

                (v)     Affiliate Subordinated Debt; and

                (vi)    any Additional Senior Indebtedness not set forth in
        clauses (i) through (v) above, so long as immediately after giving
        effect to the incurrence thereof, there shall be No Ratings Downgrade.

        (b)     Limit on Company Indebtedness. Without prejudice to
Section 8.9(a) hereof, the Company will not create, incur or suffer to exist any
Indebtedness other than Indebtedness Guaranteed by the Partnership (i) the
proceeds of which are loaned or otherwise advanced to the Partnership, with such
loans or advances by the Company to the Partnership evidenced by promissory
notes of the Partnership in an amount equal to the principal amount of such loan
or advance, bearing interest at a rate equal to the interest rate payable with
respect to such loan or advance and with an amortization schedule identical to
the amortization schedule with respect to such loan or advance or (ii) to the
extent the proceeds thereof are applied to repay or otherwise refinance all or a
portion of the Indebtedness with respect to the Securities of the Company then
outstanding.

                                       80
<PAGE>

                SECTION 8.10. Investments. Neither Obligor will make or permit
to remain outstanding any Investments except:

        (a)     Permitted Investments;

        (b)     Investments by the Partnership in the Capital Stock of the
Company;

        (c)     Investments by the Company in the Partnership Loan;

        (d)     the Debt Service LOC Account;

        (e)     subject to Sections 8.12 and 9.8, the redemption, retirement,
prepayment or defeasance of Indebtedness of such Obligor;

        (f)     accounts receivable arising in the ordinary course of business;
and

        (g)     Capital Expenditures as permitted hereunder which shall include
all Capital Expenditures so long as not in violation of this Indenture.

                SECTION 8.11. Distributions. The Obligors shall be permitted to
declare or make any Distribution only on a Debt Service Payment Date, provided
that neither Obligor will declare or make any Distribution to any Partner on any
such Debt Service Payment Date if (i) an Event of Default has occurred and is
continuing hereunder, (ii) the ratio of Senior Debt to Total Capitalization of
the Partnership exceeds 75%, (iii) (A) the Projected Debt Service Coverage Ratio
of the Partnership for the next two calendar quarters from such date of
distribution is expected to be less than 1.25 to 1 or (B) the Debt Service
Coverage Ratio for the two calendar quarters prior to such intended Distribution
is less than 1.25 to 1, as certified by the Partnership and the Company by an
Officer's Certificate delivered to the Trustee, or (iv) the Required Amount
Condition has not been met.

                SECTION 8.12. Affiliate Subordinated Debt. Neither Obligor will
purchase, redeem, retire or otherwise acquire for value, or set apart any money
for a sinking, defeasance or other analogous fund for the purchase, redemption,
retirement or other acquisition of, or make any voluntary payment or prepayment
of the principal of or interest on, or any other amount owing in respect of, any
Affiliate Subordinated Debt, except for payments or prepayments of principal and
interest in respect thereof required pursuant to the instruments evidencing such
Affiliate Subordinated Debt and permitted by the subordination provisions
thereof.

                SECTION 8.13. Lines of Business; Single-Purpose Entity.

        (a)     The Partnership will not engage in any line of business other
than that directly related to its development, ownership and operation of the
Project, including any expansions thereof, (in each case as contemplated by the
Project Agreements) and any activities

                                       81
<PAGE>

reasonably related thereto (which shall include the gathering, marketing, sale,
storage, processing and transportation of gas).

        (b)     The Company will not engage in any business other than
the incurrence of Indebtedness and the making of loans to the Partnership, in
each case in accordance with the terms hereof and the other Senior Debt
Agreements, and the performance of its obligations under the Transaction
Agreements to which it is a party.

                SECTION 8.14. Transactions with Affiliates and Related Parties.
Except for arrangements contemplated by the Project Agreements as in effect on
the date of this Indenture, neither the Partnership nor the Company will enter
into any transaction, including, without limitation, any contract or Investment,
with any Affiliate of the Partnership unless (i) such transaction is a bona fide
business transaction reasonably related to the business of the Partnership, (ii)
such transaction is on terms that at such time are no less favorable to the
Partnership than those that could be obtained at such time in a comparable arm's
length transaction with an entity that is not an Affiliate of the Partnership
and (iii) such transaction has been fully disclosed to all Partners.

                SECTION 8.15. Modifications of Certain Documents. Subject to the
Collateral Agency Agreement which requires (except as provided therein) approval
by the Required Senior Parties, among other parties, to amend any Project
Agreement, Security Agreement, Partnership Loan Agreement, the Indenture or
changing in any manner the rights of the Collateral Agent, the Partnership, the
Company or the other Senior Parties therein or thereunder, neither Obligor will
(i) agree or consent to any termination, modification, supplement or waiver of
any Project Agreement or Senior Debt Agreement or (ii) initiate changes to the
Partnership's FERC tariff if the Partnership reasonably determines that such
termination, modification, supplement, waiver or change to the tariff would
individually or collectively with all other such terminations, modifications,
supplements, waivers and changes to the tariff, reasonably be expected to have a
Material Adverse Effect, unless immediately after giving effect to such
termination, modification, supplement, waiver or change to the tariff, there
shall be No Ratings Downgrade.

                SECTION 8.16. Mandatory Obligor Actions.

                If any Casualty Event shall occur, the Partnership shall
promptly notify the Trustee thereof and take reasonable steps to pursue
diligently all material rights to compensation. In addition:

        (a)     The Partnership shall, in the case of a Catastrophic Loss, cause
all Proceeds of such Casualty Event to be deposited with the Collateral Agent in
the Loss Proceeds Account.

        (b)     The Partnership shall, in the case of a Material Loss, apply the
Proceeds received by it in connection with such Casualty Event to rebuild or
repair the Project (as provided in Section 9.8).

                                       82
<PAGE>

                SECTION 8.17. Rule 144A Information. At any time when the
Company is not subject to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, upon the request of a beneficial holder of a Security, the
Company shall promptly furnish to such beneficial holder or to a prospective
purchaser of such Security designated by such holder, as the case may be, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act ("Rule 144A Information") in order to permit compliance by such
holder with Rule 144A in connection with the resale of such Security by such
holder; provided, however, that the Company shall not be required to furnish
Rule 144A Information in connection with any request made on or after the date
which is two years from the later of (a) the date such Security (or any
Predecessor Security) was acquired from the Company or (b) the date such
Security (or any Predecessor Security) was last acquired from an "affiliate" of
the Company within the meaning of Rule 144 under the Securities Act; provided,
further, that the Company shall not be required to furnish such information at
any time to a prospective purchaser located outside the United States who is not
a "United States Person" within the meaning of Regulation S under the Securities
Act if such Security may then be sold to such prospective purchaser in
accordance with Rule 904 under the Securities Act (or any successor provision
thereto).

                SECTION 8.18. Maintenance of Office or Agency. The Company will
maintain in each Place of Payment for any series of Securities an office or
agency where Securities of that series may be presented or surrendered for
payment, where Securities of that series may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Securities of that series and this Indenture may be served. The
Company will give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, and the Company hereby appoints the Trustee as its agent to receive all
such presentations, surrenders, notices and demands.

                The Company may also from time to time designate one or more
other offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in each Place of Payment for Securities of any series for
such purposes. The Company will give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.

                SECTION 8.19. Use of Proceeds. The Company and the Partnership
agree to apply the proceeds of the sale of the Securities hereunder (a) to repay
the Existing 144A Debt, (b) to pay certain financing costs related to the sale
of the Securities hereunder, including, without limitation, breakage costs
associated with the termination of certain existing interest rate hedging
arrangements, (c) to pay costs related to the development, financing and
construction



                                       83
<PAGE>

of the California Action Project and the 2002 Expansion and (d) to reimburse the
Partnership, and its Affiliates, for any such costs incurred prior to the date
hereof.

                SECTION 8.20. Expansion. Neither Obligor shall incur
indebtedness for the purposes of financing, or permit the commencement of
construction of, any Expansion unless:

        (a)     Williams or another entity that has a public debt rating equal
to at least "BBB-" from S&P and "Baa3" from Moody's provides a Completion
Guaranty with respect to such Expansion;

        (b)     until such Expansion has achieved Completion and the holders of
the indebtedness incurred to finance such Expansion have released the applicable
Completion Guaranty, the recourse of such holders is limited to (i) the
applicable Completion Guaranty, (ii) any LTFT Agreements and related Shipper
Guarantees entered into with respect to such Expansion, (iii) any new fixed
assets financed with the proceeds of such indebtedness, and (iv) a claim to any
cash of the Partnership that would otherwise be available for Distributions
permitted under this Indenture; provided, however, such holders shall agree not
to take any action or exercise any remedies prior to Completion that will in any
way adversely affect the ability of the Partnership to operate the existing
Pipeline; and

        (c)     the percentage of the costs of such Expansion that are financed
with Indebtedness incurred by the Partnership does not exceed the Applicable
Expansion Debt Level. For the purposes of this clause (c), "Applicable Expansion
Debt Level" means the lesser of (x) 70%, (y) the difference between (A) the
percentage of additional transportation capacity attributable to an Expansion
that has been contracted by shippers meeting the requirements of the
Partnership's FERC tariff and (B) 20% and (z) a percentage that causes the
average annual Projected Debt Service Coverage Ratio from the date such
Expansion reaches Completion until the Final Maturity Date of the Securities
issued on the Closing Date (after taking into account the incurrence of the
Indebtedness incurred in connection with such Expansion) to be greater than or
equal to 1.55 to 1.0. For the purposes of clarity, if 95% of an Expansion's
transportation capacity has been contracted to shippers meeting such
requirements, the Applicable Expansion Debt Level for such Expansion will be 70%
or such lower amount that allows the Partnership to satisfy the Projected Debt
Service Coverage Ratio test set forth in clause (z); and if 75% of an
Expansion's transportation capacity has been contracted to shippers meeting such
requirements, the Applicable Expansion Debt Level for such Expansion will be 55%
or such lower amount that allows the Partnership to satisfy the Projected Debt
Service Coverage Ratio test set forth in clause (z).

                SECTION 8.21. Compliance With Laws. The Partnership agrees to
comply with all laws and regulations applicable to the conduct of its business
and the operation of the Project, including environmental requirements, the
failure to comply with which the Partnership believes would have a Material
Adverse Effect.

                SECTION 8.22. Property. The Partnership agrees to preserve good
title or valid leasehold rights to all Project related Property it claims to
hold (other than Property subject to any Casualty Event or Property disposed of
pursuant to Section 8.6), subject only to Liens



                                       84
<PAGE>

permitted pursuant to Section 8.8, to the extent that failure to do so would
have a Material Adverse Effect.

                SECTION 8.23. FERC Filings. The Partnership agrees to oppose any
filing made with the FERC if such filing would result in changes to the amounts
being charged to Shippers that would have a Material Adverse Effect.

                SECTION 8.24. Transportation Service Agreement. Except as the
FERC may require or as the Partnership's FERC tariff may permit, the Partnership
agrees not to permit the assignment by any LTFT Shipper of its obligations under
a LTFT Agreement (including, without limitation, by way of a release of capacity
to a substitute shipper) to any party with a public debt rating of less than
investment grade or its equivalent, unless (i) the obligations of the assignee
under the LTFT Agreement are (A) guaranteed by an entity with a public debt
rating equal to at least Investment Grade or (B) supported by an Acceptable
Letter of Credit, or (ii) the rating on the Securities after giving effect to
such assignment shall be reaffirmed as being equal to or higher than the ratings
on the Securities prior to such assignment by one of the Required Rating
Agencies.

                SECTION 8.25. Collateral Agency Agreement. The Securityholders
agree, by their acceptance of the Securities pursuant to the terms of this
Indenture, to be governed by and agree to be bound by any restrictions imposed
on Securityholders pursuant to the terms of the Collateral Agency Agreement,
unless otherwise specifically stated herein.

                SECTION 8.26. Transfers. The Partnership agrees not to allow any
transfer of ownership interests in the Partnership unless after giving effect to
such transfer (i) at least 50% of the Partnership is owned and operated either
by Williams and its affiliates or by a Qualified Transferee, or (ii) there is No
Ratings Downgrade.

                SECTION 8.27. Amendment to Partnership Security Agreement. Upon
Completion of any Expansion, the Partnership agrees to amend Schedule A to the
Partnership Security Agreement to add to such Schedule A any LTFT Agreements and
Shipper Guaranties executed in connection with such Expansion.

                SECTION 8.28. Debt Service Notices to Collateral Agent. If at
any time, the Partnership believes that it will have insufficient monies to pay
Mandatory Senior Debt Service on any date when it shall be due and payable, the
Partnership agrees to provide notice to such effect to the Collateral Agent at
least three (3) Business Days prior to the date on which such Mandatory Senior
Debt Service shall be due and payable. The Partnership agrees that such notice
shall state the amount of the expected insufficiency and shall otherwise be in
accordance with Sections 7.2(a)(i) and 7.2(b) of the Collateral Agency
Agreement.


                                    ARTICLE 9

                            REDEMPTION OF SECURITIES

                SECTION 9.1. Applicability of Article. Securities of any series
which are redeemable before their Stated Maturity shall be redeemable in
accordance with their terms and (except as otherwise specified as contemplated
by Section 2.3 for such Securities) in accordance with this Article 9.



                                       85
<PAGE>

                SECTION 9.2. Election to Redeem; Notice to Trustee. The election
of the Company to redeem any Securities shall be evidenced in accordance with
Section 9.4 and otherwise in the manner specified as contemplated by Section 2.3
for such Securities. In case of any redemption at the election of the Company,
the Company shall at least 45 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee of such Redemption Date, of the principal amount of Securities of
the series to be redeemed and, if applicable, of the tenor of the Securities to
be redeemed. In the case of any redemption of Securities prior to the expiration
of any restriction on such redemption or subject to compliance with conditions
provided in the terms of such Securities or elsewhere in this Indenture, the
Company shall furnish the Trustee with an Officer's Certificate evidencing
compliance with such restriction or conditions. Promptly after the calculation
by the Company of the Economic Make-Whole Premium, the Company will give the
Trustee notice thereof.

                SECTION 9.3. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of any series are to be redeemed (unless all the
Securities of such series and of a specified tenor are to be redeemed or unless
such redemption affects only a single Security), the particular Securities to be
redeemed shall be selected not more than 30 days prior to the Redemption Date by
the Trustee from the Outstanding Securities of such series not previously called
for redemption pro rata or by lot or by such other method as the Trustee shall
deem fair and appropriate and which may provide for the selection for redemption
of a portion of the Principal Amount of any Security of such series, provided
that the unredeemed portion of the Principal Amount of any Security shall be in
an authorized denomination (which shall not be less than the minimum authorized
denomination) for such Security, except that in the case of an Installment
Security redeemed in part, the face amount thereof after such redemption and not
the unpaid Principal Amount thereof shall be in an authorized denomination for
such Security. If less than all the Securities of such series and of a specified
tenor are to be redeemed (unless such redemption affects only a single
Security), the particular Securities to be redeemed shall be selected not more
than 30 days prior to the Redemption Date by the Trustee from the Outstanding
Securities of such series and specified tenor not previously called for
redemption in accordance with the preceding sentence.

                The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption as aforesaid and, in case of any Securities
selected for partial redemption as aforesaid, the principal amount thereof to be
redeemed.

                The provisions of the two preceding paragraphs shall not apply
with respect to any redemption affecting only a single Security, whether such
Security is to be redeemed in whole or in part. In the case of any such
redemption in part, the unredeemed portion of the principal amount of the
Security shall be in an authorized denomination (which shall not be less than
the minimum authorized denomination) for such Security.

                For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate
in the case of any Securities



                                       86
<PAGE>

redeemed or to be redeemed only in part, to the portion of the principal amount
of such Securities which has been or is to be redeemed.

                SECTION 9.4. Notice of Redemption. Notice of redemption shall be
given by first-class mail, postage prepaid, mailed not less than 30 nor more
than 60 days prior to the Redemption Date, to each Holder of Securities to be
redeemed, at his address appearing in the Security Register.

                All notices of redemption shall state:

        (a)     the Redemption Date,

        (b)     the Redemption Price, provided, that, if the Redemption Price
includes the Economic Make-Whole Premium, such notice need not set forth the
amount of such Economic Make-Whole Premium, but need only set forth the manner
in which such Economic Make-Whole Premium is to be calculated.

        (c)     if less than all the Outstanding Securities of any series
consisting of more than a single Security and of a specified tenor are to be
redeemed, the identification (and, in the case of partial redemption of any such
Securities, the Principal Amounts) of the particular Securities to be redeemed
and, if less than all the Outstanding Securities of any series consisting of a
single Security are to be redeemed, the Principal Amount of the particular
Securities to be redeemed,

        (d)     that, on the Redemption Date, the Redemption Price will become
due and payable upon each such Security to be redeemed and, if applicable, that
interest thereon will cease to accrue on and after said date, and that interest
accrued to the Redemption Date will be paid to the Holder of the Security on the
record date prior to the Redemption Date,

        (e)     the place or places where each such Security is to be
surrendered for payment of the Redemption Price,

        (f)     that the redemption is for a sinking fund, if such is the case,
and

        (g)     the CUSIP or ISIN number of the Securities to be redeemed.

                Notice of Redemption of Securities to be redeemed at the
election of the Company shall be given by the Company to the Trustee and each
Holder of Securities or, at the Company's request, by the Trustee to each Holder
of Securities in the name and at the expense of the Company, and shall be
irrevocable.

                SECTION 9.5. Deposit of Redemption Price. On or prior to any
Redemption Date, the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 8.4) an



                                       87
<PAGE>

amount of money sufficient to pay the Redemption Price of, and (except if the
Redemption Date shall be an Interest Payment Date) accrued interest on, all the
Securities which are to be redeemed on that date.

                SECTION 9.6. Securities Payable on Redemption Date. Notice of
redemption having been given as aforesaid, the Securities so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
therein specified, and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such
Securities shall cease to bear interest. Upon surrender of any such Security for
redemption in accordance with said notice, such Security shall be paid by the
Company at the Redemption Price, together with accrued interest to the
Redemption Date; provided, however, that, unless otherwise specified as
contemplated by Section 2.3, installments of interest whose Stated Maturity is
on or prior to the Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 2.9.

                If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and premium, if any, thereof
shall, until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Security.

                SECTION 9.7. Securities Redeemed in Part. Any Security which is
to be redeemed only in part shall be surrendered at a Place of Payment therefor
(with, if the Company or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly authorized in
writing), and the Company shall execute, and the Trustee shall authenticate and
deliver to the Holder of such Security without service charge, a new Security or
Securities of the same series and of like tenor of any authorized denomination
as requested by such Holder, in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Security so
surrendered; provided, that, in the case of an Installment Security redeemed in
part, no such new Security shall be executed, authenticated and delivered in
exchange for the unredeemed portion thereof. Upon surrender of any such
Installment Security, the Security Registrar shall make a notation thereon of
the unpaid principal amount thereof.

                SECTION 9.8. Mandatory Redemption Upon a Casualty Event.

        (a)     Catastrophic Loss. In the event of a Catastrophic Loss, the
Company shall redeem Securities in inverse order of maturity, if applicable, in
an amount equal to the Securities Percentage of the applicable Proceeds ratably
among each series at a redemption price equal to the principal amount thereof
plus accrued interest to the Redemption Date.

        (b)     Material Loss. In the event of a Material Loss, the Company
shall rebuild or repair the Project.

        (c)     Excess Proceeds. Upon completion of the repair or restoration of
the Project following any Material Loss and the payment of all costs of such
repair or restoration, the



                                       88
<PAGE>

excess, if any, of (x) the amount of the Proceeds of such Casualty Event over
(y) the aggregate amount of such costs of repair or restoration shall be
released to or for the account of, or shall otherwise be made available to, the
Partnership.

        (d)     Certain Notices. No later than 45 days prior to the date on
which any redemption of Securities is to be made pursuant to paragraph (a) of
this Section 9.8, the Company will deliver to the Trustee a statement, certified
by a Senior Officer of the Company, in form and detail reasonably satisfactory
to the Trustee of the occurrence of such event and the amount of the Proceeds
thereof.

                SECTION 9.9. Redemption at Company's Option. The Company shall
have the right to redeem all or any portion of the Outstanding Securities, in
whole or in part, at a Redemption Price equal to the Outstanding principal
amount thereof plus accrued and unpaid interest thereon to the Redemption Date,
plus the Economic Make-Whole Premium, if any, on a Redemption Date that it shall
establish in accordance with the provisions of Section 9.4 hereof.


                                   ARTICLE 10

                                  SINKING FUNDS

                SECTION 10.1. Applicability of Article. The provisions of this
Article 10 shall be applicable to any sinking fund for the retirement of
Securities of any series except as otherwise specified as contemplated by
Section 2.3 for such Securities.

                The minimum amount of any sinking fund payment provided for by
the terms of any Securities is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by the
terms of such Securities is herein referred to as an "optional sinking fund
payment". To the extent that a right to make an optional sinking fund payment is
not exercised in any year, it shall not be cumulative or carried forward to any
subsequent year. Unless otherwise provided for by the terms of any Securities,
the cash amount of any sinking-fund payment may be subject to reduction as
provided in Section 10.2. Each sinking fund payment shall be applied to the
redemption of Securities as provided for by the terms of such Securities.

                SECTION 10.2. Satisfaction of Sinking Fund Payments with
Securities. The Company (a) may deliver Outstanding Securities of a series
(other than any previously called for redemption) and (b) may apply as a credit
Securities of a series which have been redeemed either at the election of the
Company pursuant to the terms of such Securities or through the application of
permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund
payment with respect to any Securities of such series required to be made
pursuant to the terms of such Securities as and to the extent provided for by
the terms of such Securities; provided that the Securities to be so credited
shall not have been previously so credited. The Securities to be so



                                       89
<PAGE>

credited shall be received and credited for such purpose by the Trustee at the
Redemption Price, as specified in the Securities so to be redeemed, for
redemption through operation of the sinking fund and the amount of such sinking
fund payment shall be reduced accordingly.

                SECTION 10.3. Redemption of Securities for Sinking Fund. Not
less than 60 days prior to each sinking fund payment date for any Securities,
the Company will deliver to the Trustee an Officer's Certificate specifying the
amount of the next ensuing sinking fund payment for such Securities pursuant to
the terms of such Securities, the portion thereof, if any, which is to be
satisfied by payment of cash, the portion thereof, if any, which is to be
satisfied by delivering and crediting Securities pursuant to Section 10.2, the
basis for such credit, and that such Securities have not been previously so
credited, and will also deliver to the Trustee any Securities to be so
delivered. Not less than 45 days prior to each such sinking fund payment date,
the Trustee shall select the Securities to be redeemed upon such sinking fund
payment date in the manner specified in Section 9.3 and cause notice of the
redemption thereof to be given in the name of and at the expense of the Company
in the manner provided in Section 9.4. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 9.6 and 9.7.

                                   ARTICLE 11

                       DEFEASANCE AND COVENANT DEFEASANCE

                SECTION 11.1. Company's Option to Effect Defeasance or Covenant
Defeasance. The Company may elect, at its option at any time, to have Section
11.2 or Section 11.3 applied to any Securities or any series of Securities, as
the case may be, designated pursuant to Section 2.3 as being defeasible pursuant
to such Section 11.2 or 11.3, in accordance with any applicable requirements
provided pursuant to Section 2.3 and upon compliance with the conditions set
forth below in this Article 11. Any such election shall be evidenced in the
manner specified as contemplated by Section 2.3 for such Securities.

                SECTION 11.2. Defeasance and Discharge. Upon the Company's
exercise of its option (if any) to have this Section 11.2 applied to any
Securities or any series of Securities, as the case may be, the Company shall be
deemed to have been discharged from its obligations with respect to such
Securities as provided in this Section on and after the date the conditions set
forth in Section 11.4 are satisfied (hereinafter called "Defeasance"). For this
purpose, such Defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by such Securities and to have
satisfied all its other obligations under such Securities and this Indenture
insofar as such Securities are concerned (and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging the same), subject to
the following which shall survive until otherwise terminated or discharged
hereunder: (a) the rights of Holders of such Securities to receive, solely from
the trust fund described in Section 11.4 and as more fully set forth in such
Section 11.4, payments in respect of the principal of, premium, if any, and
interest on such Securities when payments are due, (b) the Company's obligations
with respect to such Securities under



                                       90
<PAGE>

Sections 2.7, 2.8, 8.4 and 8.17, (c) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and (d) this Article 11. Subject to
compliance with this Article 11, the Company may exercise its option (if any) to
have this Section 11.2 applied to any Securities notwithstanding the prior
exercise of its option (if any) to have Section 11.3 applied to such Securities.

                SECTION 11.3. Covenant Defeasance. Upon the Company's exercise
of its option (if any) to have this Section 11.3 applied to any Securities or
any series of Securities, as the case may be, (a) the Company shall be released
from its obligations under Sections 8.1 (other than the obligation set forth in
clause (i) of the last paragraph thereof, such delivery obligation to be
fulfilled within 60 days after the end of each of the first three quarterly
fiscal periods of each fiscal year of the Partnership and within 120 days after
the end of each fiscal year of the Partnership), 8.5 and 8.7 through 8.16,
inclusive, 8.21 through 8.24 inclusive, 8.26 and 8.27 and any covenants provided
pursuant to Section 2.3(s), 7.1(b) or 7.1(g) for the benefit of the Holders of
such Securities and (b) the occurrence of any event specified in Sections 8.1
(other than the obligation set forth in clause (i) of the last paragraph
thereof, such delivery obligation to be fulfilled within 60 days after the end
of each of the first three quarterly fiscal periods of each fiscal year of the
Partnership and within 120 days after the end of each fiscal year of the
Partnership) and 8.5 and 8.7 through 8.16, inclusive, 8.21 through 8.24
inclusive, 8.26 and 8.27 and any such covenants provided pursuant to Section
2.3(s), 7.1(b) or 7.1(g) shall be deemed not to be or result in an Event of
Default in each case with respect to such Securities as provided in this Section
11.3 on and after the date the conditions set forth in Section 11.4 are
satisfied (hereafter called "Covenant Defeasance"). For this purpose, such
Covenant Defeasance means that, with respect to such Securities, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such specified Section, whether
directly or indirectly by reason of any reference elsewhere herein to any such
Section or by reason of any reference in any such Section to any other provision
herein or in any other document, but the remainder of this Indenture and such
Securities shall be unaffected thereby.

                SECTION 11.4. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to the application of Section 11.2 or
Section 11.3 to any Securities or any series of Securities, as the case may be:

        (a)     The Company shall irrevocably have deposited or caused to be
deposited with the Trustee as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to, the benefits of the Holders of such Securities, (i) money in an amount, or
(ii) U.S. Government Obligations which through the scheduled payment of
principal and interest in respect thereof in accordance with their terms will
provide, not later than one day before the due date of any payment, money in an
amount, or (iii) a combination thereof, in each case sufficient, in the opinion
of a nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay and discharge,
and which shall be applied by the Trustee to pay and discharge, the principal
of, premium, if any, and interest on such Securities on the respective Stated
Maturities or Redemption Dates, in accordance with the terms of this



                                       91
<PAGE>

Indenture and such Securities. As used herein, "U.S. Government Obligation"
means (x) any security which is (i) a direct obligation of the United States of
America for the payment of which the full faith and credit of the United States
of America is pledged or (ii) an obligation of a Person controlled or supervised
by and acting as an agency or instrumentality of the United States of America
the payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which in either case (i) or (ii), is
not callable or redeemable at the option of the issuer thereof, and (y) any
depositary receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act) as custodian with respect to any U.S. Government Obligation
which is specified in clause (x) above and held by such bank for the account of
the holder of such depositary receipt, or with respect to any specific payment
of principal of or interest on any U.S. Government Obligation which is so
specified and held, provided that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depositary receipt from any amount received by the custodian in respect of
the U.S. Government Obligation or the specific payment of principal or interest
evidenced by such depositary receipt.

        (b)     In the event of an election to have Section 11.2 apply to any
Securities or any series of Securities as the case may be, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (i) the Company
has received from, or there has been published by, the Internal Revenue Service
a ruling or (ii) since the date of this instrument, there has been a change in
the applicable Federal income tax law, in either case (i) or (ii) to the effect
that, and based thereon such opinion shall confirm that, the Holders of such
Securities will not recognize gain or loss for Federal income tax purposes as a
result of the deposit, Defeasance and discharge to be effected with respect to
such Securities and will be subject to Federal income tax on the same amount, in
the same manner and at the same times as would be the case if such deposit,
Defeasance and discharge were not to occur.

        (c)     In the event of an election to have Section 11.3 apply to any
Securities or any series of Securities, as the case may be, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of such Securities will not recognize gain or loss for Federal income
tax purposes as a result of the deposit and Covenant Defeasance to be effected
with respect to such Securities and will be subject to Federal income tax on the
same amount, in the same manner and at the same times as would be the case if
such deposit and Covenant Defeasance were not to occur.

        (d)     The Company shall have delivered to the Trustee an Officer's
Certificate to the effect that neither such Securities nor any other Securities
of the same series, if then listed on any securities exchange, will be delisted
as a result of such deposit.

        (e)     No Default with respect to such Securities or any other
Securities shall have occurred and be continuing at the time of such deposit or,
with regard to any such event specified in Sections 4. 1 (g), (h) and (i), at
any time on or prior to the 90th day after the date



                                       92
<PAGE>

of such deposit (it being understood that this condition shall not be deemed
satisfied until after such 90th day).

        (f)     Such Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any other agreement or
instrument to which the Company is a party or by which it is bound.

        (g)     Such Defeasance or Covenant Defeasance shall not result in the
trust arising from such deposit constituting an investment company within the
meaning of the Investment Company Act unless such trust shall be registered
under such Act or exempt from registration thereunder.

        (h)     At the time of such deposit, (i) no default in the payment of
any principal of or premium or interest on any Securities shall have occurred
and be continuing, (ii) no Event of Default with respect to any Securities shall
have resulted in such Securities becoming, and continuing to be, due and payable
prior to the date on which they would otherwise have become due and payable
(unless payment of such Securities has been made or duly provided for), and
(iii) no other Event of Default with respect to any Securities shall have
occurred and be continuing permitting (after notice or lapse of time or both)
the Holders of such Securities (or a Trustee on behalf of such Holders) to
declare such Securities due and payable prior to the date on which they would
otherwise have become due and payable.

        (i)     Any Securities that are to be redeemed in connection with any
Defeasance or Covenant Defeasance shall be redeemed in accordance with
arrangements satisfactory to the Trustee for the giving of irrevocable notice of
redemption by the Trustee in the name, and at the expense of the Company.

        (j)     The Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel each stating that all conditions precedent
with respect to such Defeasance or Covenant Defeasance have been complied with.

                SECTION 11.5. Deposited Money and U.S. Government Obligations to
Be Held in Trust; Miscellaneous Provisions. Subject to the provisions of the
last paragraph of Section 8.4, all money and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee pursuant to Section
11.4 in respect of any Securities shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Securities and this
Indenture, to the payment, either directly or through any such Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities, of all sums due and to become due
thereon in respect of principal and any premium and interest, but money so held
in trust need not be segregated from other funds except to the extent required
by law.



                                       93
<PAGE>

                The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 11.4 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of Outstanding Securities.

                Anything in this Article 11 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon receipt of a
Company Request any money or U.S. Government Obligations held by it as provided
in Section 11.4 with respect to any Securities which, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee are in excess of the
amount thereof which would then be required to be deposited to effect the
Defeasance or Covenant Defeasance, as the case may be, with respect to such
Securities.

                SECTION 11.6. Reinstatement. If the Trustee or the Paying Agent
is unable to apply any money in accordance with this Article 11 with respect to
any Securities by reason of any order or judgment of any court or Governmental
Authority enjoining, restraining or otherwise prohibiting such application, then
the obligations under this Indenture and such Securities from which the Company
has been discharged or released pursuant to Section 11.2 or 11.3 shall be
revived and reinstated as though no deposit had occurred pursuant to this
Article 11 with respect to such Securities, until such time as the Trustee or
Paying Agent is permitted to apply all money held in trust pursuant to Section
11.5 with respect to such Securities in accordance with this Article 11;
provided however, that if the Company makes any payment of principal of or any
premium or interest on any such Security following such reinstatement of its
obligations, the Company, as the case may be, shall be subrogated to the rights
(if any) of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations so held in trust.

                                   ARTICLE 12

                              PARTNERSHIP GUARANTEE

                SECTION 12.1 Obligations Guaranteed. (a) The Partnership hereby
guarantees, subject to the provisions of Section 13.2, to the Trustee for its
own benefit and the benefit of the Holders from time to time (i) the full and
prompt payment of the principal of and premium, if any, on the Securities and
the indebtedness represented thereby, when and as the same shall become due and
payable, whether at the Stated Maturity thereof, by acceleration, call for
redemption or otherwise, (ii) the full and prompt payment of interest on the
Securities when and as the same shall become due and payable (the guarantee in
clauses (i) and (ii) collectively referred to as the "Partnership Guarantee"),
and (iii) the full and prompt payment to the Trustee of all fees, costs,
expenses, or other amounts payable to the Trustee under the Indenture when and
as the same shall become due and payable. The Partnership hereby irrevocably and
unconditionally agrees, subject to the provisions of Section 12.2 and Section
13.2



                                       94
<PAGE>

that upon any default by the Company in the payment, when due, of any principal
of, premium, if any, or interest on the Securities, and after demand therefore
being made upon the Company by the Trustee, the Partnership will promptly pay
the same. All payments by the Partnership shall be paid in lawful money of the
United States of America. Each and every default in the payment of the principal
of, premium, if any, or interest on the Securities shall, subject to the
provisions of Section 13.2, give rise to a separate cause of action hereunder,
and separate suits may be brought hereunder as each cause of action arises.

        (b)     The Partnership further agrees, subject to the provisions of
Section 12.2 and Section 13.2, that this Partnership Guarantee constitutes an
absolute, present and continuing guarantee of payment and not of collection, and
waives any right to require that any resort be had by the Trustee or the Holders
of the Securities, after demand for such payment being made upon the Company by
the Trustee, to the Trustee's or any Holder's rights against any other Person,
or any other right or remedy available to the Trustee or any Holder of the
Securities by contract, applicable law or otherwise. The obligations of the
Partnership under this Partnership Guarantee are direct, unconditional and
completely independent of the obligations of any other Person, and, subject to
the provisions of Section 12.2; a separate cause of action or separate causes of
action may be brought and prosecuted against the Partnership, after demand for
payment being made upon the Company by the Trustee, without the necessity of
joining the Company or any other party or previously proceeding with or
exhausting any other remedy against any other Person who might have become
liable for the indebtedness or of realizing upon any security held by or for the
benefit of the Holders of the Securities.

                SECTION 12.2. Obligations Unconditional. The obligations of the
Partnership under this Partnership Guarantee shall, subject to the provisions of
Section 13.2, be absolute and unconditional, and shall remain in full force and
effect, until the entire principal of, premium, if any, and interest on the
Securities shall have been paid in full or provided for and all costs, Trustee's
fees and commissions, indemnitees, and expenses, if any, shall have been paid in
full and, to extent permitted by law, such obligations shall not be affected,
modified, released or impaired by any state of facts or the happening from time
to time of any event, whatsoever, whether or not with notice to, or the consent
of, the Partnership, except as set forth in Section 13.2 hereof.

                SECTION 12.3. No Waiver or Set-off. No act of commission or
omission of any kind or at any time upon the part of the Company or the Trustee,
or their successors and assigns, in respect of any matter whatsoever shall in
any way impair the rights of the Trustee to enforce any right, power or benefit
under this Partnership Guarantee and no set-off, counterclaim, reduction, or
diminution of any obligation, or any defense of a surety guarantor (other than
performance by the Partnership of its obligations hereunder, or receipt by the
Trustee of payment from the Company) which the Partnership has or may have
against the Company or the Trustee or any assignee or successor thereof shall be
available hereunder to the Partnership.



                                       95
<PAGE>

                SECTION 12.4. Waiver of Notice; Expenses. The Partnership hereby
expressly waives notice from the Trustee or the Holders from time to time of the
Securities of their acceptance and reliance on this Partnership Guarantee of any
action taken or omitted in reliance hereon. The Partnership further expressly
waives diligence, presentment, demand for payment, protest, any requirement that
any right or power be exhausted or any action be taken against the Company or
the Partnership or against any Collateral. The Partnership agrees to pay all
reasonable costs, Trustee's fees and commissions and expenses (including all
court costs and reasonable attorneys' fees) which may be incurred by the Trustee
in enforcing or attempting to enforce this Partnership Guarantee following any
default on the part of the Partnership hereunder, whether the same shall be
enforced by suit or otherwise.

                SECTION 12.5. Benefit and Enforcement. This Partnership
Guarantee is given for the benefit of the Company and the Trustee and, subject
to the terms and conditions set forth herein, including Section 4.7, the Holders
from time to time of the Securities, all of whom shall be entitled in the same
manner as set forth herein to enforce performance and observance of this
Partnership Guarantee.

                SECTION 12.6 Survival of Partnership Guarantee Obligation;
Waiver of Subrogation. (a) If the Trustee receives any payment on account of the
liabilities guaranteed hereunder, which payment or any part thereof is
subsequently invalidated declared to be fraudulent or preferential, set aside
and/or required to be transferred or repaid to a trustee, receiver, assignee for
the benefit of creditors or any other party under any bankruptcy act or code,
state or federal law of common law or equitable doctrine, then to the extent of
any sum not finally retained by the Trustee, this Partnership Guarantee shall
remain in full force and effect until the Partnership shall have made payment to
the Trustee of such sum, which payment shall be due on demand.

        (b)     The Partnership hereby irrevocably waives any and all right to
which it may be entitled, by operation of law or otherwise, upon making any
payment hereunder (i) to be subrogated to the rights of the Trustee or the
Holders against the Company (or any Collateral) with respect to such payment or
otherwise to be reimbursed, indemnified or exonerated by the Company (or from
the proceeds of the Collateral) in respect thereof, or (ii) to receive any
payment, in the nature of contribution or for any other reason, from any other
guarantor with respect to such payment.

                SECTION 12.7. Pledge of Partnership Collateral. As security for
the prompt payment and performance of all obligations of the Partnership under
this Partnership Guarantee, the Partnership has entered into the Partnership
Security Agreement to pledge, assign, hypothecate, bargain, sell, convey,
mortgage and grant to the Collateral Agent a security interest in and general
lien upon all of the Collateral owned by the Partnership. The pledge and
assignment by the Partnership of such Collateral is collateral and security for
the prompt payment and performance of the obligations of the Partnership under
this Partnership Guarantee.



                                       96
<PAGE>

                                   ARTICLE 13

                             LIMITATION OF LIABILITY

                SECTION 13.1. Company. No recourse shall be had for the payment
of the principal (or premium, if any) or the interest on any Security, or for
any claim based thereon or otherwise in respect thereof, or of the indebtedness
represented thereby, or upon any obligation, covenant or agreement in this
Indenture or any other Transaction Agreement, against any Affiliate of the
Company or any incorporator, stockholder, officer, employee, partner, member or
director as such, past, present or future, of the Company or any Affiliate of
the Company or of any predecessor or successor (either directly or through the
Company or any such predecessor or successor), whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise; it being expressly agreed and understood that the
Company's obligation under the Securities, this Indenture and other Transaction
Agreements and all the obligations are solely corporate obligations of the
Company's, and that no personal liability whatsoever shall attach to, or be
incurred by any Affiliate of the Company or any such incorporator, stockholder,
officer, employee, partner, member or director, past, present or future, of the
Company or any Affiliate of the Company or of any such predecessor or successor
(either directly or indirectly through the Company or any such predecessor or
successor), because of any of the obligations, covenants, promises or agreements
contained in the Securities, this Indenture or any other Transaction Agreement
or to be implied herefrom or therefrom; and that any such personal liability is
hereby expressly waived and released as a condition of, and as part of the
consideration for, the execution of this Indenture and the delivery of the
Securities; provided, however, that nothing contained herein or in the
Securities shall be taken to prevent the institution of proceedings against any
Person in connection with the realization of the benefit of the Collateral
granted under the Security Agreements; and provided, further, that nothing in
this Section 13.1 shall relieve any Person of its obligations under this
Indenture, the Securities or any other Transaction Agreement to which such
Person is a party or limit or otherwise prejudice in any way the right of the
Collateral Agent or the Trustee to proceed against any such Person with respect
to the enforcement of such obligations.

                SECTION 13.2. Partnership. Satisfaction of the obligations of
the Partnership under this Instrument and the Securities shall be had solely
from the assets of the Partnership. No recourse shall be had in the event of any
non-performance by the Partnership of any such obligations to (a) any assets or
properties of the Partners other than their respective interests in the
Collateral or (b) any Partners or any Affiliate of any Partners or of the
Partnership or any incorporator, stockholder, partner, member, officer, employee
or director, past, present or future, of any such Partner or Affiliate or of any
predecessor or successor (either directly or through either Partnership or any
Partner or any such predecessor or successor), whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise, and no judgment for any deficiency upon the obligations of
the Partnership under this Indenture and the Securities shall be obtainable by
the Collateral Agent or the Trustee against any Partner or any Affiliate of any
Partner or of the Partnership or any



                                       97
<PAGE>

incorporator, stockholder, partner, member, officer, employee or director, past,
present or future, of any Partner or Affiliate or of any predecessor or
successor of any such Partner or Affiliate; provided, however, that nothing in
this Section 13.2 shall relieve any Person of its obligations under any
Transaction Agreement to which such Person is a party or limit or otherwise
prejudice in any way the right of the Collateral Agent or the Trustee to proceed
against such Person with respect to the enforcement of such obligations.



                                       98
<PAGE>

                IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed and their respective seals to be hereunto affixed
and attested, all as of the day and year first above written.


                              KERN RIVER FUNDING CORPORATION


                              By:        /s/ James G. Ivey
                                  ----------------------------------------------
                                  Name:   James G. Ivey
                                  Title:  Assistant Treasurer


                              KERN RIVER GAS TRANSMISSION COMPANY
                              By: KERN RIVER ACQUISITION, LLC,
                              as General Partner


                              By:        /s/ James G. Ivey
                                  ----------------------------------------------
                                  Name:   James G. Ivey
                                  Title:  Assistant Treasurer


                              By: WILLIAMS WESTERN PIPELINE COMPANY, LLC,
                              as General Partner


                              By:        /s/ James G. Ivey
                                  ----------------------------------------------
                                  Name:   James G. Ivey
                                  Title:  Assistant Treasurer


                              THE CHASE MANHATTAN BANK,
                              as Trustee


                              By:        /s/ Joanne Adamis
                                  ----------------------------------------------
                                  Name:   Joanne Adamis
                                  Title:  Vice President




<PAGE>

                                                                       EXHIBIT A


                           [FORM OF FACE OF SECURITY]

                           [GLOBAL SECURITIES LEGEND]

                [INCLUDE IF SECURITY IS A GLOBAL SECURITY - UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION ("DTC"), TO KERN RIVER FUNDING CORPORATION ("THE
COMPANY") OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

                THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO. THIS GLOBAL SECURITY MAY NOT BE EXCHANGED, IN
WHOLE OR IN PART, FOR A SECURITY REGISTERED IN THE NAME OF ANY PERSON OTHER THAN
THE DEPOSITORY TRUST COMPANY OR A NOMINEE THEREOF EXCEPT IN THE CIRCUMSTANCES
SET FORTH IN SECTION 2.7 OF THE INDENTURE, AND MAY NOT BE TRANSFERRED, IN WHOLE
OR IN PART, EXCEPT IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 2.7
OF THE INDENTURE. BENEFICIAL INTERESTS IN THIS GLOBAL SECURITY MAY NOT BE
TRANSFERRED EXCEPT IN ACCORDANCE WITH SECTION 2.7 OF THE INDENTURE.]

                         [RESTRICTED SECURITIES LEGEND]

                [INCLUDE IF SECURITY IS A RESTRICTED SECURITY OR A TEMPORARY
REGULATION S GLOBAL SECURITY (UNLESS, PURSUANT TO SECTION 2.7, THE COMPANY
DETERMINES THAT THE LEGEND MAY BE REMOVED) - THIS SECURITY (OR ITS PREDECESSOR)
WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED
STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY
NOTIFIED



                                       1
<PAGE>

THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

        THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
(I) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (III) PURSUANT TO ANY EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF
CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER
IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO IN (A) ABOVE.

        IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE TRUSTEE
SUCH CERTIFICATES AND OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO
CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.]

                [Insert any legend required by the Internal Revenue Code of
1986, as amended, and the regulations thereunder.]



                                       2
<PAGE>

                         KERN RIVER FUNDING CORPORATION

                           6.676% Senior Note due 2016

No.                                                                          $
   ----------

                KERN RIVER FUNDING CORPORATION, a corporation duly organized and
existing under the laws of the State of Delaware (herein called the "Company,"
which term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to ______, or
registered assigns, [INCLUDE IF THIS SECURITY IS A GLOBAL SECURITY -- the
Initial Principal Amount specified on Schedule A hereto (such Initial Principal
Amount, as it may from time to time be adjusted by endorsement on Schedule A
hereto, is hereinafter referred to as the "Principal") [INCLUDE IF THIS SECURITY
IS NOT A GLOBAL SECURITY -- the principal sum of Dollars (the "Principal
Amount")] on _________ [if the Security is to bear interest prior to Maturity,
insert --, and to pay interest thereon from [________] or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
monthly on the last day of each month, commencing [________], at the rate of
[__]% per annum (computed on the basis of a 360-day year of twelve 30-day
months), until the principal hereof is paid or made available for payment [if
applicable, insert --, provided that any principal and premium, and any such
installment of interest, which is overdue shall bear interest at the rate of %
per annum (to the extent that the payment of such interest shall be legally
enforceable), from the dates such amounts are due until they are paid or made
available for payment, and such interest shall be payable on demand]. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest, which shall be
the 15th day of the month (whether or not a Business Day), in which each
applicable Interest Payment Date shall occur. Any such interest not so
punctually paid or duly provided for will forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Company, notice whereof shall be given to Holders of
Securities of this series not less than 10 days prior to such Special Record
Date, or be paid at any time in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the Securities of this
series may be listed, and upon such notice as may be required by such exchange,
all as more fully provided in said Indenture].

                [If the Security is not to bear interest prior to Maturity,
insert -- The principal of this Security shall not bear interest except in the
case of a default in payment of principal upon acceleration, upon redemption or
at Stated Maturity and in such case the overdue principal and any overdue
premium shall bear interest at the rate of ___% per



                                       3
<PAGE>

annum, (to the extent that the payment of such interest shall be legally
enforceable), from the dates such amounts are due until they are paid or made
available for payment. Interest on any overdue principal or premium shall be
payable on demand. [Any such interest on overdue principal or premium which is
not paid on demand shall bear interest at the rate of ___% per annum (to the
extent that the payment of such interest on interest shall be legally
enforceable) from the date of such demand until the amount so demanded is paid
or made available for payment. Interest on any overdue interest shall be payable
on demand.]]

                Payment of the principal of (and premium, if any) and [if
applicable, insert - any such interest] on this Security will be made at the
office or agency of the Company maintained for that purpose in the Borough of
Manhattan, The City of New York in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts [if applicable, insert --; provided, however, that at the option
of the Company payment of interest may be made by check mailed to the address of
the Person entitled thereto as such address shall appear in the Security
Register], provided, further, that, in the case of an Installment Security,
payment of principal and premium, if any, shall also be made by check mailed to
the address of the Person entitled thereto as such address shall appear in the
Security Registrar without any requirement for the presentation and surrender of
such Security at such office or agency, except in connection with a redemption
or the final principal payment thereon.

                Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.

                Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.

                IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed.

Dated:
                                          KERN RIVER FUNDING CORPORATION,
                                            As Issuer


                                          By

                                          KERN RIVER GAS TRANSMISSION COMPANY,
                                            As Guarantor


                                          By



                                       4
<PAGE>

                          CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated therein referred to in
the within mentioned Indenture.

                                          THE CHASE MANHATTAN BANK
                                          As Trustee

                                          By
                                            Authorized Officer



                                       5
<PAGE>

                         [FORM OF REVERSE OF SECURITY]

                This Security is one of a duly authorized issue of securities of
the Company (herein called the "Securities"), issued and to be issued in one or
more series under a Trust Indenture, dated as of August 13, 2001(as the same may
be amended or supplemented from time to time the "Indenture"), among Kern River
Funding Corporation, as issuer (the "Company"), Kern River Gas Transmission
Company, as guarantor (the "Partnership"), and The Chase Manhattan Bank, as
trustee (the "Trustee," which term includes any successor trustee under the
Indenture), and reference is hereby made to the Indenture for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Partnership, the Trustee and the Holders of the Securities and
of the terms upon which the Securities are, and are to be, authenticated and
delivered. This Security is one of the series designated on the face hereof [if
applicable, insert --, limited in principal amount to $510,000,000.

                If applicable, insert -- The Securities of this series are
subject to redemption upon not less than 30 days' notice by mail, [if
applicable, insert -- (1) on _______ in any year commencing with the year ______
and ending with the year ______ through operation of the sinking fund for this
series at a Redemption Price equal to 100% of the principal amount hereof, and
(2)] at any time [if applicable, insert -- on or after ________, __], as a whole
or in part, at the election of the Company at a Redemption Price equal to 100%
of the principal amount hereof plus the Economic Make-Whole Premium, with
accrued interest to the Redemption Date, but interest installments whose Stated
Maturity is on or prior to such Redemption Date will be payable to the Holders
of such Securities, or one or more Predecessor Securities, of record at the
close of business on the relevant Record Dates referred to on the face hereof
all as provided in the Indenture.]

                [if applicable, insert -- The sinking fund for this series
provides for the redemption on __________ in each year ________ beginning
_________ with the year _________ and ending with the year ______________ of [if
applicable, insert -- not less than $_______("mandatory sinking fund") and not
more than] $__________ aggregate principal amount of Securities of this series.
Securities of this series acquired or redeemed by the Company otherwise than
through [if applicable, insert -- mandatory] sinking fund payments may be
credited against subsequent [if applicable, insert -- mandatory] sinking fund
payments otherwise required to be made [if applicable, insert --, in the inverse
order in which they become due].]

                [If the Security is subject to redemption of any kind, insert --
Except in the case of an Installment Security, in the event of redemption of
this Security in part only, a new Security or Securities of this series and of
like tenor for the unredeemed portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof.)

                [If applicable, insert -- The indenture contains provisions for
defeasance at any time of [the entire indebtedness of this Security] [or]
[certain restrictive covenants and



                                       6
<PAGE>

Events of Default with respect to this Security] [, in each case] upon
compliance with certain conditions set forth in the Indenture.]

                [If the Security is not an Original Issue Discount Security,
insert -- If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.]

                If the Security is an Original Issue Discount Security, insert
- -- If an Event of Default with respect to Securities of this series shall occur
and be continuing, an amount of principal of the Securities of this series may
be declared due and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal to -- insert formula for determining the
amount. Upon payment (i) of the amount of principal so declared due and payable
and (ii) of interest on any overdue principal, premium and interest (in each
case to the extent that the payment of such interest shall be legally
enforceable) all of the Company's obligations in respect of the payment of the
principal of and principal and interest, if any, on the Securities of this
series shall terminate.]

                Subject to certain limitations in the Indenture, at any time
when the Company is not subject to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), upon the request of a
Holder of a Security [or of a beneficial owner of an interest in a Global
Security], the Company will promptly furnish or cause to be furnished Rule 144A
Information (as defined below) to such Holder [or beneficial owner), or to a
prospective purchaser of a Security [or a beneficial interest in a Global
Security] designated by such Holder [or beneficial owner of such interest], in
order to permit compliance by such Holder [or beneficial owner] with Rule 144A
under the Securities Act of 1933, as amended (the "Securities Act"). "Rule 144A
Information" shall be such information as is specified pursuant to Rule
144A(d)(4) under the Securities Act (or any successor provision thereto).

                The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the Partnership and the rights of the Holders of
the Securities of each series to be affected under the Indenture at any time by
the Company, the Partnership and the Trustee with the consent of the Holders of
a majority in principal amount of the Securities at the time Outstanding of each
series to be affected. The Indenture also contains provisions permitting the
Holders of specified percentage in principal amount of the Securities of each
series at the time Outstanding, on behalf of the Holders of all Securities of
such series, to waive certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security.



                                       7
<PAGE>

                As provided in and subject to the provisions of the Indenture,
the Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee
shall not have received from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity.

                The foregoing shall not apply to any suit by the Holder of this
Security for the enforcement of any payment of principal hereof or any premium
or interest hereon on or after the respective due dates expressed herein.

                No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair (i) the obligation of the
Company, which is absolute and unconditional, to pay the principal of and any
premium and interest on this Security at the times, place and rate, and in the
coin or currency, herein prescribed or (ii) the unconditional guarantee of the
Partnership of the obligations of the Company under this Security and the
Indenture.

                As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company maintained for such purpose in any place where
the principal of and any premium and interest on this Security are payable, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities of this series and of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.

                The Securities of this series are issuable only in registered
form without coupons in denominations of $100,000 and any integral multiples of
$1,000 in excess thereof. As provided in the Indenture and subject to certain
limitations therein set forth Securities of this series are exchangeable for a
like aggregate principal amount of Securities of this series and of like tenor
of a different authorized denomination, as requested by the Holder surrendering
the same.



                                       8
<PAGE>

                No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

                Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and none of
the Company, the Trustee and any such agent shall be affected by notice to the
contrary.

                Each holder, by acceptance of this Security, hereby acknowledges
and agrees that (i) no recourse shall be had for the payment of the principal of
or the interest on this Security, or any part thereof, or for any claim based
thereon or otherwise in respect thereof, or of the indebtedness represented
hereby against any Affiliate of the Company (other than the Partnership) or any
incorporator, stockholder, officer, employee or director, as such, present or
future, of the Company or any Affiliate of the Company or of any predecessor or
successor, all as provided in Section 13.1 of the Indenture and (ii) no recourse
shall be had in the event of any non-performance by the Partnership of any
obligations of the Partnership under this Security or the Indenture to the
Partners or any Affiliate thereof or to any assets or properties of the Partners
other than their respective interests in the Collateral, all as provided in
Section 13.2 of the Indenture.

                The Securities are subject to a Collateral Agency Agreement
dated as of August 13, 2001 pursuant to which the rights of the Senior Parties
(including the Holders of the Securities and certain other creditors of the
Company and the Partnership) in respect of the Collateral will be shared among
the Senior Parties and will be exercised by the Collateral Agent in accordance
with the Collateral Agency Agreement.

                All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.

                THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.



                                       9
<PAGE>

        [IF SECURITY IS A GLOBAL SECURITY, INSERT AS A SEPARATE PAGE] --

         THE INITIAL PRINCIPAL AMOUNT OF THIS GLOBAL SECURITY IS ______.

                                                                      Schedule A

                             SCHEDULE OF ADJUSTMENTS


<TABLE>
<CAPTION>
                                                                   Principal              Notation made
    Date                Principal            Principal               amount               on behalf of
 adjustment             amount of            amount of             following              the Security
    made                increase             decrease              adjustment               Registrar
- --------------          --------             --------              ----------            ---------------
<S>                     <C>                  <C>                   <C>                   <C>


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

- --------                --------             --------               --------                 --------
</TABLE>



                                       10
<PAGE>

                                                                       EXHIBIT B


                          FORM OF TRANSFER CERTIFICATE
                 FOR EXCHANGE OR TRANSFER FROM RESTRICTED GLOBAL
                    SECURITY TO REGULATION S GLOBAL SECURITY
                   (TRANSFERS PURSUANT TO SECTION 2.7(c)(v)(B)
                                OF THE INDENTURE)


The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, New York 10001
Attn.:  Institutional Trust Services


        Re:     Kern River Funding Corporation
                6.676% Senior Notes Due 2016 (the "Securities")

                Reference is hereby made to the Trust Indenture, dated as of
August 13, 2001 (the "Indenture"), among Kern River Funding Corporation, as
issuer (the "Company") Kern River Gas Transmission Company, as guarantor, and
The Chase Manhattan Bank, as trustee. Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture.

                This letter relates to US$510,000,000 principal amount of
Securities which are evidenced by one or more Restricted Global Securities
(CUSIP No. 49228RAC7) and held with the Depository in the name of [Insert Name
of Transferor] (the "Transferor"). The Transferor has requested a transfer of
such beneficial interest in the Securities to a Person who will take delivery
thereof in the form of an equal principal amount of Securities evidenced by one
or more Regulation S Global Securities (ISIN No. USU4912PAC42), which amount,
immediately after such transfer, is to be held with the Depository through
Euroclear or Clearstream or both (Common Code ________).

                In connection with such request and in respect of such
Securities, the Transferor does hereby certify that such transfer has been
effected pursuant to and in accordance with Rule 903 or Rule 904 under the
United States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor does hereby further certify that:

        (a)     the offer of the Securities was not made to a person in the
United States;

        (b)     either:



                                       1
<PAGE>

                (i)     at the time the buy order was originated, the transferee
                was outside the United States or the Transferor and any person
                acting on its behalf reasonably believed and believes that the
                transferee was outside the United States; or

                (ii)    the transaction was executed in, or through the
                facilities of a designated offshore securities market and
                neither the Transferor nor any person acting on its behalf knows
                that the transaction was prearranged with a buyer in the United
                States;

        (c)     no directed selling efforts have been made in contravention of
the requirements of Rule 903(b) or 904(b) of Regulation S, as applicable;

        (d)     the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and

        (e)     upon completion of the transaction, the beneficial interest
being transferred as described above is to be held with the Depository through
Euroclear or Clearstream or both (Common Code ___).

                This certificate and the statements contained herein are made
for your benefit and the benefit of the Company and the underwriters or initial
purchasers, if any, of the initial offering of such Securities being
transferred. Terms used in this certificate and not otherwise defined in the
Indenture have the meanings set forth in Regulation S under the Securities Act.


                                               [Insert Name of Transferor]




                                                     Name:
                                                     Title:




Dated: _____________, ____



cc: Kern River Funding Corporation



                                       2
<PAGE>

                                                                       EXHIBIT C


                          FORM OF TRANSFER CERTIFICATE
                   FOR TRANSFER OR EXCHANGE FROM REGULATION S
                  GLOBAL SECURITY TO RESTRICTED GLOBAL SECURITY
                   (TRANSFERS PURSUANT TO SECTION 2.7(c)(v)(D)
                                OF THE INDENTURE)


The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, New York 10001
Attn.:  Institutional Trust Services


        Re:     Kern River Funding Corporation
                6.676% Senior Notes Due 2016 (the "Securities")

                Reference is hereby made to the Trust Indenture, dated as of
August 13, 2001 (the "Indenture"), among Kern River Funding Corporation, as
issuer (the "Company") Kern River Gas Transmission Company, as guarantor, and
The Chase Manhattan Bank, as trustee. Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture.

                This letter relates to US$510,000,000 principal amount of
Securities which are evidenced by one or more Regulation S Global Securities
(ISIN No. USU4912PAC42) and held with the Depository through [Euroclear]
[Clearstream] (Common Code ______) in the name of [Insert Name of Transferor]
(the "Transferor"). The Transferor has requested a transfer of such beneficial
interest in the Securities to a Person who will take delivery thereof in the
form of an equal principal amount of Securities evidenced by one or more
Restricted Global Securities (CUSIP No. 49228RAC7), to be held with the
Depository.

                In connection with such request and in respect of such
Securities, the Transferor does hereby certify that such transfer has been
effected pursuant to and in accordance with Rule 144A under the United States
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, the
Transferor does hereby further certify that the Securities are being transferred
to a Person that the Transferor reasonably believes is purchasing the Securities
for its own account, or for one or more accounts with respect to which such
Person exercises sole investment discretion, and such Person and each such
account is a "qualified institutional buyer" within the meaning of Rule 144A, in
each case in a transaction meeting the requirements of Rule 144A and in
accordance with any applicable blue sky or securities laws or any state of the
United States.



                                       1
<PAGE>

                This certificate and the statements contained herein are made
for your benefit and the benefit of the Company and the underwriters and initial
purchasers, if any, of the Securities being transferred.

                                                    [Insert Name of Transferor]




                                                         Name:
                                                         Title:


Dated: _____________, ____



cc: Kern River Funding Corporation



                                       2
<PAGE>

                                                                       EXHIBIT D


                          FORM OF TRANSFER CERTIFICATE
                            FOR TRANSFER OR EXCHANGE
                             OF RESTRICTED SECURITY
              (TRANSFERS PURSUANT TO SECTION 2.7(b) OR 2.7(c)(v)(E)
                                OF THE INDENTURE)


The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, New York 10001
Attn.:  Institutional Trust Services


        Re:     Kern River Funding Corporation
                6.676% Senior Notes Due 2016 (the "Securities")

                Reference is hereby made to the Trust Indenture, dated as of
August 13, 2001 (the "Indenture"), among Kern River Funding Corporation, as
issuer (the "Company") Kern River Gas Transmission Company, as guarantor, and
The Chase Manhattan Bank, as trustee. Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture.

                This letter relates to US$510,000,000 principal amount of
Securities presented or surrendered on the date hereof (the "Surrendered
Securities") which are registered in the name of [Insert Name of Transferor]
(the "Transferor"). The Transferor has requested a transfer of such Surrendered
Securities to a Person other than the Transferor (each such transaction being
referred to herein as a "transfer").

                In connection with such request and in respect of such
Surrendered Securities, the Transferor does hereby certify that:

                                   [CHECK ONE]

[  ]    (a)     the Surrendered Securities are being transferred to the Company;

                                       or

[  ]    (b)     the Surrendered Securities are being transferred pursuant to and
                in accordance with Rule 144A under the United States Securities
                Act of 1933 (the "Securities Act") and, accordingly, the
                Transferor does hereby further certify that the Surrendered
                Securities are being transferred to a Person that



                                       1
<PAGE>

                the Transferor reasonably believes is purchasing the Surrendered
                Securities for its own account, or for one or more accounts with
                respect to which such Person exercises sole investment
                discretion, and such Person and each such account is a
                "qualified institutional buyer" within the meaning of Rule 144A,
                in each case in a transaction meeting the requirements of Rule
                144A and in accordance with any applicable blue sky or
                securities laws of any state of the United States;

                                       or

[  ]    (c)     the Surrendered Securities are being transferred pursuant to and
                in accordance with Regulation S under the Securities Act, and

                (i)     the offer of the Surrendered Securities was not made to
                        a person in the United States;

                (ii)    either:

                        (A)     at the time the buy order was originated, the
                                transferee was outside the United States or the
                                Transferor and any person acting on its behalf
                                reasonably believed and believes that the
                                transferee was outside the United States, or

                        (B)     the transaction was executed in, on or through
                                the facilities of a designated offshore
                                securities market and neither the Transferor nor
                                any person acting on its behalf knows that the
                                transaction was prearranged with a buyer in the
                                United States;

                (iii)   no directed selling efforts have been made in
                        contravention of the requirements of Rule 903(b) or Rule
                        904(b) of Regulation S, as applicable; and

                (iv)    the transaction is not part of a plan or scheme to evade
                        the registration requirements of the Securities Act;

[  ]    (d)     the Surrendered Securities are being transferred in a
                transaction permitted by Rule 144 under the Securities Act and
                in accordance with any applicable blue sky securities laws of
                any state of the United States.



                                       2
<PAGE>

                This certificate and the statements contained herein are made
for your benefit and the benefit of the Company and the underwriters and initial
purchasers, if any, of the Securities being transferred. Terms used in this
certificate and not otherwise defined in the Indenture have the meanings set
forth in Regulation S under the Securities Act.

                                                [Insert Name of Transferor]




                                                     Name:
                                                     Title:


Dated: _____________, ____


cc: Kern River Funding Corporation




                                       3
<PAGE>

                                                                       EXHIBIT E


             FORM OF LETTER TO BE DELIVERED BY ACCREDITED INVESTORS

Kern River Funding Corporation
One Williams Center
Tulsa, Oklahoma 74172

Credit Suisse First Boston Corporation,
as representative of the several Purchasers

c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, NY 10010-3629

Dear Sirs:

        We are delivering this letter in connection with an offering of
$510,000,000 6.676% Senior Notes Due 2016 (the "Securities") of Kern River
Funding Corporation, a Delaware corporation (the "Company"), all as described in
the Confidential Offering Circular (the "Offering Circular") relating to the
offering.

We hereby confirm that:

        (i)     we are an "accredited investor" within the meaning of Rule
                501(a)(1), (2) or (3) under the Securities Act of 1933, as
                amended (the "Securities Act"), or an entity in which all of the
                equity owners are accredited investors within the meaning of
                Rule 501(a)(1), (2) or (3) under the Securities Act (an
                "Institutional Accredited Investor");

        (ii)    (A) any purchase of the Securities by us will be for our own
                account or for the account of one or more other Institutional
                Accredited Investors or as fiduciary for the account of one or
                more trusts, each of which is an "accredited investor" within
                the meaning of Rule 501(a)(7) under the Securities Act and for
                each of which we exercise sole investment discretion or (B) we
                are a "bank", within the meaning of Section 3(a)(2) of the
                Securities Act, or a "savings and loan association" or other
                institution described in Section 3(a)(5)(A) of the Securities
                Act that is acquiring the Securities as fiduciary for the
                account of one or more institutions for which we exercise sole
                investment discretion,



                                       1
<PAGE>

        (iii)   in the event that we purchase any of the Securities, we will
                acquire Securities having a minimum purchase price of not less
                than $100,000 for our own account or for any separate account
                for which we are acting;

        (iv)    we have such knowledge and experience in financial and business
                matters that we are capable of evaluating the merits and risks
                of purchasing the Securities;

        (v)     we are not acquiring the Securities with a view to distribution
                thereof or with any present intention of offering or selling any
                of the Securities, except inside the United States in accordance
                with Rule 144A under the Securities Act or outside the United
                States under Regulation S under the Securities Act, as provided
                below; provided that the disposition of our property and the
                property of any accounts for which we are acting as fiduciary
                shall remain at all times within our control; and

        (vi)    we have received a copy of the Offering Circular relating to the
                offering of the Securities and acknowledge that we have had
                access to financial and other information, and have been
                afforded the opportunity to ask questions of representatives of
                the Company and receive answers thereto, as we deem necessary in
                connection with our decision to purchase the Securities.

        We understand that the Securities are being offered in a transaction not
involving any public offering within the United States within the meaning of the
Securities Act and that the Securities have not been registered under the
Securities Act, and we agree, on our own behalf and on behalf of each account
for which we acquire any Securities, that if in the future we decide to resell,
pledge or otherwise transfer the Securities, the Securities may be offered,
resold, pledged or otherwise transferred only (i) in the United States to a
person who we reasonably believe is a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act) in a transaction meeting the
requirements of Rule 144A, (ii) outside the United States in a transaction in
accordance with Rule 904 under the Securities Act, (iii) under an exemption from
registration under the Securities Act provided by Rule 144 thereunder (if
available) or (iv) under an effective registration statement under the
Securities Act, in each of cases (i) through (iv), subject to any applicable
securities laws of any State of the United States or any other applicable
jurisdiction. We understand that the registrar and transfer agent for the
Securities, will not be required to accept for registration of transfer any
Securities acquired by us, except upon presentation of evidence satisfactory to
the Company and the transfer agent that the foregoing restrictions on transfer
have been complied with. We further understand that any Securities acquired by
us, will be in the form of definitive physical certificates and that the
certificates will bear a legend reflecting the substance of this paragraph.



                                       2
<PAGE>

        We acknowledge that you, the Company and others will rely upon our
confirmations, acknowledgments and agreements set forth herein, and we agree to
notify you promptly in writing if any of our representations or warranties
herein ceases to be accurate and complete.

        THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAWS.


Date:
      --------------------------               ---------------------------------
                                               (Name of Purchaser)


                                               By:
                                                  ------------------------------
                                                  Name:
                                                  Title:
                                                  Address:



                                       3




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(C)
<SEQUENCE>4
<FILENAME>d93687ex10-c.txt
<DESCRIPTION>2ND AMENDMENT TO CREDIT AGREEMENT
<TEXT>
<PAGE>
                                                                  EXHIBIT 10(c)

                      SECOND AMENDMENT TO CREDIT AGREEMENT

         THIS SECOND AMENDMENT TO CREDIT AGREEMENT (herein called this
"Amendment"), dated as of February 7, 2002, is entered into by and among the
Borrowers party to the Credit Agreement (as hereinafter defined), the Banks from
time to time party to the Credit Agreement, the Co-Syndication Agents as named
therein, the Documentation Agent as named therein and Citibank, N.A., as agent
for the Banks (in such capacity, the "Agent"). Except as otherwise defined or as
the context requires, terms defined in the Credit Agreement are used herein as
therein defined.

                                   WITNESSETH:

         WHEREAS, The Williams Companies, Inc., a Delaware Corporation ("TWC"),
Northwest Pipeline Corporation, a Delaware corporation ("NWP"), Transcontinental
Gas Pipe Line Corporation, a Delaware corporation ("TGPL"), Texas Gas
Transmission Corporation, a Delaware corporation ("TGT"; TWC, NWP, TGPL and TGT
each a "Borrower" and collectively, the "Borrowers" ) have entered into a
certain Credit Agreement dated as of July 25, 2000 with the financial
institutions from time to time party thereto (the "Banks"), The Chase Manhattan
Bank and Commerzbank AG, as Co-Syndication Agents, Credit Lyonnais New York
Branch, as Documentation Agent, and Citibank, N.A., as Agent (the "Original
Credit Agreement"), which Original Credit Agreement has been amended by a letter
agreement dated as of October 10, 2000, and by a Waiver and First Amendment
dated as of January 31, 2001 (the Original Credit Agreement, as so amended to
the date hereof, the "Credit Agreement");

         WHEREAS, the Borrowers and the Banks now desire to amend the Credit
Agreement in certain respects, as hereinafter provided;

         NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Borrowers and the Banks hereby agree as
follows:

         SECTION 1. Amendment of Section 1.01 of the Credit Agreement. Section
1.01 of the Credit Agreement is hereby amended as follows:

                  (a) The definition of "Debt" in such Section 1.1 is hereby
         amended and restated to read in its entirety as follows:

                  "Debt" means, in the case of any Person, (i) indebtedness of
                  such Person for borrowed money, (ii) obligations of such
                  Person evidenced by bonds, debentures or notes, (iii)
                  obligations of such Person to pay the deferred purchase price
                  of property or services (other than trade payables not overdue
                  by more than 60 days incurred in the ordinary course of
                  business), (iv) monetary obligations of such Person as lessee
                  under leases that are, in accordance with generally accepted
                  accounting principles, recorded as capital leases, (v)
                  obligations of such Person under guaranties in respect of, and
                  obligations (contingent or otherwise) to purchase or otherwise
                  acquire, or otherwise to assure a creditor against loss in
                  respect of, indebtedness or obligations of others of the kinds
                  referred to in clauses (i) through (iv) of this definition and
                  (vi) indebtedness or obligations of others of the kinds
                  referred to in clauses (i) through (v) of this definition
                  secured by any



                                      S-1
<PAGE>

                  Lien on or in respect of any property of such Person;
                  provided, however, that (w) Debt shall not include any
                  obligations of the Borrower in respect of the FELINE PACS; (x)
                  Debt shall not include any obligation under or resulting from
                  any agreement referred to in paragraph (y) of Schedule III,
                  paragraph (y) of Schedule IV, paragraph (y) of Schedule V, or
                  paragraph (y) of Schedule VI; (y) in the case of TWC, Debt
                  shall not include any contingent obligation of TWC relating to
                  indebtedness incurred by any SPV, WCG or a WCG Subsidiary
                  pursuant to the WCG Structured Financing (except that in the
                  event that the WCG Refinancing Transaction shall have
                  occurred, then Debt shall include the aggregate amount of the
                  WCG Structured Financing for which TWC or any of its
                  Subsidiaries shall have become directly and primarily liable);
                  and (z) it is the understanding of the parties hereto that
                  Debt shall not include any monetary obligations or guaranties
                  of monetary obligations of Persons as lessee under leases that
                  are, in accordance with generally accepted accounting
                  principles, recorded as operating leases.

                  (b) The following definition of "FELINE PACS" is hereby
         inserted in the alphabetically appropriate location in such Section
         1.1:

                  "FELINE PACS" means those certain units, as described in TWC's
                  prospectus supplement dated January 7, 2002, issued by TWC in
                  January, 2002 in an aggregate face amount of $1,100,000,000.

                  (c) The definition of "Net Worth" in such Section 1.1 is
         hereby amended and restated to read in its entirety as follows:

                  "Net Worth" of any Person means, as of any date of
                  determination the excess of total assets of such Person over
                  total liabilities of such Person, total assets and total
                  liabilities each to be determined in accordance with generally
                  accepted accounting principles; provided, however, that for
                  purposes of calculating Net Worth, total liabilities shall not
                  include any obligations of TWC in respect of the FELINE PACS.

                  (d) The definition of "WCG Note" is hereby inserted in the
         alphabetically appropriate location in such Section 1.1:

                  "WCG Note" means that certain promissory note dated March 28,
                  2001 issued by WCG to WCG Note Trust, a Delaware business
                  trust, in a principal amount of $1,500,000,000 with a maturity
                  date of March 31, 2008.

                  (e) The definition of "WCG Refinancing Transaction" is hereby
         inserted in the alphabetically appropriate location in such Section
         1.1:

                  "WCG Refinancing Transaction" means any transaction or series
                  of related transactions pursuant to which TWC or any
                  Subsidiary of TWC becomes directly and primarily liable to the
                  holders of the WCG Senior Notes for an aggregate amount not
                  exceeding the outstanding principal amount of the WCG Senior
                  Notes, together with all accrued and unpaid interest thereon,
                  any fees, and any



                                      S-2
<PAGE>

                  premiums or make-whole payments payable as a result of a
                  prepayment or early redemption of the WCG Senior Notes,
                  including, without limitation, by means of (i) any amendment
                  to the transaction documents pursuant to which the WCG Senior
                  Notes were issued, (ii) an exchange offer or tender offer for
                  the WCG Senior Notes or the WCG Note in consideration for
                  which TWC or any Subsidiary of TWC issues debt securities of
                  TWC or any Subsidiary of TWC, (iii) any redemption or
                  repurchase, in whole or in part, of the WCG Senior Notes by
                  TWC or any Subsidiary of TWC, (iv) any exercise of the "Share
                  Trust Release Option" as defined in the transaction documents
                  pursuant to which the WCG Senior Notes were issued, or (v) TWC
                  or any Subsidiary of TWC making any payments in respect of the
                  WCG Senior Notes or the WCG Note.

                  (f) The definition of "WCG Reimbursement Obligations" is
         hereby inserted in the alphabetically appropriate location in such
         Section 1.1:

                  "WCG Reimbursement Obligations" means any obligations of any
                  WCG Subsidiary in favor of TWC, any Subsidiary of TWC or the
                  WCG Senior Notes Issuer pursuant to which such WCG Subsidiary
                  has agreed to pay TWC, any Subsidiary of TWC or the WCG Senior
                  Notes Issuer an amount equal to or less than the total amount
                  of the obligations incurred by TWC and/or its Subsidiaries in
                  connection with the WCG Refinancing Transaction, including,
                  without limitation, in respect of principal, interest, fees
                  and any premiums or make-whole payments payable as a result of
                  a prepayment or early redemption of the WCG Senior Notes.

                  (g) The definition of "WCG Senior Notes" is hereby inserted in
         the alphabetically appropriate location in such Section 1.1:

                  "WCG Senior Notes" means those certain 8.25% Senior Secured
                  Notes due 2004 in an aggregate principal amount of
                  $1,400,000,000 issued by the WCG Senior Notes Issuer.

                  (h) The definition of "WCG Senior Notes Issuer" is hereby
         inserted in the alphabetically appropriate location in such Section
         1.1:

                  "WCG Senior Notes Issuer" means, collectively, WCG Note Trust,
                  a Delaware business trust, and WCG Note Corp., Inc., a
                  Delaware corporation.

                  SECTION 2. Amendment of Section 5.02. Section 5.02 of the
         Credit Agreement is hereby amended as follows:

                  (a) Clause (c) of Section 5.02 is hereby amended by deleting
         the word "or" at the end of subclause (iii) thereof, deleting the
         period at the end of subclause (iv) thereof and inserting "; or" in its
         place, and inserting the following new subclause (v) immediately
         following the existing clause (iv):



                                      S-3
<PAGE>

                  "(v) Williams Pipeline Company, LLC from (1) selling,
                  conveying or otherwise transferring all or substantially all
                  of its assets to another Person or (2) merging or
                  consolidating with or into another Person, in either case, for
                  fair-market value and on commercially reasonable terms and
                  conditions in the good faith judgment of TWC."

                  (b) Clause (e) of Section 5.02 is hereby amended and restated
         to read in its entirety as follows:

                  "(e) Loans and Advances; Investments. Make or permit to remain
                  outstanding, or allow any of its Subsidiaries to make or
                  permit to remain outstanding, any loan or advance to, or own,
                  purchase or acquire any obligations or debt securities of, any
                  WCG Subsidiary, except that a Borrower and its Subsidiaries
                  may (i) permit to remain outstanding loans and advances to a
                  WCG Subsidiary existing as of the date hereof and listed on
                  Exhibit E hereof (and such WCG Subsidiaries may permit such
                  loans and advances to remain outstanding), (ii) purchase or
                  acquire the WCG Senior Notes or the WCG Note pursuant to the
                  WCG Refinancing Transaction, and (iii) purchase or acquire and
                  permit to remain outstanding, the WCG Reimbursement
                  Obligations. Except for those investments in existence on the
                  date hereof and listed on Exhibit E hereof, purchases or
                  acquisitions pursuant to the WCG Refinancing Transaction and
                  purchases or acquisitions of WCG Reimbursement Obligations, no
                  Borrower shall, and no Borrower shall permit any of its
                  Subsidiaries to, acquire or otherwise invest in any stock or
                  other equity or other ownership interest in a WCG Subsidiary."

                  (c) Clause (i) of Section 5.02 is hereby amended by deleting
         the period at the end of the existing clause (i) and inserting in its
         place the following:

                  "; provided, however, that nothing contained herein shall
                  prohibit or otherwise restrict the ability of TWC or any
                  Subsidiary of TWC from incurring liability pursuant to the WCG
                  Refinancing Transaction."

                  (d) The last sentence of clause (k) of Section 5.02 is hereby
         amended by deleting the period at the end of the last sentence of the
         existing clause (k) and inserting in its place the following:

                  "; provided, however, that nothing contained herein shall
                  prohibit or otherwise restrict the ability of TWC or any
                  Subsidiary of TWC to use the proceeds of any Advance to own,
                  purchase or acquire the WCG Senior Notes pursuant to the WCG
                  Refinancing Transaction."

         SECTION 3. Representations and Warranties. To induce the Agent and the
Banks to enter into this Amendment, each of the Borrowers hereby reaffirms as to
itself and its Subsidiaries, as of the date hereof, its representations and
warranties contained in Article IV of the Credit Agreement (except to the extent
such representations and warranties relate solely to an earlier date) and
additionally represents and warrants as follows:



                                      S-4
<PAGE>

                  (a) Each Borrower is duly organized, validly existing and in
         good standing under the laws of the State of Delaware and has all
         corporate or limited liability company powers and all governmental
         licenses, authorizations, certificates, consents and approvals required
         to carry on its business as now conducted in all material respects,
         except for those licenses, authorizations, certificates, consents and
         approvals which the failure to have could not reasonably be expected to
         have a material adverse effect on the business, assets, condition or
         operation of the Borrower and its Subsidiaries taken as a whole. Each
         material Subsidiary of each Borrower is duly organized or validly
         formed, validly existing and (if applicable) in good standing under the
         laws of its jurisdiction of incorporation or formation, except where
         the failure to be so organized, existing and in good standing could not
         reasonably be expected to have a material adverse effect on the
         business, assets, condition or operations of such Borrower and its
         Subsidiaries taken as a whole. Each material Subsidiary of a Borrower
         has all corporate or limited liability company powers and all
         governmental licenses, authorizations, certificates, consents and
         approvals required to carry on its business as now conducted in all
         material respects, except for those licenses, authorizations,
         certificates, consents and approvals which the failure to have could
         not reasonably be expected to have a material adverse effect on the
         business, assets, condition or operation of such Borrower and its
         Subsidiaries taken as a whole.

                  (b) The execution, delivery and performance by each Borrower
         of this Amendment and the consummation of the transactions contemplated
         by this Amendment are within such Borrower's corporate powers, have
         been duly authorized by all necessary corporate action, do not
         contravene (i) such Borrower's charter or by-laws or (ii) any law or
         any contractual restriction binding on or affecting such Borrower and
         will not result in or require the creation or imposition of any Lien.

                  (c) No authorization or approval or other action by, and no
         notice to or filing with, any governmental authority or regulatory body
         is required for the due execution, delivery and performance by any
         Borrower of this Amendment or the consummation of the transactions
         contemplated by this Amendment.

                  (d) This Amendment has been duly executed and delivered by
         each Borrower. This Amendment and the Credit Agreement as amended by
         this Amendment are the legal, valid and binding obligations of each
         Borrower enforceable against each Borrower in accordance with its
         terms, except as such enforceability may be limited by any applicable
         bankruptcy, insolvency, reorganization, moratorium or similar law
         affecting creditors' rights generally and by general principles of
         equity.

                  (e) Except as set forth in the Public Filings and except for
         certain class-action lawsuits filed on or after January 29, 2002
         alleging fraud and other violations of applicable securities laws,
         there is, as to each of the Borrowers, no pending or, to the knowledge
         of such Borrower, threatened action or proceeding affecting such
         Borrower or any material Subsidiary of such Borrower (or in the case of
         TWC, the Borrowers, any Subsidiary of a Borrower or any WCG Subsidiary)
         before any court, governmental agency or arbitrator, which could
         reasonably be expected to materially and adversely affect the financial
         condition or operations of such Borrower and its Subsidiaries taken as



                                      S-5
<PAGE>

         a whole or which purports to affect the legality, validity, binding
         effect or enforceability of this Amendment, the Credit Agreement or any
         Note. For the purposes of this Section, "Public Filings" shall mean the
         respective annual reports of TWC or any other Borrower on Form 10-K or
         Form 10-K/A for the year ended December 31, 2000, and TWC's and the
         Borrowers' respective quarterly reports on Form 10-Q for the quarters
         ended March 31, 2001, June 30, 2001 and September 30, 2001.

                  (f) Upon giving effect to this Amendment, no event has
         occurred and is continuing which constitutes an Event of Default or
         which would constitute an Event of Default but for the requirement that
         notice be given or time elapse or both.

         SECTION 4. Conditions to Effectiveness. The effectiveness of this
Amendment is conditioned upon receipt by the Agent of all the following
documents, each in form and substance satisfactory to the Agent:

                  (a) Counterparts of this Amendment executed by each of the
         Borrowers, the Agent and Banks constituting not less than the Majority
         Banks;

                  (b) A certificate of the Secretary or Assistant Secretary of
         each of the Borrowers as to (i) any changes (or the absence of changes)
         since July 25, 2000 to its certificate of incorporation and its by-laws
         as of the date hereof, (ii) the resolutions of such Borrower
         authorizing the execution of this Amendment and (iii) the names and
         true signatures of the officers authorized to execute this Amendment;

                  (c) An opinion of William G. von Glahn, General Counsel of the
         Borrower, substantially in the form of Exhibit A hereto; and

                  (d) Such other documents as the Agent shall have reasonably
         requested.

         SECTION 5. Effect. This Amendment shall be deemed to be an amendment to
the Credit Agreement, and the Credit Agreement, as amended hereby, is hereby
ratified, approved and confirmed in each and every respect. All references to
the Credit Agreement in any other document, instrument, agreement or writing
shall hereafter be deemed to refer to the Credit Agreement as amended hereby.

         SECTION 6. Fees. TWC shall pay (a) to each Bank that shall have
approved this Amendment and shall have delivered to the Agent a duly executed
counterpart hereof not later than 12:00 p.m. central standard time on February
7, 2002, a fee equal to 0.25% of each such Bank's respective Commitment, and (b)
to each other Bank that shall have approved this Amendment and shall have
delivered a duly executed counterpart hereof not later than 12:00 p.m. central
standard time on February 14, 2002, a fee equal to 0.10% of each such other
Bank's respective Commitment.

         SECTION 7. Governing Law, Etc. THIS AMENDMENT SHALL BE A CONTRACT MADE
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICT OF LAW EXCEPT SECTION
5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW). Whenever possible each
provision of this


                                      S-6
<PAGE>

Amendment shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Amendment shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Amendment.

         SECTION 8. Counterpart Execution. This Amendment may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any party hereto may execute this Amendment by signing one
or more counterparts.

         SECTION 9. Successors and Assigns. This Amendment shall be binding upon
each of the Borrowers, the Agent and the Banks and their respective successors
and assigns, and shall inure to the benefit of each of the Borrowers, the Agent
and the Banks and the successors and assigns of the Banks.



                                      S-7
<PAGE>
         IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by their respective officers thereunto duly authorized, to be effective
as of the date first written above.

                                     BORROWERS:

                                     THE WILLIAMS COMPANIES, INC.

                                     By:        /s/ James G. Ivey
                                        ---------------------------------------
                                     Name:  James G. Ivey
                                     Title: Treasurer


                                     TEXAS GAS TRANSMISSION CORPORATION

                                     By:        /s/ Nick A. Bacile
                                        ---------------------------------------
                                     Name:  Nick A. Bacile
                                     Title: Vice President & CFO


                                     TRANSCONTINENTAL GAS PIPE LINE
                                     CORPORATION

                                     By:        /s/ Nick A. Bacile
                                        ---------------------------------------
                                     Name:  Nick A. Bacile
                                     Title: Vice President & CFO


                                     NORTHWEST PIPELINE CORPORATION

                                     By:        /s/ Nick A. Bacile
                                        ---------------------------------------
                                     Name:  Nick A. Bacile
                                     Title: Vice President & CFO


                                      S-8
<PAGE>



                                     AGENT:

                                     CITIBANK, N.A., as Agent


                                     By:        /s/ Todd J. Mogil
                                        ---------------------------------------
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------

                                     CO-SYNDICATION AGENTS:

                                     JPMORGAN CHASE BANK
                                     (formerly known as
                                     THE CHASE MANHATTAN BANK),
                                     as Co-Syndication Agent


                                     By:        /s/ Signature not legible
                                        ---------------------------------------
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                     COMMERZBANK AG,
                                     as Co-Syndication Agent

                                     By:        /s/ Brian J. Campbell
                                        ---------------------------------------
                                             Senior Vice President
                                             Authorized Officer

                                     By:        /s/ D. L. Ward, Jr.
                                        ---------------------------------------
                                             Assistant Vice President
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-9

<PAGE>


                                     DOCUMENTATION AGENT:

                                     CREDIT LYONNAIS NEW YORK BRANCH,
                                     as Documentation Agent


                                     By:        /s/ Bernard Weymuller
                                        ---------------------------------------
                                             Senior Vice President
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-10
<PAGE>



                                     BANKS:

                                     CITIBANK, N.A.


                                     By:        /s/ Todd J. Mogil
                                        ---------------------------------------
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-11
<PAGE>


                                     THE BANK OF NOVA SCOTIA


                                     By:        /s/ M. D. Smith
                                        ---------------------------------------
                                            Agent
                                            Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-12

<PAGE>


                                     BANK OF AMERICA, N.A.


                                     By:        /s/ Claire Lui
                                        ---------------------------------------
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-13

<PAGE>


                                     BANK ONE NA (CHICAGO)


                                     By:        /s/ Dianne L. Russell
                                        ---------------------------------------
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-14
<PAGE>


                                     JPMORGAN CHASE BANK
                                     (formerly known as
                                     THE CHASE MANHATTAN BANK),


                                     By:        /s/ Signature not legible
                                        ---------------------------------------
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-15
<PAGE>


                                     COMMERZBANK AG
                                     NEW YORK AND GRAND CAYMAN BRANCHES


                                     By:        /s/ Brian J. Campbell
                                        ---------------------------------------
                                             Senior Vice President
                                             Authorized Officer


                                     By:        /s/ D. L. Ward, Jr.
                                        ---------------------------------------
                                             Assistant Vice President
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-16
<PAGE>


                                     CREDIT LYONNAIS NEW YORK BRANCH


                                     By:        /s/ Bernard Weymuller
                                        ---------------------------------------
                                             Senior Vice President
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-17
<PAGE>


                                     THE FUJI BANK, LIMITED


                                     By:        /s/ Jacques Azagury
                                        ---------------------------------------
                                             Senior Vice President & Manager
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-18
<PAGE>


                                     NATIONAL WESTMINSTER BANK PLC
                                     NEW YORK BRANCH


                                     By:        /s/ Patricia J. Dundee
                                        ---------------------------------------
                                             Name:    Patricia J. Dundee
                                             Title:   Senior Vice President

                                     Date:                      , 2002
                                           ---------------------


                                      S-19
<PAGE>


                                     ABN AMRO BANK, N.V.


                                     By:        /s/ Signature not legible
                                        ---------------------------------------
                                             Authorized Officer


                                     By:        /s/ Signature not legible
                                        ---------------------------------------
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-20
<PAGE>


                                     BANK OF MONTREAL


                                     By:        /s/ Signature not legible
                                        ---------------------------------------
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-21
<PAGE>


                                     THE BANK OF NEW YORK


                                     By:        /s/ Raymond J. Palmer
                                        ---------------------------------------
                                             Vice President
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-22
<PAGE>


                                     BARCLAYS BANK PLC


                                     By:        /s/ Nicholas A. Bell
                                        ---------------------------------------
                                             Director, Loan Transaction
                                               Management
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------



                                      S-23
<PAGE>


                                     CIBC INC.


                                     By:        /s/ Signature not legible
                                        ---------------------------------------
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-24
<PAGE>


                                     CREDIT SUISSE FIRST BOSTON


                                     By:        /s/ Signature not legible
                                        ---------------------------------------
                                             Authorized Officer


                                     By:        /s/ Signature not legible
                                        ---------------------------------------
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-25
<PAGE>


                                     ROYAL BANK OF CANADA


                                     By:        /s/ Tom J. Oberaigner
                                        ---------------------------------------
                                             Senior Manager
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-26
<PAGE>


                                     THE BANK OF TOKYO-MITSUBISHI, LTD.,
                                     HOUSTON AGENCY


                                     By:
                                        ---------------------------------------
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-27
<PAGE>


                                     FLEET NATIONAL BANK
                                     f/k/a Bank Boston, N.A.


                                     By:        /s/ Signature not legible
                                        ---------------------------------------
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-28
<PAGE>


                                     SOCIETE GENERALE, SOUTHWEST AGENCY


                                     By:        /s/ J. Douglas McMurray, Jr.
                                        ---------------------------------------
                                             Managing Director
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-29
<PAGE>


                                     THE INDUSTRIAL BANK OF JAPAN
                                     TRUST COMPANY


                                     By:        /s/ Michael N. Oakes
                                        ---------------------------------------
                                             Senior Vice President
                                             Authorized Officer
                                     The Industrial Bank of Japan, Limited,
                                        Houston Office
                                        (Authorized Representative)

                                     Date:                      , 2002
                                           ---------------------


                                      S-30
<PAGE>


                                     TORONTO DOMINION (TEXAS), INC.


                                     By:        /s/ Jill Hall
                                        ---------------------------------------
                                             Vice President
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-31
<PAGE>


                                     UBS AG, STAMFORD BRANCH


                                     By:        /s/ Patricia O'Kicki
                                        ---------------------------------------
                                             Director, Banking Products Services
                                             Authorized Officer


                                     By:        /s/ Wilfred V. Saint
                                        ---------------------------------------
                                             Associate Director, Banking
                                                Products Services US
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-32
<PAGE>


                                     WELLS FARGO BANK TEXAS, N.A.


                                     By:        /s/ J. Alan Alexander
                                        ---------------------------------------
                                             Vice President
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-33
<PAGE>


                                     WESTDEUTSCHE LANDESBANK
                                     GIROZENTRALE, NEW YORK BRANCH


                                     By:        /s/ Salvatore Battinelli
                                        ---------------------------------------
                                             Managing Director Credit Department
                                             Authorized Officer


                                     By:        /s/ Jeffrey S. Davidson
                                        ---------------------------------------
                                             Associate Director
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-34
<PAGE>


                                     CREDIT AGRICOLE INDOSUEZ


                                     By:        /s/ Brian Knezeak
                                        ---------------------------------------
                                             First Vice President
                                             Authorized Officer


                                     By:        /s/ Mark Lvoff
                                        ---------------------------------------
                                             First Vice President, Head of
                                                Energy Platform
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-35
<PAGE>


                                     SUNTRUST BANK


                                     By:        /s/ Signature not legible
                                        ---------------------------------------
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-36
<PAGE>


                                     THE DAI-ICHI KANGYO BANK, LTD.


                                     By:        /s/ Maureen Carson
                                        ---------------------------------------
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-37
<PAGE>


                                     ARAB BANKING CORPORATION (B.S.C.)


                                     By:        /s/ Robert J. Ivosevich
                                        ---------------------------------------
                                             Deputy General Manager
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-38
<PAGE>


                                     BANK OF CHINA, NEW YORK BRANCH


                                     By:
                                        ---------------------------------------
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-39
<PAGE>


                                     BANK OF OKLAHOMA, N.A.


                                     By:        /s/ Robert D. Mattax
                                        ---------------------------------------
                                             SVP
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-40
<PAGE>


                                     BNP PARIBAS, HOUSTON AGENCY


                                     By:        /s/ Signature not legible
                                        ---------------------------------------
                                             Authorized Officer


                                     By:        /s/ Signature not legible
                                        ---------------------------------------
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-41
<PAGE>


                                     DZ BANK AG
                                     DEUTSCHE ZENTRAL-GENNOSSENSCHAFTS
                                     BANK, NEW YORK BRANCH


                                     By:        /s/ William Klun
                                        ---------------------------------------
                                             VP
                                             Authorized Officer


                                     By:        /s/ Richard W. Wilbert
                                        ---------------------------------------
                                             Vice President
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-42
<PAGE>


                                     KBC BANK N.V.


                                     By:        /s/ Robert Snauffer
                                        ---------------------------------------
                                             First Vice President
                                             Authorized Officer


                                     By:        /s/ Signature not legible
                                        ---------------------------------------
                                             Vice President
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-43
<PAGE>


                                     SUMITOMO MITSUI BANKING CORPORATION


                                     By:        /s/ C. Michael Garrido
                                        ---------------------------------------
                                             Senior Vice President
                                             Authorized Officer

                                     Date:    _____________________, 2002


                                      S-44
<PAGE>


                                     COMMERCE BANK, N.A.


                                     By:        /s/ Signature not legible
                                        ---------------------------------------
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-45
<PAGE>


                                     RZB FINANCE LLC


                                     By:
                                        ---------------------------------------
                                             Authorized Officer


                                     By:
                                        ---------------------------------------
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-46
<PAGE>


                                     FIRST UNION NATIONAL BANK


                                     By:        /s/ First Union National Bank
                                        ---------------------------------------
                                             Senior Vice President
                                             Authorized Officer

                                     Date:                      , 2002
                                           ---------------------


                                      S-47


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(F)
<SEQUENCE>5
<FILENAME>d93687ex10-f.txt
<DESCRIPTION>LIMITED WAIVER & 2ND AMENDMENT TO CREDIT AGREEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10(f)


             LIMITED WAIVER AND SECOND AMENDMENT TO CREDIT AGREEMENT

         THIS LIMITED WAIVER AND SECOND AMENDMENT TO CREDIT AGREEMENT (herein
called this "Amendment"), dated as of July 24, 2001, is entered into by and
among The Williams Companies, Inc., a Delaware corporation, as Borrower pursuant
to the Credit Agreement (as hereinafter defined), the Banks from time to time
party to the Credit Agreement, the Co-Syndication Agents as named therein, the
Co-Documentation Agents as named therein and Citibank, N.A., as agent for the
Banks (in such capacity, the "Agent"). Except as otherwise defined or as the
context requires, terms defined in the Credit Agreement are used herein as
therein defined.

                                   WITNESSETH:

         WHEREAS, The Williams Companies, Inc. ("TWC" or the "Borrower") has
entered into a certain Credit Agreement dated as of July 25, 2000 with the
financial institutions from time to time party thereto (the "Banks"), The Chase
Manhattan Bank and Commerzbank AG, as Co-Syndication Agents, Credit Lyonnais New
York Branch, as Documentation Agent, and Citibank, N.A., as Agent (the "Original
Credit Agreement"), which Credit Agreement has been amended by a Waiver and
First Amendment to Credit Agreement dated as of January 31, 2001 (the Original
Credit Agreement, as so amended, the "Credit Agreement");

         WHEREAS, the Borrower and the Banks now desire to amend the Credit
Agreement in certain respects, as hereinafter provided;

         WHEREAS, the Borrower has requested waivers of certain provisions of
the Credit Agreement; and

         WHEREAS, the Banks wish to name Bank of America, N.A. and Credit
Lyonnais as Co-Documentation Agents and to replace the Documentation Agent with
the Co-Documentation Agents for purposes of the Credit Agreement and each
document related thereto;

         NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Borrower and the Banks hereby agree as follows:

         SECTION 1. Amendment of Section 1.1 of the Credit Agreement. Section
1.1 of the Credit Agreement is hereby amended as follows:

                  (a) The following definitions of "B of A" and
"Co-Documentation Agent" are added to such Section 1.1 in appropriate
alphabetical order:

                  "B of A" means Bank of America, National Association.

                  "Co-Documentation Agent" means either of B of A or Credit
         Lyonnais, together with the successors and assigns of each in such
         capacity.

                  (b) The definition of "Commitment" in such Section 1.1 is
hereby amended and restated to read in its entirety as follows:



<PAGE>

                  "Commitment" of any Bank means at any time the amount set
         opposite such Bank's name on Schedule IV or as reflected for such Bank
         in the relevant Transfer Agreement to which it is a party, as such
         amount may be terminated, reduced or increased after the date hereof
         pursuant to Section 2.4, Section 2.17, Section 6.1 or Section 8.6(a).

                  (c) The definition of "Consolidated" in such Section 1.1 is
hereby amended and restated to read in its entirety as follows:

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

                  (d) The definition of "Consolidating" in such Section 1.1 is
hereby deleted in its entirety.

                  (e) The definition of "Designated Minority Interests" in such
Section 1.1 is hereby amended and restated to read in its entirety as follows:

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

                  (f) The definition of "Designating Bank" in such Section 1.1
is amended and restated in its entirety to read as follows:

                  "Designating Bank" has the meaning specified in Section
         8.6(g).

                  (g) The definition of "Documentation Agent" in such Section
1.1 is hereby deleted.

                  (h) The definition of "Domestic Lending Office" in such
Section 1.1 is amended and restated in its entirety to read as follows:

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

                  (i) The following definition of "Eligible Assignee" is added
to Section 1.1 of the Credit Agreement in appropriate alphabetical order:



                                       2
<PAGE>

                  "Eligible Assignee" means (i) any Bank, (ii) any affiliate of
         any Bank, and (iii) any other Person not covered by clause (i) or (ii)
         of this definition (A) so long as no Event of Default has occurred and
         is continuing, with the consent of the Borrower and the Agent (which
         consents shall not be unreasonably withheld) or (B) if (x) any Event of
         Default has occurred and is continuing or (y) any event or condition
         which, upon the giving of notice or passage of time or both, would
         constitute an Event of Default has occurred or exists and is
         continuing, without any requirement for consent by the Agent or the
         Borrower; provided, however, that neither the Borrower nor any
         affiliate of the Borrower shall be an Eligible Assignee.

                  (j) The definition of "Eurodollar Lending Office" in such
Section 1.1 of the Credit Agreement is amended and restated to read in its
entirety, as follows:

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

                  (k) The following definition of "Register" is added to Section
1.1 of the Credit Agreement in appropriate alphabetical order:

                  "Register" shall mean the books and accounts maintained by the
         Agent of the interests of each Bank under this Agreement and its
         Commitments and Advances, including records of transfers of any
         interests in this Agreement and the Commitment and Advances (if any) of
         any Bank pursuant to Section 8.6 and the records maintained by the
         Agent pursuant to Section 2.9.

                  (l) The definition of "SPC" in such Section 1.1 is hereby
amended and restated to read in its entirety as follows:

                  "SPC" has the meaning specified in Section 8.6(g).

                  (m) The definition of "Subsidiary" in such Section 1.1 is
hereby amended and restated in its entirety to read as follows:

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



                                       3
<PAGE>

                  (n) The definition of "Transfer Agreement" in such Section 1.1
is amended and restated in its entirety to read as follows:

                  "Transfer Agreement" means an agreement executed pursuant to
         Section 8.6 by an assignor Bank and assignee Bank substantially in the
         form of Exhibit F, which agreement shall be executed by the Borrower
         and the Agent to evidence the consent of each if such consent is
         required pursuant to the terms of Section 8.6.

         SECTION 2. Amendment of Section 2.11. Clause (c) of Section 2.11 of the
Credit Agreement is hereby amended by replacing the phrase "all of the
provisions of the last sentence of Section 8.6(a)" in such clause (c) with the
phrase "all of the provisions of the second and third sentences of Section
8.6(a), and clauses (b) and (d) of Section 8.6."

         SECTION 3. Amendment of Section 4.1(e). Section 4.1(e) of the Credit
Agreement is hereby amended and restated in its entirety to read as follows:

                  (e) The Consolidated balance sheets of the Borrower and its
         Subsidiaries as at December 31, 2000, and the related Consolidated
         statements of income and cash flows of the Borrower and its
         Subsidiaries for the fiscal year then ended, copies of which have been
         furnished to each Bank, and the Consolidated balance sheet of the
         Borrower and its Subsidiaries as at March 31, 2001, and the related
         Consolidated statements of income and cash flows of the Borrower and
         its Subsidiaries for the three months then ended, duly certified by an
         authorized financial officer of the Borrower, copies of which have been
         furnished to each Bank, fairly present, (in the case of such balance
         sheets as at March 31, 2001, and such statements of income and cash
         flows for the three months then ended, subject to year-end audit
         adjustments) the Consolidated financial condition of the Borrower and
         its Subsidiaries as at such dates and the Consolidated results of
         operations of the Borrower and its Subsidiaries for the year and three
         month period, respectively, ended on such dates, all in accordance with
         generally accepted accounting principles consistently applied. Since
         March 31, 2001, there has been no material adverse change in the
         condition or operations of the Borrower or its Subsidiaries.

         SECTION 4. Amendment of Section 4.1(h). The last sentence of Section
4.1(h) of the Credit Agreement is hereby amended by deleting the parenthetical
"(including the WCG Subsidiaries)" therefrom.

         SECTION 5. Amendment of Section 4.1(j). Section 4.1(j) of the Credit
Agreement is hereby amended by deleting the parenthetical "(including any
material WCG Subsidiaries)" wherever it appears in such Section.

         SECTION 6. Amendment of Section 4.1(k). [Intentionally Blank.]

         SECTION 7. Amendment of Section 4.1(m). Section 4.1(m) of the Credit
Agreement is hereby amended by deleting the last sentence thereof.



                                       4
<PAGE>

         SECTION 8. Amendment of Section 5.1(b)(ii). Section 5.1(b)(ii) of the
Credit Agreement is hereby amended and restated in its entirety as follows:

                  (ii) as soon as available and in any event not later than 60
         days after the end of each of the first three quarters of each fiscal
         year of the Borrower, the Consolidated balance sheets of the Borrower
         and its Subsidiaries as of the end of such quarter and the Consolidated
         statements of income and cash flows of the Borrower and its
         Subsidiaries for the period commencing at the end of the previous year
         and ending with the end of such quarter, all in reasonable detail and
         duly certified (subject to year-end audit adjustments) by an authorized
         financial officer of the Borrower as having been prepared in accordance
         with generally accepted accounting principles; provided that, if any
         financial statement referred to in this clause (ii) of Section 5.1(b)
         is readily available on-line through EDGAR as of the date on which such
         financial statement is required to be delivered hereunder, the Borrower
         shall not be obligated to furnish copies of such financial statement.
         An authorized financial officer of the Borrower shall furnish a
         certificate (a) stating that he has no knowledge that an Event of
         Default, or an event which, with notice or lapse of time or both, would
         constitute an Event of Default has occurred and is continuing or, if an
         Event of Default or such an event has occurred and is continuing, a
         statement as to the nature thereof and the action, if any, which the
         Borrower proposes to take with respect thereto, and (b) showing in
         detail the calculation supporting such statement in respect of Section
         5.2(b).

         SECTION 9. Amendment of Section 5.1(b)(iii). Section 5.1(b)(iii) of the
Credit Agreement is hereby amended and restated in its entirety as follows:

                  (iii) as soon as available and in any event not later than 105
         days after the end of each fiscal year of the Borrower, a copy of the
         annual audit report for such year for the Borrower and its
         Subsidiaries, including therein Consolidated balance sheets of the
         Borrower and its Subsidiaries as of the end of such fiscal year and
         Consolidated statements of income and cash flows of the Borrower and
         its Subsidiaries for such fiscal year, in each case prepared in
         accordance with generally accepted accounting principles and certified
         by Ernst & Young, LLP or other independent certified public accountants
         of recognized standing acceptable to the Majority Banks; provided that
         if any financial statement referred to in this clause (iii) of Section
         5.1(b) is readily available on-line through EDGAR as of the date on
         which such financial statement is required to be delivered hereunder,
         the Borrower shall not be obligated to furnish copies of such financial
         statement. The Borrower shall also deliver in conjunction with such
         financial statements, a certificate of such accounting firm to the
         Banks (a) stating that, in the course of the regular audit of the
         business of the Borrower and its Subsidiaries, which audit was
         conducted by such accounting firm in accordance with generally accepted
         auditing standards, such accounting firm has obtained no knowledge that
         an Event of Default or an event which, with notice or lapse of time or
         both, would constitute an Event of Default, has occurred and is
         continuing, or if, in the opinion of such accounting firm, an Event of
         Default or such an event has occurred and is



                                       5
<PAGE>

         continuing, a statement as to the nature thereof, and (b) showing in
         detail the calculations supporting such statement in respect of Section
         5.2(b).

         SECTION 10. Amendment of Section 5.1(b)(vi). Section 5.1(b)(vi) of the
Credit Agreement is hereby amended and restated in its entirety as follows:

                  (vi) as soon as possible and in any event within 30 Business
         Days after the Borrower or any ERISA Affiliate knows or has reason to
         know (A) that any Termination Event described in clause (i) of the
         definition of Termination Event with respect to any Plan has occurred
         that could have a material adverse effect on the Borrower or any
         material Subsidiary of the Borrower or any ERISA Affiliate or (B) that
         any other Termination Event with respect to any Plan has occurred or is
         reasonably expected to occur that could have a material adverse effect
         on the Borrower or any material Subsidiary of the Borrower or any ERISA
         Affiliate, a statement of the chief financial officer or chief
         accounting officer of the Borrower describing such Termination Event
         and the action, if any, which the Borrower or such Subsidiary or ERISA
         Affiliate proposes to take with respect thereto;

         SECTION 11. Amendment of Section 5.2(g) of the Credit Agreement.
Section 5.2(g) of the Credit Agreement is hereby amended by deleting the
parenthetical "(including any material WCG Subsidiary)" in each of clauses (i)
and (ii) thereof.

         SECTION 12. Amendment of Section 7.2. Clause (i) of Section 7.2 of the
Credit Agreement is hereby amended by replacing the reference to "the last
sentence of Section 8.6(a)" in such clause (i) with a reference to "the second
and third sentences of Section 8.6(a)."

         SECTION 13. Amendment of Section 8.2. Section 8.2 is hereby amended by
replacing the phrase "specified pursuant to Section 8.6(a)" each time it appears
therein with "specified in a Transfer Agreement for any assignee Bank delivered
pursuant to Section 8.6(a)."

         SECTION 14. Amendment of Section 8.6. Clause (d) of Section 8.6 of the
Credit Agreement is redesignated clause (g). Clauses (a) through (c) of Section
8.6 of the Credit Agreement shall be amended, restated and replaced in their
entirety as follows:

                  SECTION 8.6 Binding Effect; Transfers. (a) This Agreement
         shall become effective when it shall have been executed by the
         Borrower, the Co-Syndication Agents, Credit Lyonnais in its former
         capacity as the documentation agent and the Agent and when each Bank
         listed on the signature pages hereof has delivered an executed
         counterpart hereof to the Agent, has sent to the Agent a facsimile copy
         of its signature hereon or has notified the Agent that such Bank has
         executed this Agreement and thereafter shall be binding upon and inure
         to the benefit of the Borrower, the Agent and each Bank and their
         respective successors and assigns; provided that the Borrower shall not
         have the right to assign any of its rights hereunder or any interest
         herein without the prior written consent of all of the Banks. Each Bank
         may assign to one or more banks, financial institutions or other
         entities all or a portion of its rights and obligations under this
         Agreement (including, without limitation, all or a portion of its
         Commitments, the Advances



                                       6
<PAGE>

         owing to it and any Note or Notes held by it); provided, however, that
         (i) each such assignment shall be of a constant, and not a varying,
         percentage of all rights and obligations under this Agreement, (ii)
         except in the case of an assignment of all of a Bank's rights and
         obligations under this Agreement or an assignment to another Bank, the
         amount of the Commitment of the assigning Bank being assigned pursuant
         to each such assignment (determined as of the date of the Transfer
         Agreement with respect to such assignment) shall in no event be less
         than $10,000,000 in the aggregate or such lesser amount as may be
         consented to by the Agent and the Borrower, (iii) each such assignment
         shall be to an Eligible Assignee, and (iv) the parties to each such
         assignment shall execute and deliver to the Agent, for its acceptance
         and recording in the Register maintained by the Agent, a Transfer
         Agreement together with any Note or Notes subject to such assignment
         and, unless the assignment is to an affiliate of such Bank, a
         processing and recordation fee of $3,500. Upon such execution,
         delivery, acceptance and recording, from and after the effective date
         specified in each Transfer Agreement, (x) the assignee thereunder shall
         be a party hereto and, to the extent that rights and obligations
         hereunder have been assigned to it pursuant to such Transfer Agreement,
         have the rights and obligations of a Bank hereunder (including, without
         limitation, obligations to the Agent pursuant to Section 7.5) and (y)
         the Bank assignor thereunder shall, to the extent that rights and
         obligations hereunder have been assigned by it pursuant to such
         Transfer Agreement, relinquish its rights and be released from its
         obligations under this Agreement, except for rights and obligations
         which continue after repayment of the Advances or termination of this
         Agreement pursuant to the express terms of this Agreement (and, in the
         case of a Transfer Agreement covering all of an assigning Bank's rights
         and obligations under this Agreement, such Bank shall cease to be a
         party hereto).

                  (b) By executing and delivering a Transfer Agreement, the Bank
         assignor thereunder and the assignee thereunder confirm to and agree
         with each other and the other parties hereto as follows: (i) other than
         as provided in such Transfer Agreement, such assigning Bank makes no
         representation or warranty and assumes no responsibility with respect
         to any statements, warranties or representations (whether written or
         oral) made in or in connection with this Agreement, any Note or Notes
         or any other instrument or document furnished pursuant hereto or in
         connection herewith or the execution, legality, validity,
         enforceability, genuineness, sufficiency or value of this Agreement,
         any Note or Notes or any other instrument or document furnished
         pursuant hereto or in connection herewith; (ii) such assigning Bank
         makes no representation or warranty and assumes no responsibility with
         respect to the financial condition of the Borrower or any other Person
         or the performance or observance by the Borrower or any other Person of
         any of its respective obligations under this Agreement, any Note or
         Notes or any other instrument or document furnished pursuant hereto or
         in connection herewith; (iii) such assignee confirms that it has
         received a copy of this Agreement, together with copies of the
         financial statements and such other documents and information as it has
         deemed appropriate to make its own credit analysis and decision to
         enter into such



                                       7
<PAGE>

         Transfer Agreement; (iv) such assignee will, independently and without
         reliance upon the Agent, such assigning Bank or any other Bank and
         based on such financial statements and such other documents and
         information as it shall deem appropriate at the time, continue to make
         its own credit analysis and decisions in taking or not taking action
         under this Agreement, any Note or Notes or any other instrument or
         document; (v) such assignee confirms that it is an Eligible Assignee;
         (vi) such assignee appoints and authorizes the Agent to act as Agent on
         its behalf and to exercise such powers and discretion under the
         Agreement, any Note or Notes or any other document executed in
         connection herewith or therewith as are delegated to the Agent by the
         terms hereof or thereof, together with such powers and discretion as
         are reasonably incidental thereto; and (vii) such assignee agrees that
         it will perform in accordance with their terms all of the obligations
         which by the terms of this Agreement are required to be performed by it
         as a Bank.

                  (c) The Agent shall maintain at its address referred to in
         Section 2.13(a) a copy of each Transfer Agreement, delivered to and
         accepted by it and the Register for the recordation of the names and
         addresses of the Banks and the Commitment of, and the principal amount
         of the Advances owing to, each Bank from time to time.

                  (d) Upon its receipt of a Transfer Agreement executed and
         completed by an assigning Bank and an assignee representing that it is
         an Eligible Assignee (and, if required, consented to by the Borrower),
         the Agent shall (i) accept such Transfer Agreement, (ii) record the
         information contained therein in the Register and (iii) give prompt
         notice thereof to the Borrower. Within five Business Days after its
         receipt of such notice and the request of the assigning Bank and/or
         Eligible Assignee, the Borrower shall deliver, in replacement of any A
         Note of the Borrower then outstanding which may have been executed to
         the order of such assigning Bank or as may be requested by the assignee
         or the assigning Bank (A) to such assignee upon its request or as
         required by Section 2.9, a new A Note of the Borrower in the amount of
         the Commitment of such assigning Bank which is being so assumed by such
         assignee plus, in the case of any assignee which is already a Bank
         hereunder, the amount of such assignee's Commitment immediately prior
         to such assignment (any such assignee which is already a Bank hereunder
         agrees to mark "Exchanged" and return to the Borrower, with reasonable
         promptness following the delivery of such new A Note, any A Note being
         replaced thereby, if any), (B) to such assigning Bank as required by
         Section 2.9, a new A Note in the amount of the balance, if any, of the
         Commitment of such assigning Bank to the Borrower (without giving
         effect to any B Reduction) retained by such assigning Bank (and such
         assigning Bank agrees to mark "Exchanged" and return to the Borrower,
         with reasonable promptness following delivery of such new A Notes, the
         A Note being replaced thereby), and (C) to the Agent, photocopies of
         such new A Notes, if any.



                                       8
<PAGE>

                  (e) Each Bank may sell participations to one or more banks or
         other entities (other than the Borrower or any of its Affiliates) in or
         to all or a portion of its rights and obligations under this Agreement
         (including, without limitation, all or a portion of its Commitment, the
         Advances owing to it and any Note or Notes held by it); provided,
         however, that (i) such Bank's obligations under this Agreement
         (including without limitation, its Commitment to the Borrower
         hereunder) shall remain unchanged, (ii) such Bank shall remain solely
         responsible to the other parties hereto for the performance of such
         obligations, (iii) such Bank shall remain the holder of any such Note
         or any Notes for all purposes of this Agreement, (iv) the Borrower, the
         Agent and the other Banks shall continue to deal solely and directly
         with such Bank in connection with such Bank's rights and obligations
         under this Agreement, (v) all amounts payable under this Agreement
         shall be calculated as if such Bank had not sold such participation,
         and (vi) the terms of any such participation shall not restrict such
         Bank's ability to consent to any departure by the Borrower therefrom
         without the approval of the participant, except that the approval of
         the participant may be required to the extent that such amendment,
         waiver or consent would reduce the principal of, or interest on, the
         Advances or any fees or other amounts payable hereunder, in each case
         to the extent subject to such participation, or postpone any date fixed
         for any payment of principal of, or interest on, the Advances or any
         fees or other amounts payable hereunder, in each case to the extent
         subject to such participation.

                  (f) Notwithstanding any other provisions set forth in this
         Agreement, any Bank may at any time create a security interest in all
         or any portion of its rights under this Agreement (including, without
         limitation, the Advances owing to it and the Note or Notes held by it)
         in favor of any Federal Reserve Bank in accordance with Regulation A of
         the Federal Reserve Board.

         SECTION 15. Replacement of Schedule IV; Addition of New Banks, etc. (a)
Schedule IV of the Credit Agreement is hereby amended and restated in its
entirety to read as set forth in Schedule IV hereto.

                  (b) The Commitments of DG Bank will terminate effective as of
July 24, 2001, and as of such date such Bank shall not have any further
obligation to make any Advance. Upon payment in full of all amounts owed to DG
Bank by the Borrower in accordance with the terms and conditions of this
Agreement and any Note or Notes issued by the Borrower to such Bank, DG Bank
shall not have any rights or obligations under the Credit Agreement, any Note or
Notes or other documents executed pursuant to the Credit Agreement except for
those rights and obligations which, by the express terms of the Credit
Agreement, continue after repayment in full of the obligations of the Borrower
to any Bank.

                  (c) Each of UMB Bank, N.A., Lehman Commercial Paper Inc. and
Merrill Lynch Bank USA (each a "New Bank" and collectively, the "New Banks"), by
its signature to this Amendment, agrees to become, and is hereby deemed to be a
Bank pursuant to the terms of the Credit Agreement and any other documents
executed pursuant thereto, with a Commitment in the amount shown on Schedule IV
to this Amendment. Each New Bank agrees that (i) none of



                                       9
<PAGE>

the Agent, the Co-Syndication Agents, the Co-Documentation Agents, the Arranger
or any Bank has made any representation or warranty or assumed any
responsibility with respect to any statements, warranties or representations,
whether written or oral, made in or in connection with the Credit Agreement, any
Note or Notes or any other instrument or document furnished pursuant hereto or
thereto or in connection herewith or therewith or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement, any Note or Notes or any other instrument or document furnished
pursuant hereto or thereto or in connection herewith; (ii) none of the Agent,
the Co-Syndication Agents, the Co-Documentation Agents, the Arranger or any Bank
makes any representation or warranty or assumes any responsibility with respect
to the financial condition of the Borrower or any other Person or the
performance or observance by the Borrower or any other Person of any of its
respective obligations under the Credit Agreement, any Note or Notes or any
other instrument or document furnished pursuant thereto or in connection
therewith; (iii) such New Bank confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into the Credit Agreement; (iv) such New
Bank will, independently and without reliance upon the Agent, or any Bank and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Credit Agreement, any Note or Notes or any other instrument or
document; (v) such New Bank appoints and authorizes the Agent to act as Agent on
its behalf and to exercise such powers and discretion under the Credit
Agreement, any Note or Notes or any other instrument or document furnished
pursuant to the Credit Agreement as are delegated to the Agent by the terms
thereof, together with such powers and discretion as are reasonably incidental
thereto; and (vi) such New Bank agrees that it will perform in accordance with
their terms all of the obligations which by the terms of the Credit Agreement,
any Note or Notes or any other instrument or document furnished pursuant to the
Credit Agreement are required to be performed by it as a Bank.

         After giving effect to this Amendment, the Commitment of each Bank
shall be as shown on Schedule IV hereto, effective as of July 24, 2001 and the
aggregate total of all such Commitments is $2,200,000,000.

         SECTION 16. Extension of Stated Termination Date. Pursuant to Section
2.18 of the Credit Agreement, each of the Banks executing below agrees that the
Stated Termination Date shall be extended to July 24, 2002.

         SECTION 17. Replacement of Documentation Agent. Each Bank hereby
designates each of B of A and Credit Lyonnais as a Co-Documentation Agent and B
of A and Credit Lyonnais hereby accept such designation. Each of the
Co-Documentation Agents and the Banks agrees that the Co-Documentation Agents
shall replace the Documentation Agent for all purposes related to the Credit
Agreement, the Notes and any other instrument or document related thereto. Each
reference to the Documentation Agent in the Credit Agreement (including in the
preface, recitals and any schedule or exhibit), any Note or any other document
or instrument related to the Credit Agreement shall be deemed to be a reference
to the Co-Documentation Agents.



                                       10
<PAGE>

         SECTION 18. Limited Waiver of Section 5.2(e). The Borrower has
requested the waiver of, and each Bank by its signature hereby agrees to waive,
Section 5.2(e) of the Credit Agreement for and in connection with the following:

                  (a) WCG and/or one or more of the Subsidiaries thereof owns
the assets described on Annex A hereto. TWC anticipates that it or one of its
Subsidiaries may enter into a Sale and Lease-Back Transaction in which TWC or
one of its Subsidiaries will purchase the assets described on Annex A and then
lease such assets to WCG or a WCG Subsidiary. TWC hereby covenants that such
transaction shall be entered into on terms and conditions reasonably fair in all
material respects to TWC and its Subsidiaries. To the extent that such Sale and
Lease-Back Transaction may be, or may be deemed to be, an investment in a WCG
Subsidiary, an advance to a WCG Subsidiary, or a purchase, acquisition or
ownership of an obligation of a WCG Subsidiary, such transaction is prohibited
by Section 5.2(e) of the Credit Agreement.

         In connection with such Sale and Lease-Back Transaction, and only for
purposes of such transactions, TWC requests that the Banks waive the provisions
of Section 5.2(e) of the Credit Agreement to allow TWC and/or its Subsidiaries
to effect the Sale and Lease-Back Transaction, described in the preceding
paragraph. Nothing herein shall, or shall be deemed to, waive the provisions of
Section 5.2(j) of the Credit Agreement, or any other provisions of the Credit
Agreement applicable to the Sale and Lease-Back Transaction, except as expressly
set forth above with respect to Section 5.2(e) thereof.

         By its signature hereto, each Bank agrees to waive and does hereby
waive Section 5.2(e) (and only Section 5.2(e)) of the Credit Agreement to allow,
and only to the extent necessary to allow, TWC and its Subsidiaries to acquire
the assets described on Annex A and to act as lessor pursuant to the Sale and
Lease-Back Transaction described above involving such assets.

         SECTION 19. Representations and Warranties. To induce the Agent and the
Banks to enter into this Amendment, the Borrower hereby reaffirms, as of the
date hereof, its representations and warranties contained in Article IV of the
Credit Agreement (except to the extent such representations and warranties
relate solely to an earlier date) and additionally represents and warrants as
follows:

                  (a) The Borrower is duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all corporate or
limited liability company powers and all governmental licenses, authorizations,
certificates, consents and approvals required to carry on its business as now
conducted in all material respects, except for those licenses, authorizations,
certificates, consents and approvals which the failure to have could not
reasonably be expected to have a material adverse effect on the business,
assets, condition or operation of the Borrower and its Subsidiaries taken as a
whole. Each material Subsidiary of the Borrower is duly organized or validly
formed, validly existing and (if applicable) in good standing under the laws of
its jurisdiction of incorporation or formation, except where the failure to be
so organized, existing and in good standing could not reasonably be expected to
have a material adverse effect on the business, assets, condition or operations
of the Borrower and its Subsidiaries taken as a whole. Each material Subsidiary
of the Borrower has all corporate or limited liability company powers and all
governmental licenses, authorizations, certificates, consents and approvals
required to carry on its business as now conducted in all material



                                       11
<PAGE>

respects, except for those licenses, authorizations, certificates, consents and
approvals which the failure to have could not reasonably be expected to have a
material adverse effect on the business, assets, condition or operation of the
Borrower and its Subsidiaries taken as a whole.

                  (b) The execution, delivery and performance by the Borrower of
this Amendment and the consummation of the transactions contemplated by this
Amendment are within the Borrower's corporate powers, have been duly authorized
by all necessary corporate action, do not contravene (i) the Borrower's charter
or by-laws or (ii) any law or any contractual restriction binding on or
affecting the Borrower and will not result in or require the creation or
imposition of any Lien.

                  (c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by the Borrower of this
Amendment or the consummation of the transactions contemplated by this
Amendment.

                  (d) This Amendment has been duly executed and delivered by the
Borrower. This Amendment and the Credit Agreement as amended by this Amendment
are the legal, valid and binding obligations of the Borrower enforceable against
the Borrower in accordance with its terms, except as such enforceability may be
limited by any applicable bankruptcy, insolvency, reorganization, moratorium or
similar law affecting creditors' rights generally and by general principles of
equity.

                  (e) Except as set forth in the Public Filings, there is, as to
the Borrower, no pending or, to the knowledge of the Borrower, threatened action
or proceeding affecting the Borrower or any material Subsidiary of the Borrower
before any court, governmental agency or arbitrator, which could reasonably be
expected to materially and adversely affect the financial condition or
operations of the Borrower and its Subsidiaries taken as a whole or which
purports to affect the legality, validity, binding effect or enforceability of
this Amendment, the Credit Agreement or any Note. For the purposes of this
Section, "Public Filings" shall mean the Borrower's annual report on Form 10-K
for the year ended December 31, 2000, and the Borrower's quarterly reports on
Form 10-Q for the quarter ended March 31, 2001.

                  (f) Upon giving effect to this Amendment, no event has
occurred and is continuing which constitutes an Event of Default or which would
constitute an Event of Default but for the requirement that notice be given or
time elapse or both.

         SECTION 20. Conditions to Effectiveness. The effectiveness of this
Amendment is conditioned upon receipt by the Agent of all the following
documents, each in form and substance satisfactory to the Agent:

                  (a) Counterparts of this Amendment executed by the Borrower,
the Agent and each of the Banks;

                  (b) A certificate of the Secretary or Assistant Secretary of
the Borrower as to (i) any changes (or the absence of changes) since July 25,
2000 to its certificate of incorporation and its by-laws as of the date hereof,
(ii) the resolutions of the Borrower authorizing the



                                       12
<PAGE>

execution of this Amendment and (iii) the names and true signatures of the
officers authorized to execute this Amendment;

                  (c) An opinion of William G. von Glahn, General Counsel of the
Borrower, substantially in the form of Exhibit A hereto; and

                  (d) Such other documents as the Agent shall have reasonably
requested.

         SECTION 21. Effect. This Amendment shall be deemed to be an amendment
to the Credit Agreement, and the Credit Agreement, as amended hereby, is hereby
ratified, approved and confirmed in each and every respect. All references to
the Credit Agreement in any other document, instrument, agreement or writing
shall hereafter be deemed to refer to the Credit Agreement as amended hereby.

         SECTION 22. Governing Law, Etc. THIS AMENDMENT SHALL BE A CONTRACT MADE
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. Whenever
possible each provision of this Amendment shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Amendment shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Amendment.

         SECTION 23. Counterpart Execution. This Amendment may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument, and any party hereto may execute this Amendment by signing
one or more counterparts.

         SECTION 24. Successors and Assigns. This Amendment shall be binding
upon the Borrower, the Agent and the Banks and their respective successors and
assigns, and shall inure to the benefit of each of the Borrower, the Agent and
the Banks and the successors and assigns of the Banks.





                                       13
<PAGE>

         IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by their respective officers thereunto duly authorized, to be effective
as of the date first written above.

                                        BORROWER:

                                        THE WILLIAMS COMPANIES, INC.



                                        By:     /s/ James G. Ivey
                                            ------------------------------------
                                                Name: James G. Ivey
                                                Title: Treasurer






                                      S-1
<PAGE>

                                        AGENT:

                                        CITIBANK, N.A., as Agent



                                        By:     /s/ Todd J. Mogil
                                            ------------------------------------
                                                     Attorney-In-Fact
                                                    Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------

                                        CO-SYNDICATION AGENTS:

                                        THE CHASE MANHATTAN BANK,
                                        as Co-Syndication Agent and as a Bank


                                        By:     /s/ Signature not legible
                                            ------------------------------------
                                                    Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------

                                        COMMERZBANK AG, as Co-Syndication Agent


                                        By:     /s/ Subash R. Viswanathan
                                            ------------------------------------
                                                    Senior Vice President
                                                      Authorized Officer

                                        By:     /s/ Brian J. Campbell
                                            ------------------------------------
                                                    Senior Vice President
                                                      Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-2
<PAGE>

                                        CO-DOCUMENTATION AGENTS:

                                        CREDIT LYONNAIS NEW YORK BRANCH,
                                        as Co-Documentation Agent and as a Bank


                                        By:     /s/ Jean-Marc Moriani
                                            ------------------------------------
                                                    Chief Exec. Officer
                                                    Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------

                                        BANK OF AMERICA,
                                        as Co-Documentation Agent and as a Bank


                                        By:     /s/ Claire Liu
                                            ------------------------------------
                                                    Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-3
<PAGE>

                                        BANKS:

                                        CITIBANK, N.A.


                                        By:     /s/ Todd J. Mogil
                                            ------------------------------------
                                                     Attorney-In-Fact
                                                    Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-4
<PAGE>

                                        THE BANK OF NOVA SCOTIA


                                        By:     /s/ F.C.H. Ashby
                                            ------------------------------------
                                                    Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-5
<PAGE>

                                        BANK ONE, NA (CHICAGO)


                                        By:     /s/ Dianne L. Russell
                                            ------------------------------------
                                                     Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-6
<PAGE>

                         [Page intentionally left blank]







                                      S-7
<PAGE>

                                        COMMERZBANK AG,
                                        NEW YORK AND GRAND CAYMAN BRANCHES


                                        By:     /s/ Subash R. Viswanathan
                                            ------------------------------------
                                                   Senior Vice President
                                                     Authorized Officer

                                        By:     /s/ W. David Suttles
                                            ------------------------------------
                                                       Vice President
                                                     Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-8
<PAGE>

                         [Page intentionally left blank]






                                      S-9
<PAGE>

                                        THE FUJI BANK, LIMITED



                                        By:     /s/ Signature not legible
                                            ------------------------------------
                                                      Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-10
<PAGE>

                                        NATIONAL WESTMINSTER BANK PLC
                                        NEW YORK BRANCH



                                        By:         /s/ Patricia J. Dundee
                                            ------------------------------------
                                        Name:       Patricia J. Dundee
                                        Title:      Senior Vice President

                                        Date:                             , 2001
                                             -----------------------------



                                      S-11
<PAGE>

                                        ABN AMRO BANK, N.V.



                                        By:     /s/ Frank R. Russo, Jr.
                                            ------------------------------------
                                                    Group Vice President
                                                     Authorized Officer

                                        By:     /s/ Bo Ford
                                            ------------------------------------
                                                  Assistant Vice President
                                                     Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-12
<PAGE>

                                        BANK OF MONTREAL



                                        By:     /s/ Signature not legible
                                            ------------------------------------
                                                      Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-13
<PAGE>

                                        THE BANK OF NEW YORK



                                        By:     /s/ Signature not legible
                                            ------------------------------------
                                                      Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-14
<PAGE>

                                        BARCLAYS BANK PLC



                                        By:     /s/ Nicholas A. Bell
                                            ------------------------------------
                                                         Director
                                                    Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-15
<PAGE>

                                        CIBC INC.



                                        By:     /s/ Signature not legible
                                            ------------------------------------
                                                     Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-16
<PAGE>

                                        CREDIT SUISSE FIRST BOSTON



                                        By:     /s/ Bill O'Daly
                                            ------------------------------------
                                                      Vice President
                                                    Authorized Officer

                                        By:     /s/ James P. Moran
                                            ------------------------------------
                                                         Director
                                                    Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-17
<PAGE>

                                        ROYAL BANK OF CANADA



                                        By:     /s/ Tom J. Oberaigner
                                            ------------------------------------
                                                      Senior Manager
                                                    Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-18
<PAGE>

                                        THE BANK OF TOKYO-MITSUBISHI, LTD.,
                                        HOUSTON AGENCY



                                        By:     /s/ Kelton Glasscock
                                            ------------------------------------
                                                  Vice President & Manager
                                                     Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-19
<PAGE>

                                        FLEET NATIONAL BANK
                                        f/k/a Bank Boston, N.A.



                                        By:     /s/ Signature not legible
                                            ------------------------------------
                                                      Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-20
<PAGE>

                                        SOCIETE GENERALE, SOUTHWEST AGENCY



                                        By:     /s/ Signature not legible
                                            ------------------------------------
                                                     Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-21
<PAGE>

                                        THE INDUSTRIAL BANK OF JAPAN TRUST
                                        COMPANY



                                        By:     /s/ Michael N. Oakes
                                            ------------------------------------
                                           Senior Vice President, Houston Office
                                                     Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-22
<PAGE>

                                        TORONTO DOMINION (TEXAS), INC.



                                        By:     /s/ Jill Hall
                                            ------------------------------------
                                                       Vice President
                                                     Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-23
<PAGE>

                                        UBS AG, STAMFORD BRANCH



                                        By:     /s/ Signature not legible
                                            ------------------------------------
                                            Associate Director, Banking Products
                                                        Services, US
                                                     Authorized Officer

                                        By:     /s/ Jennifer L. Poccia
                                            ------------------------------------
                                            Associate Director, Banking Products
                                                        Services, US
                                                     Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-24
<PAGE>

                                        WELLS FARGO BANK, N.A.



                                        By:     /s/ J. Alan Alexander
                                            ------------------------------------
                                                       Vice President
                                                     Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-25
<PAGE>

                                        WESTDEUTSCHE LANDESBANK
                                        GIROZENTRALE, NEW YORK BRANCH



                                        By:     /s/ Salvatore Battinelli
                                            ------------------------------------
                                             Managing Director Credit Department
                                                      Authorized Officer

                                        By:     /s/ Lisa Walker
                                            ------------------------------------
                                                      Associate Director
                                                      Authorized Officer


                                        Date:                             , 2001
                                             -----------------------------



                                      S-26
<PAGE>

                                        CREDIT AGRICOLE INDOSUEZ



                                        By:     /s/ Brian Knezeak
                                            ------------------------------------
                                                        FVP, Manager
                                                     Authorized Officer

                                        By:     /s/ Michael D. Willis
                                            ------------------------------------
                                                    VP, Credit Analysis
                                                     Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-27
<PAGE>

                                        SUNTRUST BANK



                                        By:     /s/ David J. Edge
                                            ------------------------------------
                                                         Director
                                                    Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-28
<PAGE>

                                        THE DAI-ICHI KANGYO BANK, LTD.



                                        By:     /s/ Maureen Carson
                                            ------------------------------------
                                                     Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-29
<PAGE>

                                        ARAB BANKING CORPORATION (B.S.C.)



                                        By:           /s/ Robert Ivoswich
                                            ------------------------------------
                                                           D & M
                                                     Authorized Officer

                                        By:           /s/ Barbara Sanderson
                                            ------------------------------------
                                                       Vice President
                                                     Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-30
<PAGE>

                                        BANK OF CHINA, NEW YORK BRANCH



                                        By:     /s/ Signature not legible
                                            ------------------------------------
                                                      Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-31
<PAGE>

                                        BANK OF OKLAHOMA, N.A.



                                        By:     /s/ Stephen R. Pattison
                                            ------------------------------------
                                                            SVP
                                                     Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-32
<PAGE>

                                        BNP PARIBAS, HOUSTON AGENCY



                                        By:     /s/ Mark A. Cox
                                            ------------------------------------
                                                          Director
                                                     Authorized Officer

                                        By:     /s/ Larry Robinson
                                            ------------------------------------
                                                       Vice President
                                                     Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-33
<PAGE>

                         [Page intentionally left blank]






                                      S-34
<PAGE>

                                        KBC BANK N.V.



                                        By:           /s/ Robert Snauffer
                                            ------------------------------------
                                                     First Vice President
                                                      Authorized Officer

                                        By:           /s/ Eric Raskin
                                            ------------------------------------
                                                        Vice President
                                                      Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-35
<PAGE>

                                        SUMITOMO MITSUI BANKING CORPORATION



                                        By:     /s/ C. Michael Garrido
                                            ------------------------------------
                                                     Senior Vice President
                                                       Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-36
<PAGE>

                                        COMMERCE BANK, N.A.



                                        By:     /s/ Signature not legible
                                            ------------------------------------
                                                     Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-37
<PAGE>

                                        RZB FINANCE LLC



                                        By:     /s/ Dieter Beintrexler
                                            ------------------------------------
                                                         President
                                                     Authorized Officer

                                        By:     /s/ Frank J. Yautz
                                            ------------------------------------
                                                    First Vice President
                                                     Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-38
<PAGE>

                                        FIRST UNION NATIONAL BANK



                                        By:     /s/ Signature not legible
                                            ------------------------------------
                                                     Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-39
<PAGE>

                                        UMB BANK, N.A.



                                        By:     /s/ Signature not legible
                                            ------------------------------------
                                                     Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-40
<PAGE>

                                        MERRILL LYNCH BANK USA



                                        By:     /s/ Signature not legible
                                            ------------------------------------
                                                     Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-41
<PAGE>

                                        LEHMAN COMMERCIAL PAPER INC.



                                        By:     /s/ Michele Swanson
                                            ------------------------------------
                                                     Authorized Officer

                                        Date:                             , 2001
                                             -----------------------------



                                      S-42
<PAGE>

                                        Executed for purposes of acknowledging
                                        Section 15(b) only:

                                        DG BANK DEUTSCHE
                                        GENNOSSENSCHAFTSBANK AG



                                        By:     /s/ Signature not legible
                                            ------------------------------------
                                        Name:
                                        Title:

                                        By:     /s/ Signature not legible
                                            ------------------------------------
                                        Name:
                                        Title:





<PAGE>

                                   SCHEDULE IV

                                   COMMITMENTS

                               AS OF JUNE 23, 2001


<Table>
<Caption>
BANKS                                                                             COMMITMENT
- -----                                                                             ----------
<S>                                                                             <C>
Bank of America, N.A.
The Bank of Nova Scotia
Bank One, NA
The Chase Manhattan Bank
Citibank, N.A.
Commerzbank AG
Credit Lyonnais
The Fuji Bank, Limited
National Westminster Bank PLC
ABN Amro Bank N.V.
Bank of Montreal
The Bank of New York
Barclays Bank PLC
CIBC Inc.
Credit Suisse First Boston
Royal Bank of Canada
The Bank of Tokyo-Mitsubishi, Ltd.
Fleet National Bank
Societe Generale
The Industrial Bank of Japan Trust Company
Toronto Dominion (Texas), Inc.
UBS AG, Stamford Branch
Wells Fargo Bank Texas, N.A.
Westdeutsche Landesbank Girozentrale
Credit Agricole Indosuez
Suntrust Bank
The Dai-Ichi Kangyo Bank, Ltd.
Arab Banking Corporation (B.S.C.)
Bank of China
Bank of Oklahoma, N.A.
BNP Paribas, Houston Agency
DG Bank
KBC Bank, N.V.
The Sumitomo Bank, Limited
Commerce Bank, N.A.
RZB Finance LLC
UMB Bank, N.A.
Lehman Commercial Paper Inc.
Merrill Lynch Bank USA
                                                                                -----------------
COMMITMENTS                                                                     $2,200,000,000.00
                                                                                =================
</Table>


                                  Sch IV -- 1
<PAGE>

                                     ANNEX A


Assets to be subject to the Sale and Lease-back transaction:

WILLIAMS TECHNOLOGY CENTER

The (a) real property and structures located east of the existing Bank of
Oklahoma Tower at One Williams Center, Tulsa, Oklahoma commonly known as the
Williams Technology Center (the "Center"), Tech Center Parking Garage (including
the "La Pente" parcel) (located at First Street and Cincinnati Avenue), Skywalk,
Skywalk Support and Skywalk Support Parcel (the "Realty") and (b) the personal
property and fixtures generally comprised of the furniture, fixtures and
equipment as are located or to be located upon or affixed or to be affixed to
the Realty (the "FF&E").

AIRCRAFT

The Aircraft shall include the three (3) aircraft identified as follows:

Citation X (N358WC)
Citation V (N352WC)
Citation Excel (N359WC)

The aggregate value of the assets described above is approximately $277,000,000.




                                  Annex A -- 1
<PAGE>

                                    EXHIBIT A

                                 FORM OF OPINION





                                 Exhibit A -- 1

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(G)
<SEQUENCE>6
<FILENAME>d93687ex10-g.txt
<DESCRIPTION>3RD AMENDMENT TO CREDIT AGREEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10(g)

                       THIRD AMENDMENT TO CREDIT AGREEMENT

         THIS THIRD AMENDMENT TO CREDIT AGREEMENT (herein called this
"Amendment"), dated as of February 7, 2002, is entered into by and among The
Williams Companies, Inc., a Delaware corporation, as Borrower pursuant to the
Credit Agreement (as hereinafter defined), the Banks from time to time party to
the Credit Agreement, the Co-Syndication Agents as named therein, the
Co-Documentation Agents as named therein and Citibank, N.A., as agent for the
Banks (in such capacity, the "Agent"). Except as otherwise defined or as the
context requires, terms defined in the Credit Agreement are used herein as
therein defined.

                                   WITNESSETH:

         WHEREAS, The Williams Companies, Inc. ("TWC" or the "Borrower") has
entered into a certain Credit Agreement dated as of July 25, 2000 with the
financial institutions from time to time party thereto (the "Banks"), The Chase
Manhattan Bank and Commerzbank AG, as Co-Syndication Agents, Credit Lyonnais New
York Branch, as Documentation Agent, and Citibank, N.A., as Agent (the "Original
Credit Agreement"), which has been amended by that certain Waiver and First
Amendment to Credit Agreement dated as of January 31, 2001, and by that certain
Limited Waiver and Second Amendment to Credit Agreement dated as of July 24,
2001 (the Original Credit Agreement, as so amended to the date hereof, the
"Credit Agreement");

         WHEREAS, the Borrower and the Banks now desire to amend the Credit
Agreement in certain respects, as hereinafter provided;

         NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Borrower and the Banks hereby agree as follows:

         SECTION 1. Amendment of Section 1.1 of the Credit Agreement. Section
1.1 of the Credit Agreement is hereby amended as follows:

                  (a) The definition of "Debt" in such Section 1.1 is hereby
amended and restated to read in its entirety as follows:

                  "Debt" means, in the case of any Person, (i) indebtedness of
         such Person for borrowed money, (ii) obligations of such Person
         evidenced by bonds, debentures or notes, (iii) obligations of such
         Person to pay the deferred purchase price of property or services
         (other than trade payables not overdue by more than 60 days incurred in
         the ordinary course of business), (iv) monetary obligations of such
         Person as lessee under leases that are, in accordance with generally
         accepted accounting principles, recorded as capital leases, (v)
         obligations of such Person under guaranties in respect of, and
         obligations (contingent or otherwise) to purchase or otherwise acquire,
         or otherwise to assure a creditor against loss in respect of,
         indebtedness or obligations of others of the kinds referred to in
         clauses (i) through (iv) of this definition and (vi) indebtedness or
         obligations of others of the kinds referred to in clauses (i) through
         (v) of this definition secured by any Lien on or in respect of any
         property of such Person; provided, however, that



<PAGE>

         (w) Debt shall not include any obligations of the Borrower in respect
         of the FELINE PACS; (x) Debt shall not include any obligation under or
         resulting from any agreement referred to in paragraph (y) of Schedule
         III; (y) in the case of the Borrower, Debt shall not include any
         contingent obligation of the Borrower relating to indebtedness incurred
         by any SPV, WCG or a WCG Subsidiary pursuant to the WCG Structured
         Financing (except that in the event that the WCG Refinancing
         Transaction shall have occurred, then Debt shall include the aggregate
         amount of the WCG Structured Financing for which the Borrower or any of
         its Subsidiaries shall have become directly and primarily liable); and
         (z) it is the understanding of the parties hereto that Debt shall not
         include any monetary obligations or guaranties of monetary obligations
         of Persons as lessee under leases that are, in accordance with
         generally accepted accounting principles, recorded as operating leases.

                  (b) The following definition of "FELINE PACS" is hereby
inserted in the alphabetically appropriate location in such Section 1.1:

                  "FELINE PACS" means those certain units, as described in the
         Borrower's prospectus supplement dated January 7, 2002, issued by the
         Borrower in January, 2002 in an aggregate face amount of
         $1,100,000,000.

                  (c) The definition of "Net Worth" in such Section 1.1 is
hereby amended and restated to read in its entirety as follows:

                  "Net Worth" of any Person means, as of any date of
         determination the excess of total assets of such Person over total
         liabilities of such Person, total assets and total liabilities each to
         be determined in accordance with generally accepted accounting
         principles; provided, however, that for purposes of calculating Net
         Worth, total liabilities shall not include any obligations of the
         Borrower in respect of the FELINE PACS.

                  (d) The definition of "WCG Note" is hereby inserted in the
alphabetically appropriate location in such Section 1.1:

                  "WCG Note" means that certain promissory note dated March 28,
         2001 issued by WCG to WCG Note Trust, a Delaware business trust, in a
         principal amount of $1,500,000,000 with a maturity date of March 31,
         2008.

                  (e) The definition of "WCG Refinancing Transaction" is hereby
inserted in the alphabetically appropriate location in such Section 1.1:

                  "WCG Refinancing Transaction" means any transaction or series
         of related transactions pursuant to which the Borrower or any
         Subsidiary of the Borrower becomes directly and primarily liable to the
         holders of the WCG Senior Notes for an aggregate amount not exceeding
         the outstanding principal amount of the WCG Senior Notes, together with
         all accrued and unpaid interest thereon, any fees, and any premiums or
         make-whole payments payable as a result of a



                                       2
<PAGE>

         prepayment or early redemption of the WCG Senior Notes, including,
         without limitation, by means of (i) any amendment to the transaction
         documents pursuant to which the WCG Senior Notes were issued, (ii) an
         exchange offer or tender offer for the WCG Senior Notes or the WCG Note
         in consideration for which the Borrower or any Subsidiary of the
         Borrower issues debt securities of the Borrower or any Subsidiary of
         the Borrower, (iii) any redemption or repurchase, in whole or in part,
         of the WCG Senior Notes by the Borrower or any Subsidiary of the
         Borrower, (iv) any exercise of the "Share Trust Release Option" as
         defined in the transaction documents pursuant to which the WCG Senior
         Notes were issued, or (v) the Borrower or any Subsidiary of the
         Borrower making any payments in respect of the WCG Senior Notes or the
         WCG Note.

                  (f) The definition of "WCG Reimbursement Obligations" is
hereby inserted in the alphabetically appropriate location in such Section 1.1:

                  "WCG Reimbursement Obligations" means any obligations of any
         WCG Subsidiary in favor of the Borrower, any Subsidiary of the Borrower
         or the WCG Senior Notes Issuer pursuant to which such WCG Subsidiary
         has agreed to pay the Borrower, any Subsidiary of the Borrower or the
         WCG Senior Notes Issuer an amount equal to or less than the total
         amount of the obligations incurred by the Borrower and/or its
         Subsidiaries in connection with the WCG Refinancing Transaction,
         including, without limitation, in respect of principal, interest, fees
         and any premiums or make-whole payments payable as a result of a
         prepayment or early redemption of the WCG Senior Notes.

                  (g) The definition of "WCG Senior Notes" is hereby inserted in
the alphabetically appropriate location in such Section 1.1:

                  "WCG Senior Notes" means those certain 8.25% Senior Secured
         Notes due 2004 in an aggregate principal amount of $1,400,000,000
         issued by the WCG Senior Notes Issuer.

                  (h) The definition of "WCG Senior Notes Issuer" is hereby
inserted in the alphabetically appropriate location in such Section 1.1:

                  "WCG Senior Notes Issuer" means, collectively, WCG Note Trust,
         a Delaware business trust, and WCG Note Corp., Inc., a Delaware
         corporation.

         SECTION 2. Amendment of Section 5.2. Section 5.2 of the Credit
Agreement is hereby amended as follows:

                  (a) Clause (c) of Section 5.2 is hereby amended by deleting
the word "or" at the end of subclause (iii) thereof, deleting the period at the
end of subclause (iv) thereof and inserting "; or" in its place, and inserting
the following new subclause (v) immediately following the existing clause (iv):



                                       3
<PAGE>

                  "(v) Williams Pipeline Company, LLC from (1) selling,
         conveying or otherwise transferring all or substantially all of its
         assets to another Person or (2) merging or consolidating with or into
         another Person, in either case, for fair-market value and on
         commercially reasonable terms and conditions in the good faith judgment
         of the Borrower."

                  (b) Clause (e) of Section 5.2 is hereby amended and restated
to read in its entirety as follows:

                  "(e) Loans and Advances; Investments. Make or permit to remain
         outstanding, or allow any of its Subsidiaries to make or permit to
         remain outstanding, any loan or advance to, or own, purchase or acquire
         any obligations or debt securities of, any WCG Subsidiary, except that
         the Borrower and its Subsidiaries may (i) permit to remain outstanding
         loans and advances to a WCG Subsidiary existing as of the date hereof
         and listed on Exhibit E hereof (and such WCG Subsidiaries may permit
         such loans and advances to remain outstanding), (ii) purchase or
         acquire the WCG Senior Notes or the WCG Note pursuant to the WCG
         Refinancing Transaction, and (iii) purchase or acquire and permit to
         remain outstanding, the WCG Reimbursement Obligations. Except for those
         investments in existence on the date hereof and listed on Exhibit E
         hereof, purchases or acquisitions pursuant to the WCG Refinancing
         Transaction and purchases or acquisitions of WCG Reimbursement
         Obligations, the Borrower shall not, and shall not permit any of its
         Subsidiaries to, acquire or otherwise invest in any stock or other
         equity or other ownership interest in a WCG Subsidiary."

                  (c) Clause (i) of Section 5.2 is hereby amended by deleting
the period at the end of the existing clause (i) and inserting in its place the
following:

                  "; provided, however, that nothing contained herein shall
         prohibit or otherwise restrict the ability of the Borrower or any
         Subsidiary of the Borrower from incurring liability pursuant to the WCG
         Refinancing Transaction."

                  (d) The last sentence of clause (k) of Section 5.2 is hereby
amended by deleting the period at the end of the last sentence of the existing
clause (k) and inserting in its place the following:

                  "; provided, however, that nothing contained herein shall
         prohibit or otherwise restrict the ability of the Borrower or any
         Subsidiary of the Borrower to use the proceeds of any Advance to own,
         purchase or acquire the WCG Senior Notes pursuant to the WCG
         Refinancing Transaction."

         SECTION 3. Representations and Warranties. To induce the Agent and the
Banks to enter into this Amendment, the Borrower hereby reaffirms, as of the
date hereof, its representations and warranties contained in Article IV of the
Credit Agreement (except to the extent such representations and warranties
relate solely to an earlier date) and additionally represents and warrants as
follows:



                                       4
<PAGE>

                  (a) The Borrower is duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all corporate or
limited liability company powers and all governmental licenses, authorizations,
certificates, consents and approvals required to carry on its business as now
conducted in all material respects, except for those licenses, authorizations,
certificates, consents and approvals which the failure to have could not
reasonably be expected to have a material adverse effect on the business,
assets, condition or operation of the Borrower and its Subsidiaries taken as a
whole. Each material Subsidiary of the Borrower is duly organized or validly
formed, validly existing and (if applicable) in good standing under the laws of
its jurisdiction of incorporation or formation, except where the failure to be
so organized, existing and in good standing could not reasonably be expected to
have a material adverse effect on the business, assets, condition or operations
of the Borrower and its Subsidiaries taken as a whole. Each material Subsidiary
of the Borrower has all corporate or limited liability company powers and all
governmental licenses, authorizations, certificates, consents and approvals
required to carry on its business as now conducted in all material respects,
except for those licenses, authorizations, certificates, consents and approvals
which the failure to have could not reasonably be expected to have a material
adverse effect on the business, assets, condition or operation of the Borrower
and its Subsidiaries taken as a whole.

                  (b) The execution, delivery and performance by the Borrower of
this Amendment and the consummation of the transactions contemplated by this
Amendment are within the Borrower's corporate powers, have been duly authorized
by all necessary corporate action, do not contravene (i) the Borrower's charter
or by-laws or (ii) any law or any contractual restriction binding on or
affecting the Borrower and will not result in or require the creation or
imposition of any Lien.

                  (c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by the Borrower of this
Amendment or the consummation of the transactions contemplated by this
Amendment.

                  (d) This Amendment has been duly executed and delivered by the
Borrower. This Amendment and the Credit Agreement as amended by this Amendment
are the legal, valid and binding obligations of the Borrower enforceable against
the Borrower in accordance with its terms, except as such enforceability may be
limited by any applicable bankruptcy, insolvency, reorganization, moratorium or
similar law affecting creditors' rights generally and by general principles of
equity.

                  (e) Except as set forth in the Public Filings and except for
certain class-action lawsuits filed on or after January 29, 2002 alleging fraud
and other violations of applicable securities laws, there is, as to the
Borrower, no pending or, to the knowledge of the Borrower, threatened action or
proceeding affecting the Borrower or any material Subsidiary of the Borrower
before any court, governmental agency or arbitrator, which could reasonably be
expected to materially and adversely affect the financial condition or
operations of the Borrower and its Subsidiaries taken as a whole or which
purports to affect the legality, validity, binding effect or enforceability of
this Amendment, the Credit Agreement or any Note. For the purposes of this
Section, "Public Filings" shall mean the Borrower's annual report on Form 10-K
for the



                                       5
<PAGE>

year ended December 31, 2000, and the Borrower's quarterly reports on Form 10-Q
for the quarters ended March 31, 2001, June 30, 2001 and September 30, 2001.

                  (f) Upon giving effect to this Amendment, no event has
occurred and is continuing which constitutes an Event of Default or which would
constitute an Event of Default but for the requirement that notice be given or
time elapse or both.

         SECTION 4. Conditions to Effectiveness. The effectiveness of this
Amendment is conditioned upon receipt by the Agent of all the following
documents, each in form and substance satisfactory to the Agent:

                  (a) Counterparts of this Amendment executed by the Borrower,
the Agent and Banks constituting not less than the Majority Banks;

                  (b) A certificate of the Secretary or Assistant Secretary of
the Borrower as to (i) any changes (or the absence of changes) since July 25,
2000 to its certificate of incorporation and its by-laws as of the date hereof,
(ii) the resolutions of the Borrower authorizing the execution of this Amendment
and (iii) the names and true signatures of the officers authorized to execute
this Amendment;

                  (c) An opinion of William G. von Glahn, General Counsel of the
Borrower, substantially in the form of Exhibit A hereto; and

                  (d) Such other documents as the Agent shall have reasonably
requested.

         SECTION 5. Effect. This Amendment shall be deemed to be an amendment to
the Credit Agreement, and the Credit Agreement, as amended hereby, is hereby
ratified, approved and confirmed in each and every respect. All references to
the Credit Agreement in any other document, instrument, agreement or writing
shall hereafter be deemed to refer to the Credit Agreement as amended hereby.

         SECTION 6. Fees. The Borrower shall pay (a) to each Bank that shall
have approved this Amendment and shall have delivered to the Agent a duly
executed counterpart hereof not later than 12:00 p.m. central standard time on
February 7, 2002, a fee equal to 0.25% of each such Bank's respective
Commitment, and (b) to each other Bank that shall have approved this Amendment
and shall have delivered a duly executed counterpart hereof not later than 12:00
p.m. central standard time on February 14, 2002, a fee equal to 0.10% of each
such other Bank's respective Commitment.

         SECTION 7. Governing Law, Etc. THIS AMENDMENT SHALL BE A CONTRACT MADE
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICT OF LAW EXCEPT SECTION
5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW). Whenever possible each
provision of this Amendment shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Amendment
shall be prohibited by or invalid under applicable



                                       6
<PAGE>

law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Amendment.

         SECTION 8. Counterpart Execution. This Amendment may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any party hereto may execute this Amendment by signing one
or more counterparts.

         SECTION 9. Successors and Assigns. This Amendment shall be binding upon
the Borrower, the Agent and the Banks and their respective successors and
assigns, and shall inure to the benefit of each of the Borrower, the Agent and
the Banks and the successors and assigns of the Banks.



                                       7
<PAGE>

         IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by their respective officers thereunto duly authorized, to be effective
as of the date first written above.

                                       BORROWER:

                                       THE WILLIAMS COMPANIES, INC.



                                       By: /s/ James G. Ivey
                                          --------------------------------------
                                       Name: James G. Ivey
                                       Title: Treasurer



                                      S--1
<PAGE>

                                       AGENT:

                                       CITIBANK, N.A., as Agent



                                       By:
                                          --------------------------------------
                                                     Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                       CO-SYNDICATION AGENTS:

                                       JPMORGAN CHASE BANK
                                       (formerly known as
                                       THE CHASE MANHATTAN BANK),
                                       as Co-Syndication Agent and as a Bank



                                       By: /s/ Signature not legible
                                          --------------------------------------
                                                     Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------

                                       COMMERZBANK AG, as Co-Syndication Agent



                                       By: /s/ Brian J. Campbell
                                          --------------------------------------
                                                   Senior Vice President
                                                     Authorized Officer

                                       By: /s/ D. L. Ward, Jr.
                                          --------------------------------------
                                                 Assistant Vice President
                                                   Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                      S--2
<PAGE>

                                       CO-DOCUMENTATION AGENTS:

                                       CREDIT LYONNAIS NEW YORK BRANCH,
                                       as Co-Documentation Agent and as a Bank



                                       By: /s/ Bernard Weymuller
                                          --------------------------------------
                                                  Senior Vice President
                                                    Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------

                                       BANK OF AMERICA, N.A.
                                       as Co-Documentation Agent and as a Bank



                                       By: /s/ Claire Liu
                                          --------------------------------------
                                                   Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                      S--3
<PAGE>

                                       BANKS:

                                       CITIBANK, N.A.



                                       By: /s/ Todd J. Mogil
                                          --------------------------------------
                                                     Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                      S--4
<PAGE>

                                       THE BANK OF NOVA SCOTIA



                                       By: /s/ M. D. Smith
                                          --------------------------------------
                                                            Agent
                                                     Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                      S--5
<PAGE>

                                       BANK ONE NA (CHICAGO)



                                       By: /s/ Dianne L. Russell
                                          --------------------------------------
                                                     Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                      S--6
<PAGE>

                                       COMMERZBANK AG,
                                       NEW YORK AND GRAND CAYMAN BRANCHES


                                       By: /s/ Brian J. Campbell
                                          --------------------------------------
                                                   Senior Vice President
                                                     Authorized Officer

                                       By: /s/ D. L. Ward, Jr.
                                          --------------------------------------
                                                  Assistant Vice President
                                                    Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                      S--7

<PAGE>

                                       THE FUJI BANK, LIMITED


                                       By: /s/ Jacques Azagury
                                          --------------------------------------
                                              Senior Vice President & Manager
                                                    Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                      S--8
<PAGE>

                                       NATIONAL WESTMINSTER BANK PLC
                                       NEW YORK BRANCH



                                       By: /s/ Patricia J. Dundee
                                          --------------------------------------
                                          Name:  Patricia J. Dundee
                                          Title: Senior Vice President

                                       Date:                              , 2002
                                            ------------------------------



                                      S--9
<PAGE>

                                       ABN AMRO BANK, N.V.



                                       By: /s/ Signature not legible
                                          --------------------------------------
                                                     Authorized Officer

                                       By: /s/ Signature not legible
                                          --------------------------------------
                                                     Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--10
<PAGE>

                                       BANK OF MONTREAL



                                       By: /s/ Signature not legible
                                          --------------------------------------
                                                     Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--11
<PAGE>

                                       THE BANK OF NEW YORK



                                       By: /s/ Raymond J. Palmer
                                          --------------------------------------
                                                      Vice President
                                                    Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--12
<PAGE>

                                       BARCLAYS BANK PLC



                                       By: /s/ Nicholas A. Bell
                                          --------------------------------------
                                           Director, Loan Transaction Management
                                                    Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--13
<PAGE>

                                       CIBC INC.



                                       By: /s/ Signature not legible
                                          --------------------------------------
                                                     Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--14
<PAGE>

                                       CREDIT SUISSE FIRST BOSTON



                                       By: /s/ Signature not legible
                                          --------------------------------------
                                                     Authorized Officer

                                       By: /s/ Signature not legible
                                          --------------------------------------
                                                     Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--15
<PAGE>

                                       ROYAL BANK OF CANADA



                                       By: /s/ Tom J. Oberaigner
                                          --------------------------------------
                                                       Senior Manager
                                                     Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--16
<PAGE>

                                       THE BANK OF TOKYO-MITSUBISHI, LTD.,
                                       HOUSTON AGENCY



                                       By:
                                          --------------------------------------
                                                     Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--17
<PAGE>

                                       FLEET NATIONAL BANK
                                       f/k/a Bank Boston, N.A.



                                       By: /s/ Signature not legible
                                          --------------------------------------
                                                     Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--18
<PAGE>

                                       SOCIETE GENERALE, SOUTHWEST AGENCY



                                       By: /s/ J. Douglas McMurray, Jr.
                                          --------------------------------------
                                                    Managing Director
                                                    Authorized Officer


                                       Date:                              , 2002
                                            ------------------------------



                                     S--19
<PAGE>

                                       THE INDUSTRIAL BANK OF JAPAN, LIMITED,
                                       NEW YORK BRANCH



                                       By: /s/ Michael N. Oakes
                                          --------------------------------------
                                           Senior Vice President, Houston Office
                                                    Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--20
<PAGE>

                                       TORONTO DOMINION (TEXAS), INC.



                                       By: /s/ Jill Hall
                                          --------------------------------------
                                                      Vice President
                                                    Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--21
<PAGE>

                                       UBS AG, STAMFORD BRANCH



                                       By: /s/ Patricia O'Ricki
                                          --------------------------------------
                                           Director, Banking Products Services
                                                    Authorized Officer

                                       By: /s/ Wilfred V. Saint
                                          --------------------------------------
                                          Associate Director Banking Products
                                                        Services US
                                                    Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--22
<PAGE>

                                       WELLS FARGO BANK TEXAS, N.A.



                                       By: /s/ J. Alan Alexander
                                          --------------------------------------
                                                      Vice President
                                                    Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--23
<PAGE>

                                       WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW
                                       YORK BRANCH



                                       By: /s/ Salvatore Battinelli
                                          --------------------------------------
                                           Managing Director, Credit Department
                                                   Authorized Officer

                                       By: /s/ Jeffrey S. Davidson
                                          --------------------------------------
                                                     Associate Director
                                                     Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--24
<PAGE>

                                       CREDIT AGRICOLE INDOSUEZ



                                       By: /s/ Brian Knezeak
                                          --------------------------------------
                                                   First Vice President
                                                    Authorized Officer

                                       By: /s/ Mark Lvoff
                                          --------------------------------------
                                           First Vice President, Head of Energy
                                                          Platform
                                                     Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--25
<PAGE>

                                       SUNTRUST BANK



                                       By: /s/ Signature not legible
                                          --------------------------------------
                                                     Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--26
<PAGE>

                                       THE DAI-ICHI KANGYO BANK, LTD.



                                       By: /s/ Maureen Carson
                                          --------------------------------------
                                                     Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--27
<PAGE>

                                       ARAB BANKING CORPORATION (B.S.C.)



                                       By: /s/ Robert J. Ivosevich
                                          --------------------------------------
                                                  Deputy General Manager
                                                    Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--28
<PAGE>

                                       BANK OF CHINA, NEW YORK BRANCH



                                       By:
                                          --------------------------------------
                                                     Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--29
<PAGE>

                                       BANK OF OKLAHOMA, N.A.



                                       By: /s/ Robert D. Mattax
                                          --------------------------------------
                                                     Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--30
<PAGE>

                                       BNP PARIBAS, HOUSTON AGENCY



                                       By: /s/ Signature not legible
                                          --------------------------------------
                                                     Authorized Officer

                                       By: /s/ Signature not legible
                                          --------------------------------------
                                                     Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--31
<PAGE>

                                       KBC BANK N.V.



                                       By: /s/ Robert Snauffer
                                          --------------------------------------
                                                   First Vice President
                                                    Authorized Officer

                                       By: /s/ Signature not legible
                                          --------------------------------------
                                                       Vice President
                                                     Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--32
<PAGE>

                                       SUMITOMO MITSUI BANKING CORPORATION



                                       By: /s/ C. Michael Garrido
                                          --------------------------------------
                                                    Senior Vice President
                                                     Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--33
<PAGE>

                                       COMMERCE BANK, N.A.



                                       By: /s/ Signature not legible
                                          --------------------------------------
                                                     Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--34
<PAGE>

                                       RZB FINANCE LLC



                                       By:
                                          --------------------------------------
                                                     Authorized Officer

                                       By:
                                          --------------------------------------
                                                     Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--35
<PAGE>

                                       FIRST UNION NATIONAL BANK



                                       By: /s/ Robert R. Wetteroff
                                          --------------------------------------
                                                   Senior Vice President
                                                     Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--36
<PAGE>

                                       UMB BANK, N.A.



                                       By: /s/ Kathy Trigg
                                          --------------------------------------
                                                     Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--37
<PAGE>

                                       MERRILL LYNCH BANK USA



                                       By: /s/ Preston L. Jackson
                                          --------------------------------------
                                                     Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--38
<PAGE>

                                       LEHMAN COMMERCIAL PAPER INC.



                                       By: /s/ Michele Swanson
                                          --------------------------------------
                                                     Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--39
<PAGE>

                                       NATEXIS BANQUES POPULAIRES


                                       By: /s/ Signature not legible
                                          --------------------------------------
                                                     Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------


                                       By: /s/ Signature not legible
                                          --------------------------------------
                                                     Authorized Officer

                                       Date:                              , 2002
                                            ------------------------------



                                     S--40

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(K)
<SEQUENCE>7
<FILENAME>d93687ex10-k.txt
<DESCRIPTION>3RD AMENDMENT DATED 2/7/02
<TEXT>
<PAGE>
                                                                   EXHIBIT 10(k)



                     THIRD AMENDMENT TO TERM LOAN AGREEMENT

         THIS THIRD AMENDMENT TO TERM LOAN AGREEMENT (the "AMENDMENT") is
entered into effective as of February 7, 2002, among The Williams Companies,
Inc., a Delaware corporation (the "COMPANY"), Credit Lyonnais New York Branch,
as Administrative Agent (in such capacity, "ADMINISTRATIVE AGENT"), and certain
LENDERS (herein so called) named on SCHEDULE 2.1 (as amended and supplemented
from time to time) of the Term Loan Agreement (as hereinafter defined).


                                    RECITALS


         A. The Company, Lenders, Commerzbank AG New York and Cayman Island
Branches, as Syndication Agent, The Bank of Nova Scotia, as Documentation Agent,
and Administrative Agent entered into that certain Term Loan Agreement dated as
of April 7, 2000, as modified and amended pursuant to that certain First
Amendment to Term Loan Agreement dated as of August 21, 2000 and that certain
Waiver and Second Amendment to Term Loan Agreement dated as of January 31, 2001
(such Term Loan Agreement, as so modified and amended, herein referred to as the
"TERM LOAN AGREEMENT") which Term Loan Agreement has been further modified by
that certain letter agreement (the "PRIOR WAIVER LETTER"), dated as of November
6, 2000, and that certain Limited Waiver of Term Loan Agreement dated as of July
20, 2001 (the "JULY WAIVER", and together with the Prior Waiver Letter herein
collectively referred to as "EXISTING WAIVERS"). Unless otherwise indicated
herein, all terms used with their initial letter capitalized are used herein
with their meaning as defined in the Term Loan Agreement, and all Section
references are to Sections in the Term Loan Agreement.

         B. The Company has requested that the Lenders further modify and amend
certain terms and provisions of the Term Loan Agreement.

         C. The Lenders are willing to so modify and amend the Term Loan
Agreement, as requested, in accordance with the terms and provisions set forth
herein and upon the condition that the Company and the Determining Lenders shall
have executed and delivered this Amendment and that the Company shall have fully
satisfied the terms and conditions hereof.

         NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Company, Administrative Agent and the Lenders hereby agree, as
follows:

PARAGRAPH 1. AMENDMENT OF SECTION 1.1 OF THE TERM LOAN AGREEMENT.

         1.1 DEFINITIONS. SECTION 1.1 of the Term Loan Agreement is hereby
amended, as follows:

                  (a) The definition of "DEBT" in such SECTION 1.1 is hereby
amended and restated to read in its entirety as follows:

                  "DEBT" means, in the case of any Person, (i) indebtedness of
         such Person for borrowed money, (ii) obligations of such Person
         evidenced by bonds, debentures or notes, (iii) obligations of such
         Person to pay the deferred purchase price of property or



                                       1
<PAGE>

         services (other than trade payables not overdue by more than 60 days
         incurred in the ordinary course of business), (iv) monetary obligations
         of such Person as lessee under leases that are, in accordance with
         generally accepted accounting principles, recorded as capital leases,
         (v) obligations of such Person under guaranties in respect of, and
         obligations (contingent or otherwise) to purchase or otherwise acquire,
         or otherwise to assure a creditor against loss in respect of,
         indebtedness or obligations of others of the kinds referred to in
         clauses (i) through (iv) of this definition and (vi) indebtedness or
         obligations of others of the kinds referred to in clauses (i) through
         (v) of this definition secured by any Lien on or in respect of any
         property of such Person; provided, however, that (w) Debt shall not
         include any obligations of the Company in respect of the FELINE PACS;
         (x) Debt shall not include any obligation under or resulting from any
         agreement referred to in paragraph (y) of SCHEDULE I; (y) in the case
         of the Company, Debt shall not include any contingent obligation of the
         Company relating to indebtedness incurred by any SPV, WCG or a WCG
         Subsidiary pursuant to the WCG Structured Financing (except that in the
         event that the WCG Refinancing Transaction shall have occurred, then
         Debt shall include the aggregate amount of the WCG Structured Financing
         for which the Company or any of its Subsidiaries shall have become
         directly and primarily liable); and (z) it is the understanding of the
         parties hereto that Debt shall not include any monetary obligations or
         guaranties of monetary obligations of Persons as lessee under leases
         that are, in accordance with GAAP, recorded as operating leases.

                  (b) The following definition of "FELINE PACS" is hereby
inserted in the alphabetically appropriate location in such SECTION 1.1:

                  "FELINE PACS" means those certain units, as described in the
         Company's prospectus supplement dated January 7, 2002, issued by the
         Company in January, 2002 in an aggregate face amount of $1,100,000,000.

                  (c) The definition of "NET WORTH" in such SECTION 1.1 is
hereby amended and restated to read in its entirety as follows:

                  "NET WORTH" of any Person means, as of any date of
         determination the excess of total assets of such Person over total
         liabilities of such Person, total assets and total liabilities each to
         be determined in accordance with GAAP; provided, however, that for
         purposes of calculating Net Worth, total liabilities shall not include
         any obligations of the Company in respect of the FELINE PACS.

                  (d) The definition of "WCG NOTE" is hereby inserted in the
alphabetically appropriate location in such SECTION 1.1:

                  "WCG NOTE" means that certain promissory note dated March 28,
         2001 issued by WCG to WCG Note Trust, a Delaware business trust, in a
         principal amount of $1,500,000,000 with a maturity date of March 31,
         2008.

                  (e) The definition of "WCG REFINANCING TRANSACTION" is hereby
inserted in the alphabetically appropriate location in such SECTION 1.1:

                  "WCG REFINANCING TRANSACTION" means any transaction or series
         of related transactions pursuant to which the Company or any Subsidiary
         of the Company becomes directly and primarily liable to the holders of
         the WCG Senior Notes for an aggregate




                                       2
<PAGE>


         amount not exceeding the outstanding principal of the WCG Senior Notes,
         together with all accrued and unpaid interest thereon, any fees, and
         any premiums or make-whole payments payable as a result of a prepayment
         or early redemption of the WCG Senior Notes, including, without
         limitation, by means of (i) any amendment to the transaction documents
         pursuant to which the WCG Senior Notes were issued, (ii) an exchange
         offer or tender offer for the WCG Senior Notes or the WCG Note in
         consideration for which the Company or any Subsidiary of the Company
         issues debt securities of the Company or any Subsidiary of the Company,
         (iii) any redemption or repurchase, in whole or in part, of the WCG
         Senior Notes by the Company or any Subsidiary of the Company, (iv) any
         exercise of the "Share Trust Release Option" as defined in the
         transaction documents pursuant to which the WCG Senior Notes were
         issued, or (v) the Company or any Subsidiary of the Company making any
         payments in respect of the WCG Senior Notes or the WCG Note.

                  (f) The definition of "WCG REIMBURSEMENT OBLIGATIONS" is
hereby inserted in the alphabetically appropriate location in such SECTION 1.1:

                  "WCG REIMBURSEMENT OBLIGATIONS" means any obligations of any
         WCG Subsidiary in favor of the Company, any Subsidiary of the Company
         or the WCG Senior Notes Issuer pursuant to which such WCG Subsidiary
         has agreed to pay the Company, any Subsidiary of the Company or the WCG
         Senior Notes Issuer an amount equal to or less than the total amount of
         the obligations incurred by the Company and/or its Subsidiaries in
         connection with the WCG Refinancing Transaction, including, without
         limitation, in respect of principal, interest, fees and any premiums or
         make-whole payments payable as a result of a prepayment or early
         redemption of the WCG Senior Notes.

                  (g) The definition of "WCG SENIOR NOTES" is hereby inserted in
the alphabetically appropriate location in such SECTION 1.1:

                  "WCG SENIOR NOTES" means those certain 8.25% Senior Secured
         Notes due 2004 in an aggregate principal amount of $1,400,000,000
         issued by the WCG Senior Notes Issuer.

                  (h) The definition of "WCG SENIOR NOTES ISSUER" is hereby
inserted in the alphabetically appropriate location in such SECTION 1.1:

                  "WCG SENIOR NOTES ISSUER" means, collectively, WCG Note Trust,
         a Delaware business trust, and WCG Note Corp., Inc., a Delaware
         corporation.

         1.2 SECTION 8.7. SECTION 8.7 of the Credit Agreement is hereby amended
by deleting the word "or" at the end of subclause (c) and period at the end of
subclause (d) thereof, inserting in place of the period at the end of subclause
(d) a semicolon and the word "or" and inserting the following new subclause (e)
immediately following the existing subclause (d):

                  "(e) Williams Pipeline Company, LLC from (1) selling,
         conveying or otherwise transferring all or substantially all of its
         assets to another Person or (2) merging or consolidating with or into
         another Person, in either case, for fair-market value and on
         commercially reasonable terms and conditions in the good faith judgment
         of the Company."



                                       3
<PAGE>

         1.3 SECTION 8.9. SECTION 8.9 is hereby amended and restated to read in
its entirety as follows:

                  "8.9 Loans and Advances. The Company shall not make or permit
         to remain outstanding or allow any of its Subsidiaries to make or
         permit to remain outstanding, any loan or advance to, or own, purchase
         or acquire any obligations or debt securities of any WCG Subsidiary,
         except that the Company and its Subsidiaries may (i) make and permit to
         remain outstanding loans and advances to a WCG Subsidiary existing as
         of July 25, 2000 and listed on Exhibit F hereto (and such WCG
         Subsidiaries may permit such loans and advances on Exhibit F to remain
         outstanding), (ii) purchase or acquire the WCG Senior Notes or the WCG
         Note pursuant to the WCG Refinancing Transaction, and (iii) purchase or
         acquire and permit to remain outstanding, the WCG Reimbursement
         Obligations. Except for those investments in existence on July 25, 2000
         and listed on Exhibit F hereof, purchases or acquisitions pursuant to
         the WCG Refinancing Transaction and purchases or acquisitions of WCG
         Reimbursement Obligations, the Company shall not, and shall not permit
         any of its Subsidiaries to, acquire or otherwise invest in any stock or
         other equity or other ownership interest in a WCG Subsidiary."

         1.4 SECTION 8.13. SECTION 8.13 is hereby amended by deleting the period
at the end of such Section and inserting in its place the following:

                  "; provided, however, that nothing contained herein shall
         prohibit or otherwise restrict the ability of the Company or any
         Subsidiary of the Company from incurring liability pursuant to the WCG
         Refinancing Transaction."

         1.5 SECTION 8.15. SECTION 8.15 is hereby amended by deleting the period
at the end of the last sentence of such Section and inserting in its place the
following:

                  "; provided, however, that nothing contained herein shall
         prohibit or otherwise restrict the ability of the Company or any
         Subsidiary of the Company to use the proceeds of any Borrowing to own,
         purchase or acquire the WCG Senior Notes pursuant to the WCG
         Refinancing Transaction."

PARAGRAPH 2. AMENDMENT EFFECTIVE DATE. This Amendment shall be binding upon all
parties to the Loan Papers on the last day upon which the following has
occurred:

                  (a) Administrative Agent shall have received a certificate of
         the Secretary or Assistant Secretary of the Company as to (i) any
         changes (or the absence of changes) since April 7, 2000, to its
         certificate of incorporation and its by-laws as of the date hereof,
         (ii) the resolutions of the Company authorizing the execution of this
         Amendment, and (iii) the names and true signatures of the officers
         authorized to execute this Amendment; and

                  (b) Counterparts of this Amendment shall have been executed
         and delivered to Administrative Agent by the Company, Administrative
         Agent, and the Determining Lenders or when Administrative Agent shall
         have received telecopied, telexed, or other evidence satisfactory to it
         that all such parties have executed and are delivering to
         Administrative Agent counterparts thereof.

Upon satisfaction of the foregoing conditions, (i) this Amendment shall be
deemed effective on and as of February 7, 2002 (the "AMENDMENT EFFECTIVE DATE").



                                       4
<PAGE>


PARAGRAPH 3. REPRESENTATIONS AND WARRANTIES. As a material inducement to Lenders
to execute and deliver this Amendment, the Company hereby represents and
warrants to Lenders (with the knowledge and intent that Lenders are relying upon
the same in entering into this Amendment) the following: (a) the representations
and warranties in the Term Loan Agreement and in all other Loan Papers are true
and correct on the date hereof in all material respects, as though made on the
date hereof except to the extent such representations and warranties relate to
an earlier date and except with respect to Section 7.6 of the Term Loan
Agreement for certain class-action lawsuits filed on or after January 29, 2002
alleging fraud and other violations of applicable securities laws; (b) no
Default or Potential Default exists under the Loan Papers; and (c) the terms and
provisions of the FELINE PACS transactions described in PARAGRAPH 1 hereof have
been accurately and completely described herein and in the other documents
provided to the Administrative Agent and the Lenders in connection herewith.

PARAGRAPH 4. MISCELLANEOUS.

         4.1 EFFECT ON LOAN DOCUMENTS. The Term Loan Agreement and all related
Loan Papers shall remain unchanged and in full force and effect, except as
provided in this Amendment, and are hereby ratified and confirmed. On and after
the Amendment Effective Date, all references to the "TERM LOAN AGREEMENT" shall
be to the Term Loan Agreement as herein amended. The execution, delivery, and
effectiveness of this Amendment shall not, except as expressly provided herein,
operate as a waiver of any Rights of the Lenders under the Term Loan Agreement
or any Loan Papers, nor constitute a waiver under the Term Loan Agreement or any
other provision of the Loan Papers.

         4.2 REFERENCE TO MISCELLANEOUS PROVISIONS. This Amendment and the other
documents delivered pursuant to this Amendment are part of the Loan Papers
referred to in the Term Loan Agreement, and the provisions relating to Loan
Papers set forth in SECTION 12 are incorporated herein by reference the same as
if set forth herein verbatim.

         4.3 FEES. The Company shall pay (a) to each Lender that shall have
approved this Amendment and shall have delivered to the Administrative Agent a
duly executed counterpart hereof not later than 5:00 p.m. central standard time
on February 8, 2002, a fee equal to 0.25% of each such Lender's respective
Committed Sum, and (b) to each other Lender that shall have approved this
Amendment and shall have delivered a duly executed counterpart hereof not later
than 5:00 p.m. central standard time on February 14, 2002, a fee equal to 0.10%
of each such other Lender's respective Committed Sum.

         4.4 COSTS AND EXPENSES. The Company agrees to pay promptly the
reasonable fees and expenses of counsel to Administrative Agent for services
rendered in connection with the preparation, negotiation, reproduction,
execution, and delivery of this Amendment.

         4.5 COUNTERPARTS. This Amendment may be executed in a number of
identical counterparts, each of which shall be deemed an original for all
purposes, and all of which constitute, collectively, one agreement; but, in
making proof of this Amendment, it shall not be necessary to produce or account
for more than one such counterpart. It is not necessary that all parties execute
the same counterpart so long as identical counterparts are executed by the
Company, each Determining Lender, and Administrative Agent.

         4.6 THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT AMONG THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,




                                       5
<PAGE>

CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENT OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

         Executed as of the date first above written, but effective as of the
Amendment Effective Date.

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                             SIGNATURE PAGES FOLLOW]



                                       6
<PAGE>


         Signature Page to that certain Third Amendment to Term Loan Agreement
dated effective as of February 7, 2002, among The Williams Companies, Inc., as
the Company, Credit Lyonnais New York Branch, as Administrative Agent and as a
Lender, and certain Lenders named therein.

Address for notices
One Williams Center, Suite 5000                 THE WILLIAMS COMPANIES, INC.,
Tulsa, Oklahoma 74172                           a Delaware corporation
Attn: Treasurer
Telephone No.: (918) 573-5551
Facsimile No.: (918) 573-2065                   By:      /s/ James G. Ivey
                                                   -----------------------------
                                                Name:  James G. Ivey
                                                Title: Treasurer

With a copy to:
One Williams Center, Suite 4100
Tulsa, Oklahoma 74172
Attn: Associate General Counsel
Telephone No.: (918) 573-2613
Facsimile No.: (918) 573-4503



                       [SIGNATURE PAGE TO THIRD AMENDMENT
                             TO TERM LOAN AGREEMENT]



<PAGE>




         Signature Page to that certain Third Amendment to Term Loan Agreement
dated effective as of February 7, 2002, among The Williams Companies, Inc., as
the Company, Credit Lyonnais New York Branch, as Administrative Agent and as a
Lender, and certain Lenders named therein.

1301 Avenue of the Americas                 CREDIT LYONNAIS NEW YORK BRANCH, as
New York, New York 10019                    Administrative Agent and as a Lender


                                            By:       /s/ Bernard Wevmuller
                                                --------------------------------
                                            Name:  Bernard Wevmuller
                                                  ------------------------------
                                            Title: Senior Vice President
                                                   -----------------------------


With a copy to:
1000 Louisiana Street, Suite 5360
Houston, Texas 77002
Attention: Mr. Robert LaRocque
Telephone No.: 713-753-8733
Facsimile No.: 713-751-0307


                       [SIGNATURE PAGE TO THIRD AMENDMENT
                             TO TERM LOAN AGREEMENT]


<PAGE>






         Signature Page to that certain Third Amendment to Term Loan Agreement
dated effective as of February 7, 2002, among The Williams Companies, Inc., as
the Company, Credit Lyonnais New York Branch, as Administrative Agent and as a
Lender, and certain Lenders named therein.

1230 Peachtree Street, Suite 3500           COMMERZBANK AG NEW YORK AND GRAND
Atlanta, Georgia 30309                      CAYMAN BRANCHES, as Syndication
Attn: Brian Campbell                        Agent, as a Lender and as a
Telephone: (404) 888-6518                   Designating Lender
Facsimile: (404) 888-6539
                                            By:      /s/ Brian J. Campbell
                                                --------------------------------
                                            Name:  Brian J. Campbell
                                                  ------------------------------
                                            Title: Senior Vice President
                                                   -----------------------------

With a copy to:

                                            By:       /s/ D. L. Ward, Jr.
                                                --------------------------------
Holland & Knight                            Name:  D. L. Ward, Jr.
1201 West Peachtree Street, Suite 2000            ------------------------------
Atlanta, Georgia 30309                      Title: Asst. Vice President
Attn: Ms. Sherie Holmes                            -----------------------------
Telephone: (404) 898-8197
Facsimile: (404) 881-0470




                       [SIGNATURE PAGE TO THIRD AMENDMENT
                             TO TERM LOAN AGREEMENT]

<PAGE>



         Signature Page to that certain Third Amendment to Term Loan Agreement
dated effective as of February 7, 2002, among The Williams Companies, Inc., as
the Company, Credit Lyonnais New York Branch, as Administrative Agent and as a
Lender, and certain Lenders named therein.


                                           FOUR WINDS FUNDING CORPORATION, as a
                                           Designated Lender


                                           By COMMERZBANK AKTIENGESELLCHAFT, as
                                              Administrator and Attorney-in-Fact


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


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


                       [SIGNATURE PAGE TO THIRD AMENDMENT
                             TO TERM LOAN AGREEMENT]

<PAGE>



         Signature Page to that certain Third Amendment to Term Loan Agreement
dated effective as of February 7, 2002, among The Williams Companies, Inc., as
the Company, Credit Lyonnais New York Branch, as Administrative Agent and as a
Lender, and certain Lenders named therein.

1100 Louisiana Street, Suite 3000           THE BANK OF NOVA SCOTIA,
Houston, Texas 77002                        as Documentation Agent and as a
Attn: Joe Latanzie                          Lender
Telephone: (713) 759-3435
Facsimile: (713) 752-2425                   By:         /s/ M. D. Smith
                                                 -------------------------------
                                            Name: M. D. Smith
                                                  ------------------------------
                                            Title: Agent, Operations
                                                   -----------------------------


                       [SIGNATURE PAGE TO THIRD AMENDMENT
                             TO TERM LOAN AGREEMENT]


<PAGE>



         Signature Page to that certain Third Amendment to Term Loan Agreement
dated effective as of February 7, 2002, among The Williams Companies, Inc., as
the Company, Credit Lyonnais New York Branch, as Administrative Agent and as a
Lender, and certain Lenders named therein.

1020 19th Street, NW, Suite 500             ABU DHABI INTERNATIONAL BANK INC.,
Washington, DC 20036                        as a Lender
Attn: David Young
Telephone: (202) 842-7956
Facsimile: (202) 842-7955                   By:       /s/ David J. Young
                                                --------------------------------
                                            Name:  David J. Young
                                                  ------------------------------
                                            Title: Vice President
                                                   -----------------------------


                                            By:         /s/ Nagy S. Kolta
                                                --------------------------------
                                            Name:  Nagy S. Kolta
                                                  ------------------------------
                                            Title: Executive Vice President
                                                   -----------------------------




                       [SIGNATURE PAGE TO THIRD AMENDMENT
                             TO TERM LOAN AGREEMENT]

<PAGE>



         Signature Page to that certain Third Amendment to Term Loan Agreement
dated effective as of February 7, 2002, among The Williams Companies, Inc., as
the Company, Credit Lyonnais New York Branch, as Administrative Agent and as a
Lender, and certain Lenders named therein.

470 Park Avenue South                       BANK POLSKA KASA OPIEKI S.A.,
32nd Street, 15th Floor                     as a Lender
New York, New York 10016
Attn: Hussein El-Tawil
Telephone: (212) 251-1245                   By:      /s/ Hussein B. El-Tawil
Facsimile: (212) 679-5910                       --------------------------------
                                            Name:  Hussein B. El-Tawil
                                                  ------------------------------
                                            Title: Vice President
                                                   -----------------------------



                       [SIGNATURE PAGE TO THIRD AMENDMENT
                             TO TERM LOAN AGREEMENT]

<PAGE>



         Signature Page to that certain Third Amendment to Term Loan Agreement
dated effective as of February 7, 2002, among The Williams Companies, Inc., as
the Company, Credit Lyonnais New York Branch, as Administrative Agent and as a
Lender, and certain Lenders named therein.

Strong Capital Management                   STRONG ADVANTAGE FUND, INC.
100 Heritage Reserve                        as a Lender
Menomonee Falls, Wisconsin  53201
Attn: Joe Ford
Telephone: (414) 973-5266                   By:  /s/ Gilbert L. Southwell, III
Facsimile: (414) 973-5239                       --------------------------------
                                            Name:  Gilbert L. Southwell, III
                                                  ------------------------------
                                            Title: Associate Counsel
                                                   -----------------------------



                       [SIGNATURE PAGE TO THIRD AMENDMENT
                             TO TERM LOAN AGREEMENT]


<PAGE>



         Signature Page to that certain Third Amendment to Term Loan Agreement
dated effective as of February 7, 2002, among The Williams Companies, Inc., as
the Company, Credit Lyonnais New York Branch, as Administrative Agent and as a
Lender, and certain Lenders named therein.

c/o JP Morgan Chase                         CHANG HWA COMMERCIAL BANK, LTD., NEW
4 Chase MetroTech Center                    YORK BRANCH, as a Lender
20th Floor (West)
Brooklyn, New York 11245
Attn: Vivian Chen                           By:       /s/ Ming-Hsien Lin
Telephone: (718) 242-8815                       --------------------------------
Facsimile: (718) 242-7159                   Name:  Ming-Hsien Lin
                                                  ------------------------------
                                            Title: VP & General Manager
                                                   -----------------------------


With a copy to:

c/o JP Morgan Chase
4 Chase MetroTech Center
20th Floor (West)
Brooklyn, New York 11245
Attn: Peter Lieu
Telephone: (718) 242-3688
Facsimile: (718) 242-7159


                       [SIGNATURE PAGE TO THIRD AMENDMENT
                             TO TERM LOAN AGREEMENT]

<PAGE>



         Signature Page to that certain Third Amendment to Term Loan Agreement
dated effective as of February 7, 2002, among The Williams Companies, Inc., as
the Company, Credit Lyonnais New York Branch, as Administrative Agent and as a
Lender, and certain Lenders named therein.

16333 Broadway, 40th Floor                  THE DAI-ICHI KANGYO BANK, LTD., as a
New York, New York 10019                    Lender
Attn: Maureen Carson
Telephone: (212) 649-0325                   By:        /s/ Maureen Carson
Facsimile: (212) 541-4822                       --------------------------------
                                            Name:  Maureen Carson
                                                  ------------------------------
                                            Title: Account Officer
                                                   -----------------------------


With a copy to:

16333 Broadway, 40th Floor
New York, New York 10019
Attn: Bert Tang
Telephone: (212) 432-8839
Facsimile: (212) 541-4805


                       [SIGNATURE PAGE TO THIRD AMENDMENT
                             TO TERM LOAN AGREEMENT]

<PAGE>



         Signature Page to that certain Third Amendment to Term Loan Agreement
dated effective as of February 7, 2002, among The Williams Companies, Inc., as
the Company, Credit Lyonnais New York Branch, as Administrative Agent and as a
Lender, and certain Lenders named therein.

76 Madison Avenue, 12th Floor               FIRST COMMERCIAL BANK - NEW YORK
New York, New York 10016                    AGENCY, as a Lender
Attn: Max Kwok
Telephone: (212) 684-9248                   By:
Facsimile: (212) 684-9315                       --------------------------------
                                            Name:
                                                  ------------------------------
                                            Title:
                                                   -----------------------------



                       [SIGNATURE PAGE TO THIRD AMENDMENT
                             TO TERM LOAN AGREEMENT]

<PAGE>



         Signature Page to that certain Third Amendment to Term Loan Agreement
dated effective as of February 7, 2002, among The Williams Companies, Inc., as
the Company, Credit Lyonnais New York Branch, as Administrative Agent and as a
Lender, and certain Lenders named therein.

380 Madison Avenue, 21st Floor              GULF INTERNATIONAL BANK,
New York, New York 10017                    as a Lender
Attn: Bill Shepard
Telephone: (212) 922-2323
Facsimile: (212) 922-2309                   By:      /s/ William B. Shepard
                                                --------------------------------
                                            Name:  William B. Shepard
                                                  ------------------------------
                                            Title: Vice President
                                                   -----------------------------



                                            By:        /s/ Issa N. Baconi
                                                --------------------------------
                                            Name:  Issa N. Baconi
                                                  ------------------------------
                                            Title: EVP & Branch Manager
                                                   -----------------------------


                       [SIGNATURE PAGE TO THIRD AMENDMENT
                             TO TERM LOAN AGREEMENT]


<PAGE>



         Signature Page to that certain Third Amendment to Term Loan Agreement
dated effective as of February 7, 2002, among The Williams Companies, Inc., as
the Company, Credit Lyonnais New York Branch, as Administrative Agent and as a
Lender, and certain Lenders named therein.

200 Madison Avenue, Suite 20007             HUA NAN COMMERCIAL BANK, LTD.,
New York, New York 10016                    as a Lender
Attn: Frank Tang
Telephone: (646) 435-1881
Facsimile: (212) 417-9341                   By:       /s/ Yun-Peng Chang
                                                --------------------------------
                                            Name:  Yun-Peng Chang
                                                  ------------------------------
                                            Title: SVP & General Manager
                                                   -----------------------------


                       [SIGNATURE PAGE TO THIRD AMENDMENT
                             TO TERM LOAN AGREEMENT]

<PAGE>



         Signature Page to that certain Third Amendment to Term Loan Agreement
dated effective as of February 7, 2002, among The Williams Companies, Inc., as
the Company, Credit Lyonnais New York Branch, as Administrative Agent and as a
Lender, and certain Lenders named therein.

150 East 42nd Street, 29th Floor            BAYERISCHE HYPO-UND
New York, New York 10017                    VEREINSBANK AG, NEW YORK
Attn: Steve Atwell                          BRANCH, as a Lender
Telephone: (212) 672-5458
Facsimile: (212) 672-5530
                                            By:       /s/ Shannon Batchman
                                                --------------------------------
                                            Name:    Shannon Batchman
                                                  ------------------------------
                                            Title:   Director
                                                   -----------------------------


                                            By:         /s/ Steven Atwell
                                                --------------------------------
                                            Name:  Steven Atwell
                                                  ------------------------------
                                            Title: Director
                                                   -----------------------------


                       [SIGNATURE PAGE TO THIRD AMENDMENT
                             TO TERM LOAN AGREEMENT]


<PAGE>



         Signature Page to that certain Third Amendment to Term Loan Agreement
dated effective as of February 7, 2002, among The Williams Companies, Inc., as
the Company, Credit Lyonnais New York Branch, as Administrative Agent and as a
Lender, and certain Lenders named therein.

245 Peachtree Center Avenue, Suite 2550     KBC BANK N.V., as a Lender
Atlanta, Georgia 30303
Attn: Filip Ferrante
Telephone: (404) 584-5466                   By:         /s/ Robert Snauffer
Facsimile: (404) 584-5465                       --------------------------------
                                            Name:  Robert Snauffer
                                                  ------------------------------
                                            Title: First Vice President
                                                   -----------------------------


                                            By:          /s/ Eric Raskin
                                                --------------------------------
                                            Name:  Erick Raskin
                                                  ------------------------------
                                            Title: Vice President
                                                   -----------------------------

With a copy to:

125 West 55th Street
New York, New York 10019
Attn: Diane Grimmig
Telephone: (212) 541-0707
Facsimile: (212) 541-0784



                       [SIGNATURE PAGE TO THIRD AMENDMENT
                             TO TERM LOAN AGREEMENT]
<PAGE>



         Signature Page to that certain Third Amendment to Term Loan Agreement
dated effective as of February 7, 2002, among The Williams Companies, Inc., as
the Company, Credit Lyonnais New York Branch, as Administrative Agent and as a
Lender, and certain Lenders named therein.

Grosse Bleiche 54-56                        LANDESBANK RHEINLAND-PFALZ,
Mainz, Germany 55098                        GIROZENTRALE,
Attn: Daniel Juncker                        as a Lender
Telephone: (011) 49-61-31-133374
Facsimile: (011) 49-61-31-132599
                                            By:
                                                --------------------------------
                                            Name:
                                                  ------------------------------
                                            Title:
                                                   -----------------------------


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

                       [SIGNATURE PAGE TO THIRD AMENDMENT
                             TO TERM LOAN AGREEMENT]

<PAGE>



         Signature Page to that certain Third Amendment to Term Loan Agreement
dated effective as of February 7, 2002, among The Williams Companies, Inc., as
the Company, Credit Lyonnais New York Branch, as Administrative Agent and as a
Lender, and certain Lenders named therein.


Ursulinenstra(beta)e 2                      LANDESBANK SAAR GIROZENTRALE,
66111 Saarbrucken, Germany                  as a Lender
Attn: Rolf Buchholz
Telephone: (011) 49-681-383-1304
Facsimile: (011) 49-681-383-1208            By:
                                                --------------------------------
                                            Name:
                                                  ------------------------------
                                            Title:
                                                   -----------------------------


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



                       [SIGNATURE PAGE TO THIRD AMENDMENT
                             TO TERM LOAN AGREEMENT]
<PAGE>



         Signature Page to that certain Third Amendment to Term Loan Agreement
dated effective as of February 7, 2002, among The Williams Companies, Inc., as
the Company, Credit Lyonnais New York Branch, as Administrative Agent and as a
Lender, and certain Lenders named therein.

Martensdamm 6                               LANDESBANK SCHLESWIG-HOLSTEIN
Kiel, Germany 24103                         GIROZENTRALE, as a Lender
Attn: Kerstin Spaeter
Telephone: (011) 49-431-900-2765
Facsimile: (011) 49-431-900-1794            By:      /s/ Dr. Nikolai Ulrich
                                                --------------------------------
                                            Name:  Dr. Nikolai Ulrich
                                                   -----------------------------
                                            Title: Vice President
                                                   -----------------------------



                                            By:         /s/ Klaus Reimers
                                                --------------------------------
                                            Name:  Klaus Reimers
                                                  ------------------------------
                                            Title: Assistant Vice President
                                                   -----------------------------



                       [SIGNATURE PAGE TO THIRD AMENDMENT
                             TO TERM LOAN AGREEMENT]
<PAGE>




         Signature Page to that certain Third Amendment to Term Loan Agreement
dated effective as of February 7, 2002, among The Williams Companies, Inc., as
the Company, Credit Lyonnais New York Branch, as Administrative Agent and as a
Lender, and certain Lenders named therein.

811 Wilshire Boulevard, Suite 1900          LAND BANK OF TAIWAN, LOS ANGELES
Los Angeles, California 90017               BRANCH, as a Lender
Attn: Jonathan Kuo
Telephone: (213) 532-3789                   By:
Facsimile: (213) 532-3766                       --------------------------------
                                            Name:
                                                  ------------------------------
                                            Title:
                                                   -----------------------------


                       [SIGNATURE PAGE TO THIRD AMENDMENT
                             TO TERM LOAN AGREEMENT]
<PAGE>



         Signature Page to that certain Third Amendment to Term Loan Agreement
dated effective as of February 7, 2002, among The Williams Companies, Inc., as
the Company, Credit Lyonnais New York Branch, as Administrative Agent and as a
Lender, and certain Lenders named therein.

2250 East 73rd Street, Suite 200            LOCAL OKLAHOMA BANK, N.A.,
Tulsa, Oklahoma 74136                       as a Lender
Attn: Elisabeth Blue
Telephone: (918) 497-2422
Facsimile: (918) 497-2497                   By:       /s/ Elisabeth F. Blue
                                               ---------------------------------
                                            Name:    Elisabeth F. Blue
                                                  ------------------------------
                                            Title:   Senior Vice President
                                                   -----------------------------



                       [SIGNATURE PAGE TO THIRD AMENDMENT
                             TO TERM LOAN AGREEMENT]
<PAGE>



         Signature Page to that certain Third Amendment to Term Loan Agreement
dated effective as of February 7, 2002, among The Williams Companies, Inc., as
the Company, Credit Lyonnais New York Branch, as Administrative Agent and as a
Lender, and certain Lenders named therein.

299 Park Avenue, 17th Floor                NATIONAL BANK OF KUWAIT,  S.A.K.,
New York, New York 10171                   GRAND CAYMAN BRANCH, as a
Attn: Wendy Wanninger                      Lender
Telephone: (212) 303-9807
Facsimile: (212) 888-2958
                                           By:         /s/ Muhammad Kamal
                                               ---------------------------------
                                           Name:    Muhammad Kamal
                                                 -------------------------------
                                           Title:   General Manager
                                                  ------------------------------


                                           By:         /s/ Robert J. McNeill
                                               ---------------------------------
                                           Name:    Robert J. McNeill
                                                 -------------------------------
                                           Title:   Executive Manager
                                                  ------------------------------



                       [SIGNATURE PAGE TO THIRD AMENDMENT
                             TO TERM LOAN AGREEMENT]

<PAGE>



         Signature Page to that certain Third Amendment to Term Loan Agreement
dated effective as of February 7, 2002, among The Williams Companies, Inc., as
the Company, Credit Lyonnais New York Branch, as Administrative Agent and as a
Lender, and certain Lenders named therein.


1200 Smith Street, Suite 3100               BNP PARIBAS, as a Lender
Houston, Texas 77002
Attn: Mark Cox
Telephone: (713) 982-1152                   By:        /s/ Brian M. Malone
Facsimile: (713) 859-6915                       --------------------------------
                                            Name:    Brian M. Malone
                                                  ------------------------------
                                            Title:   Managing Director
                                                   -----------------------------

                                            By:        /s/ Greg Smothers
With a copy to:                                 --------------------------------
                                            Name:    Greg Smothers
                                                  ------------------------------
                                            Title:   Vice President
1200 Smith Street, Suite 3100                      -----------------------------
Houston, Texas 77002
Attn: David Dodd
Telephone: (713) 982-1156
Facsimile: (713) 859-6915



                       [SIGNATURE PAGE TO THIRD AMENDMENT
                             TO TERM LOAN AGREEMENT]
<PAGE>



         Signature Page to that certain Third Amendment to Term Loan Agreement
dated effective as of February 7, 2002, among The Williams Companies, Inc., as
the Company, Credit Lyonnais New York Branch, as Administrative Agent and as a
Lender, and certain Lenders named therein.

135 Bishopsgate                             THE ROYAL BANK OF SCOTLAND PLC,
London, England EC2M 3UR                    as a Lender
Attn: Jane Woodley
Telephone: (011) 44-207-375-5724
Facsimile: (011) 44-207-375-5919            By:        /s/ Keith Johnson
                                               --------------------------------
                                            Name:    Keith Johnson
                                                  ------------------------------
                                            Title:   Senior Vice President
                                                   -----------------------------

With a copy to:

JP Morgan Chase Towers
600 Travis, Suite 6070
Houston, Texas 77002
Attn: Adam Pettifer
Telephone: (713) 221-2416
Facsimile: (713) 221-2430



                       [SIGNATURE PAGE TO THIRD AMENDMENT
                             TO TERM LOAN AGREEMENT]
<PAGE>



         Signature Page to that certain Third Amendment to Term Loan Agreement
dated effective as of February 7, 2002, among The Williams Companies, Inc., as
the Company, Credit Lyonnais New York Branch, as Administrative Agent and as a
Lender, and certain Lenders named therein.

277 Park Avenue, 6th Floor                  SUMITOMO MITSUI BANKING
New York, New York 10172                    CORPORATION, as a Lender
Attn: Bruce Meredith
Telephone: (212) 224-4194
Facsimile: (212) 224-4384                   By:      /s/ C. Michael Garrido
                                               ---------------------------------
                                            Name:    C. Michael Garrido
                                                  ------------------------------
                                            Title:   Senior Vice President
                                                   -----------------------------

With a copy to:

277 Park Avenue, 6th Floor
New York, New York 10172
Attn: Kenneth Austin
Telephone: (212) 224-4043
Facsimile: (212) 224-4384


                       [SIGNATURE PAGE TO THIRD AMENDMENT
                             TO TERM LOAN AGREEMENT]

<PAGE>



         Signature Page to that certain Third Amendment to Term Loan Agreement
dated effective as of February 7, 2002, among The Williams Companies, Inc., as
the Company, Credit Lyonnais New York Branch, as Administrative Agent and as a
Lender, and certain Lenders named therein.

1221 McKinney Street, Suite 4100            THE INDUSTRIAL BANK OF JAPAN,
Houston, Texas 77010                        LIMITED, NEW YORK BRANCH, as a
Attn: Lynn Williford                        Lender
Telephone: (713) 651-9444 x104
Facsimile: (713) 651-9209                   By:        /s/ Michael N. Oakes
                                                --------------------------------
                                            Name:    Michael N. Oakes
                                                  ------------------------------
                                            Title:   Senior Vice President,
                                                     Houston Office
                                                   -----------------------------



                       [SIGNATURE PAGE TO THIRD AMENDMENT
                             TO TERM LOAN AGREEMENT]

<PAGE>



         Signature Page to that certain Third Amendment to Term Loan Agreement
dated effective as of February 7, 2002, among The Williams Companies, Inc., as
the Company, Credit Lyonnais New York Branch, as Administrative Agent and as a
Lender, and certain Lenders named therein.

55 East 52nd Street, 11th Floor             UNITED FINANCIAL OF JAPAN, as a
New York, New York 10055                    Lender
Attn: Ryoichi Konishi
Telephone: (212) 339-6172                   By:
Facsimile: (212) 754-2360                       --------------------------------
                                            Name:
                                                  ------------------------------
                                            Title:
                                                   -----------------------------


                       [SIGNATURE PAGE TO THIRD AMENDMENT
                             TO TERM LOAN AGREEMENT]

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(Q)
<SEQUENCE>8
<FILENAME>d93687ex10-q.txt
<DESCRIPTION>AMENDMENT AND CONSENT DATED 8/17/00
<TEXT>
<PAGE>
                                                                   EXHIBIT 10(q)


                              AMENDMENT AND CONSENT


         AMENDMENT AND CONSENT dated as of August 17, 2000 ("Agreement") by the
undersigned persons (the "Parties").

                             PRELIMINARY STATEMENTS

         A. The Parties are parties to certain Operative Documents referred to
in the Amended and Restated Participation Agreement dated as of September 2,
1998 (the "Participation Agreement") among Williams Communications, Inc.
("WCI"), State Street Bank and Trust Company of Connecticut, National
Association, not in its individual capacity except as expressly set forth
therein, but solely as Trustee (the "Trustee"), the persons named therein as
note purchasers and their permitted successors and assigns (the "Note Holders"),
the persons named therein as certificate purchasers and their permitted
successors and assigns (the "Certificate Holders"), the persons named therein as
APA Purchasers and their permitted successors and assigns (the "APA
Purchasers"), State Street Bank and Trust Company ("State Street") not in its
individual capacity but solely as Collateral Agent (the "Collateral Agent"), and
Citibank, N.A., in its capacity as agent for the Note Holders and the
Certificate Holders (the "Agent").

         B. The Williams Companies, Inc. ("TWC"), successor in interest by
merger dated July 31, 1999 to Williams Holdings of Delaware, Inc., as Guarantor
under the Amended and Restated Guaranty Agreement dated as of September 2, 1998
(the "Guaranty"), has requested that the Guaranty be amended and restated in its
entirety as set forth herein.

         C. WCI, the Trustee, the Collateral Agent, the Agent and the Majority
Holders (as defined below) are willing to amend and restate the Guaranty in its
entirety, but only subject to the terms and conditions set forth in this
Agreement.

         D. The Parties, other than WCI and TWC, are willing to consent to the
amendment and restatement of the Guaranty requested by TWC, but only subject to
the terms and conditions set forth in this Agreement.

         NOW, THEREFORE, the Parties agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

         1.1 Defined Terms. As used in this Agreement, (i) terms defined in the
first paragraph, preliminary statements or other sections of this Agreement
shall have the meanings set forth therein, and (ii) capitalized terms used in
this Agreement and not otherwise defined herein shall have the meanings set
forth in Appendix A to the Participation Agreement and the other Operative
Documents referred to therein.


<PAGE>



                                   ARTICLE II

                              AMENDMENT AND CONSENT

         2.1 Amendment and Restatement of the Guaranty. Effective as set forth
in Section 4.3 hereof, the Guaranty is amended and restated to read in its
entirety in the form attached as Exhibit A hereto.

         2.2 Consent to Amendment and Restatement. Each of the Parties to this
Agreement, other than the APA Purchasers, hereby consents to the amendment and
restatement of the Guaranty set forth in Section 2.1 of this Agreement.



                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

         3.1 Representations and Warranties of WCI. WCI represents and warrants
as follows:

                  (a) WCI is a corporation duly organized, validly existing and
         in good standing under the laws of the State of Delaware.

                  (b) The execution, delivery and performance by WCI of this
         Agreement is within its corporate power, has been duly authorized by
         all necessary corporate action, and does not contravene, constitute a
         default under or a breach of (i) the certificate of incorporation or
         by-laws of WCI or (ii) any contract, lease, indenture, agreement or
         instrument binding on WCI or its property or (iii) any Law binding on
         WCI or its property.

                  (c) No authorization or approval or other action by, and no
         notice to or filing with, any Governmental Authority is required for
         the due execution, delivery and performance by WCI of this Agreement.

                  (d) This Agreement has been duly executed and delivered by
         WCI. This Agreement is the legal, valid and binding obligation of WCI
         enforceable against WCI, in accordance with its terms, subject to
         applicable bankruptcy, insolvency, reorganization, moratorium or
         similar Laws affecting the enforceability of creditors' rights
         generally and by general principles of equity.

                  (e) The representations and warranties of WCI contained in
         each of the Operative Documents are correct in all material respects on
         and as of the date hereof, as though made on and as of the date hereof.

                  (f) No event has occurred and is continuing which constitutes
         a Default as of the date hereof.



2

<PAGE>

         3.2 Representations and Warranties of TWC. TWC represents and warrants
as follows:

                  (a) TWC is a corporation duly organized, validly existing and
         in good standing under the laws of the State of Delaware.

                  (b) The execution, delivery and performance by TWC of this
         Agreement is within its corporate power, has been duly authorized by
         all necessary corporate action, and does not contravene, constitute a
         default under or a breach of (i) the certificate of incorporation or
         by-laws of TWC, (ii) any contract, lease, indenture, agreement or
         instrument binding on TWC or its property, or (iii) any Law binding on
         TWC or its property.

                  (c) No authorization or approval or other action by, and no
         notice to or filing with, any Governmental Authority is required for
         the due execution, delivery and performance by TWC of this Agreement.

                  (d) This Agreement has been duly executed and delivered by
         TWC. This Agreement is the legal, valid and binding obligation of TWC,
         enforceable against TWC, in accordance with its terms, subject to
         applicable bankruptcy, insolvency, reorganization, moratorium or
         similar Laws affecting the enforceability of creditors' rights
         generally and by general principles of equity.

                  (e) The representations and warranties of TWC contained in
         each of the Operative Documents are correct in all material respects on
         and as of the date hereof, as though made on and as of the date hereof.

                  (f) No event has occurred and is continuing which constitutes
         a Default as of the date hereof.

                                   ARTICLE IV

                                  MISCELLANEOUS

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

         4.2 Execution in Counterparts.This Agreement may be executed in any
number of counterparts and by any combination of the parties hereto in separate
counterparts, each of which counterparts shall be an original and all of which
taken together shall constitute one and the same instrument. Delivery of an
executed counterpart of a signature page to this Agreement by facsimile shall be
effective as delivery of a manually executed counterpart of this Agreement.

         4.3 Effectiveness of Amendment and Consent. Upon receipt by the Agent
of duly executed counterparts hereof signed by TWC, WCI, the Agent, CXC, the
SPV, the Majority Holders, the Majority Purchasers, the Trustee and the
Collateral Agent, this Agreement and the amendment and restatement of the
Guaranty contained herein shall be deemed effective as of July 25, 2000.



3
<PAGE>

         4.4 Expenses. This Agreement is subject to the expense reimbursement
provisions of Section 8.13 of the Participation Agreement.

         4.5 Effect on the Operative Documents. Upon execution and delivery of
this Agreement, (a) each reference in the Guaranty to "this Agreement", "this
Guaranty", "hereunder", "hereof", "herein", or words of like import shall mean
and be a reference to the Guaranty as amended and restated hereby, and (b) each
reference to the Guaranty in any Operative Document or Securitization Document
shall mean and be a reference to the Guaranty as amended and restated hereby.
Except as expressly modified hereby, all of the terms and conditions of the
Operative Documents and the Securitization Documents shall remain unaltered and
in full force and effect.

         4.6 Trustee. The undersigned Note Holders and Certificate Holders
hereby (a) direct the Trustee to give its consent to the actions contemplated
hereby by executing and delivering this Agreement, and (b) consent to the
execution and delivery by the Trustee of this Agreement.

         4.7 Consent. CXC and the Majority Purchasers (as defined in the APA)
hereby consent to the execution and delivery of this Agreement by the SPV, as
Note Holder, and hereby direct the SPV, as Note Holder, to enter into this
Agreement.

         4.8 Exculpation of the Trustee. Except for its own gross negligence and
willful misconduct and as otherwise expressly provided in the Operative
Documents, it is expressly understood and agreed by the parties hereto that (a)
this Agreement is executed and delivered by SSBTC, not in its individual
capacity but solely as Trustee under the Declaration of Trust, in the exercise
of the powers and authority conferred and vested in it as the Trustee, (b) each
of the undertakings and agreements herein made on the part of the Trustee is
made and intended not as a personal representation, undertaking and agreement by
SSBTC but is made and intended for the purpose for binding only the Trust Estate
created by the Declaration of Trust, (c) nothing herein contained shall be
construed as creating any liability on SSBTC, individually or personally, to
perform any obligation of the Trustee either expressed or implied contained
herein or in the Operative Documents, all such liability, if any, being
expressly waived by the parties to this Waiver and Consent and by any Person
lawfully claiming by, through or under the parties to this Waiver and Consent
and (d) under no circumstances shall SSBTC be personally liable for the payment
of any indebtedness or expenses of the Trustee or be liable for the breach or
failure of any obligation, representation, warranty or covenant made or
undertaken by the Trustee under the Operative Documents.


                   Remainder of page intentionally left blank



4
<PAGE>

         Each of the undersigned has caused this Agreement to be executed by its
respective officer or officers thereunto duly authorized, as of the date first
written above.

                                             WILLIAMS COMMUNICATIONS, INC.


                                             By:    /s/ Howard S. Kalika
                                                 -------------------------------
                                                 Name:  Howard S. Kalika
                                                 Title: Treasurer


                                             THE WILLIAMS COMPANIES, INC.


                                             By:    /s/ James G. Ivey
                                                 -------------------------------
                                                 Name:  James G. Ivey
                                                 Title: Treasurer


                                             CITIBANK, N.A., as Agent


                                             By:    /s/ J. Christopher Lyons
                                                 -------------------------------
                                                 Name:  J. Christopher Lyons
                                                 Title: Attorney-In-Fact


                                             CITIBANK, N.A., as APA Purchaser


                                             By:    /s/ J. Christopher Lyons
                                                 -------------------------------
                                                 Name:  J. Christopher Lyons
                                                 Title: Attorney-In-Fact


                                             CXC INCORPORATED

                                             By: CITICORP NORTH AMERICA, INC.,
                                                 as attorney-in-fact


                                             By:    /s/ Signature not legible
                                                 -------------------------------
                                                 Name:
                                                 Title: V.P.



5

<PAGE>


                                 WC NETWORK FUNDING LLC, as Note Holder,

                                 By:  WC Network Holdings, Inc., its sole member


                                 By:    /s/ Dwight Jenkins
                                    --------------------------------------------
                                 Name:  Dwight Jenkins
                                 Title: Vice President


                                 STATE STREET BANK AND TRUST COMPANY, not in its
                                 individual capacity but solely as Trustee of
                                 the 1998 WCI Trust, as Trustee and Lessor


                                 By:    /s/ Earl W. Dennison, Jr.
                                    --------------------------------------------
                                 Name:  Earl W. Dennison, Jr.
                                 Title: Vice President


                                 STATE STREET BANK AND TRUST COMPANY, not in its
                                 individual capacity but solely as Collateral
                                 Agent


                                 By:    /s/ Earl W. Dennison, Jr.
                                    --------------------------------------------
                                 Name:  Earl W. Dennison, Jr.
                                 Title: Vice President


                                 BANK OF MONTREAL, as an APA Purchaser


                                 By:    /s/ Mary Lee Latta
                                    --------------------------------------------
                                 Name:  Mary Lee Latta
                                 Title: Director



6
<PAGE>



                                 ROYAL BANK OF CANADA, as an APA Purchaser


                                 By:    /s/ Andrew C. Williamson
                                    --------------------------------------------
                                 Name:  Andrew C. Williamson
                                 Title: Vice President


                                 THE BANK OF NOVIA SCOTIA, as an APA Purchaser


                                 By:    /s/ F.C.S. Ashby
                                    --------------------------------------------
                                 Name:  F.C.S. Ashby
                                 Title: Manager Loan Operations


                                 BANK OF AMERICA, N.A., formerly BANK OF AMERICA
                                 NATIONAL TRUST AND SAVINGS
                                 ASSOCIATION/NATIONSBANK, as an APA Purchaser


                                 By:    /s/ Claire Liu
                                    --------------------------------------------
                                 Name:  Claire M. Liu
                                 Title: Managing Director


                                 THE CHASE MANHATTAN BANK, as an APA Purchaser


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



7
<PAGE>


                                 TORONTO DOMINION (TEXAS), INC., as an APA
                                 Purchaser


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


                                 ABN AMRO BANK N.V., as an APA Purchaser


                                 By:    /s/ David C. Carrington
                                    --------------------------------------------
                                 Name:  David C. Carrington
                                 Title: Group Vice President

                                 By:    /s/ Shilpa Parandekar
                                    --------------------------------------------
                                 Name:  Shilpa Parandekar
                                 Title: Corporate Banking Officer


                                 FLEET NATIONAL BANK (formerly BANKBOSTON,
                                 N.A)., as an APA Purchaser

                                 By:    /s/ Kristine A. Kasselman
                                    --------------------------------------------
                                 Name:  Kristine A. Kasselman
                                 Title: Managing Director


                                 COMMERZBANK AG, as an APA Purchaser


                                 By:    /s/ Harry P. Yergey
                                    --------------------------------------------
                                 Name:  Harry P. Yergey
                                 Title: SVP & Manager

                                 By:    /s/ Brian J. Campbell
                                    --------------------------------------------
                                 Name:  Brian J. Campbell
                                 Title: Vice President



8
<PAGE>



                                 CREDIT AGRICOLE INDOSUEZ, as an APA Purchaser


                                 By:    /s/ Brian Knezeak
                                    --------------------------------------------
                                 Name:  Brian Knezeak
                                 Title: FVP, Manager

                                 By:    /s/ Patrick Cocquerel
                                    --------------------------------------------
                                 Name:  Patrick Cocquerel
                                 Title: FVP, Managing Director


                                 BARCLAYS BANK PLC., as an APA Purchaser


                                 By:    /s/ Nicholas A. Bell
                                    --------------------------------------------
                                 Name:  Nicholas A. Bell
                                 Title: Director, Loan Transaction Management


                                 CIBC INC., as an APA Purchaser


                                 By:    /s/ M. Beth Miller
                                    --------------------------------------------
                                 Name:  M. Beth Miller
                                 Title: Authorized Signatory


                                 THE BANK OF NEW YORK, as an APA Purchaser


                                 By:    /s/ Raymond J. Palmer
                                    --------------------------------------------
                                 Name:  Raymond J. Palmer
                                 Title: Vice President



                                 FBTC LEASING CORP., as a Certificate Holder


                                 By:    /s/ Masatoshi Kaishita
                                    --------------------------------------------
                                 Name:  Masatoshi Kaishita
                                 Title: Treasurer



9
<PAGE>


                                 BNP PARIBAS, as an APA Purchaser


                                 By:    /s/ Serge Desrayaud
                                    --------------------------------------------
                                 Name:  Serge Desrayaud
                                 Title: Head of Media & Telecom. Asset
                                        Management

                                 By:    /s/ Gregg W. Bonardi
                                    --------------------------------------------
                                 Name:  Gregg W. Bonardi
                                 Title: Vice President


                                 SCOTIABANC INC., as a Certificate Holder


                                 By:    /s/ William E. Zarrett
                                    --------------------------------------------
                                 Name:  William E. Zarrett
                                 Title: Managing Director



10

<PAGE>

                                    Exhibit A

                  Form of Second Amended and Restated Guaranty

================================================================================


                           SECOND AMENDED AND RESTATED
                               GUARANTY AGREEMENT

                           dated as of August 17, 2000

                                     between

                          THE WILLIAMS COMPANIES, INC.

                                       and

                       STATE STREET BANK AND TRUST COMPANY
                      OF CONNECTICUT, NATIONAL ASSOCIATION,
                 in its individual capacity as its interests may
                appear in the Operative Documents, but otherwise
                         not in its individual capacity
                              but solely as Trustee

                                       and

                      STATE STREET BANK AND TRUST COMPANY,
                         not in its individual capacity,
                         but solely as Collateral Agent

                                       and

                                 CITIBANK, N.A.,
                                    as Agent,

                                       and

                                 CITIBANK, N.A.,
                                  as APA Agent

================================================================================


<PAGE>



                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                                       Page
                                                                                                       ----
<S>                                                                                                     <C>
ARTICLE I  DEFINITIONS; RULES OF CONSTRUCTION............................................................2
         Section 1.01  Definitions.......................................................................2
         Section 1.02  Computation of Time Periods.......................................................9
         Section 1.03  Accounting Terms..................................................................9
         Section 1.04  Use of Certain Terms.............................................................10
         Section 1.05  Headings and References..........................................................10
ARTICLE II  GUARANTY AND PAYMENT........................................................................10
         Section 2.01  Guaranty.........................................................................10
ARTICLE III  REPRESENTATIONS AND WARRANTIES.............................................................12
         Section 3.01  Representations and Warranties of the Guarantor..................................12
         Section 3.02  Satisfaction of Conditions Under Participation Agreement.........................14
ARTICLE IV  COVENANTS OF THE GUARANTOR..................................................................15
         Section 4.01  Affirmative Covenants............................................................15
         Section 4.02  Negative Covenants...............................................................18
ARTICLE V  REMEDIES.....................................................................................21
         Section 5.01  Remedies.........................................................................21
ARTICLE VI  NATURE OF AGREEMENT.........................................................................21
         Section 6.01  Nature of Guaranty...............................................................21
         Section 6.02  Survival.........................................................................21
         Section 6.03  Waivers..........................................................................21
         Section 6.04  The Guarantor's Obligations Unconditional........................................22
ARTICLE VII  BANKRUPTCY.................................................................................24
         Section 7.01  No Subrogation...................................................................24
         Section 7.02  Reinstatement....................................................................25
         Section 7.03  Non-Discharged Obligations.......................................................25
ARTICLE VIII  MISCELLANEOUS.............................................................................26
         Section 8.01  Notices..........................................................................26
         Section 8.02  Immunity.........................................................................26
         Section 8.03  Non-Exclusive Remedies...........................................................26
         Section 8.04  Amendments and Waivers...........................................................26
         Section 8.05  Severability.....................................................................26
         Section 8.06  Further Assurances...............................................................27
         Section 8.07  Governing Law and Submission to Jurisdiction.....................................27
         Section 8.08  Time.............................................................................27
         Section 8.09  Benefit..........................................................................27
         Section 8.10  Entire Agreement.................................................................28
         Section 8.11  Counterparts.....................................................................28
</Table>


                                       i
<PAGE>

<Table>
<Caption>
                                                                                                       Page
                                                                                                       ----
<S>                                                                                                     <C>

         Section 8.12  Reliance.........................................................................28
         Section 8.13  Survival of Indemnities..........................................................28
         Section 8.14  APA............................................................................. 28
</Table>

Schedule I        Permitted Liens
Exhibit A         Existing Loans and Investments of WCG Subsidiaries



                                       ii
<PAGE>


                 SECOND AMENDED AND RESTATED GUARANTY AGREEMENT


                  SECOND AMENDED AND RESTATED GUARANTY AGREEMENT, dated as of
August 17, 2000 by and between The Williams Companies, Inc., a Delaware
corporation, successor in interest by merger dated July 31, 1999 to Williams
Holdings of Delaware, Inc. (the "Guarantor"), State Street Bank and Trust
Company of Connecticut, National Association, a national banking association, in
its individual capacity as its interests may appear in the Operative Documents
(as defined below), but otherwise not in its individual capacity but solely as
Trustee (the "Trustee"), State Street Bank and Trust Company, not in its
individual capacity, but solely as collateral agent for the Purchasers (as
defined below) (the "Collateral Agent"), and Citibank, N.A., a national banking
association as agent for the Purchasers (the "Agent"), and Citibank, N.A., a
national banking association as agent for CXC (as defined below) and the APA
Purchasers (as defined below) (the "APA Agent").


                              Preliminary Statement


                  A. On the Original Initial Funding Date, as contemplated by
the Original Participation Agreement, the Guarantor executed a Guaranty in favor
of the Trustee, the Collateral Agent and the Agent for their benefit and for the
benefit of the Original Note Holders and Original Certificate Holders (the
"Original Guaranty"). In connection with amending and restating the May
Participation Agreement (as defined below), the Guarantor amended and restated
the Original Guaranty.

                  B. On the Initial Funding Date, as contemplated in the
Participation Agreement, the Guarantor executed the Amended and Restated
Guaranty Agreement (the "Amended Guaranty") as an inducement for (i) the
Trustee, the Collateral Agent and the Agent to enter into the transactions
contemplated by the Operative Documents, (ii) the Note Holders to purchase the
Interim Notes, (iii) the Certificate Holders to make Investments, (iv) CXC to
make CXC Advances to the SPV under the Finance Facility and (v) CXC, the SPV,
the APA Agent, the APA Purchasers and CNAI and Citicorp North America, Inc., as
agent for CXC and the APA Purchasers with respect to the Residual Credit
Enhancement (as defined in the APA) to enter into the APA, all of which the
Trustee, the Collateral Agent, the Agent, the Note Holders, the Certificate
Holders, the APA Agent, CXC and the APA Purchasers would have been unwilling to
do if the Guarantor did not execute and deliver the Amended Guaranty.

                  C. The Guarantor intends this Guaranty to amend and restate
the Amended Guaranty to reflect certain terms set forth in the Credit Agreement
(as defined below).

                  In consideration of the mutual covenants and agreements set
forth herein and intending to be legally bound by this Agreement, the Guarantor,
the Trustee, the Collateral Agent, the Agent and the APA Agent hereby agree as
follows:


<PAGE>
                                    ARTICLE I

                       DEFINITIONS; RULES OF CONSTRUCTION


                  Section 1.01 Definitions. As used in this Agreement, terms
defined in the preceding paragraphs or in other sections of this Agreement shall
have the meanings specified therein, the terms defined in Appendix A to the
Participation Agreement (as defined below), and not otherwise defined herein,
shall have the meanings set forth therein, and the following terms shall have
the meanings set forth below:

                  "Agreement" means this Second Amended and Restated Guaranty
Agreement.

                  "American Soda" means American Soda, L.L.P., a Colorado
limited liability partnership.

                  "Bank" means the lenders listed on the signature pages of the
Credit Agreement and each other Person that becomes a Bank pursuant to the last
sentence of Section 8.06(a) of the Credit Agreement.

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

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

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

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

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

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

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



                                       2
<PAGE>

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

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

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

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

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

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

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

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

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

                  "Consolidated" refers to the consolidation of the accounts of
any Person and its Subsidiaries in accordance with GAAP; provided that, unless
otherwise provided, in the case of the Guarantor, "Consolidated" shall mean the
consolidation of the accounts of the Guarantor and its Subsidiaries and shall
not include any accounts of the WCG Subsidiaries; provided that for purposes of
the Consolidated financial statements required to be delivered pursuant to
Sections 3.01(e), 4.01(b)(ii) and 4.01(b)(iii) and where otherwise provided, the
consolidation of the accounts of the Guarantor and its Subsidiaries shall
include the WCG Subsidiaries.

                  "Consolidated Net Worth" of any Person means the Net Worth of
such Person and its Subsidiaries on a Consolidated basis plus, in the case of
the Guarantor, the Designated Minority Interests to the extent not otherwise
included; provided that, in no event shall the value ascribed to Designated
Minority Interests exceed $136,892,000 in the aggregate.

                  "Consolidating" refers to, with respect to the balance sheets
and statements of income and cash flows required by Sections 3.01(e),
4.01(b)(ii) and 4.01(b)(iii), the consolidation of the accounts of the Guarantor
and its Subsidiaries in accordance with the following format: (i) the WCG
Subsidiaries, (ii) the Guarantor and its Subsidiaries (which term does not
include the WCG Subsidiaries), (iii) consolidation



                                       3
<PAGE>

adjustments, and (iv) Consolidated financial statements of the Guarantor and
each Subsidiary of the Guarantor, including the WCG Subsidiaries.

                  "Credit Agreement" means the Credit Agreement dated as of July
25, 2000 among The Williams Companies, Inc., Northwest Pipeline Corporation,
Transcontinental Gas Pipe Line Corporation, Texas Gas Transmission Corporation,
as Borrowers, the Banks named therein, as Banks, and Citibank, N.A., as Agent,
as in effect on the date of this Agreement.

                  "Debt" means, in the case of any Person, (i) indebtedness of
such Person for borrowed money, (ii) obligations of such Person evidenced by
bonds, debentures or notes, (iii) obligations of such Person to pay the deferred
purchase price of property or services (other than trade payables not overdue by
more than 60 days incurred in the ordinary course of business), (iv) monetary
obligations of such Person as lessee under leases that are, in accordance with
GAAP, recorded as capital leases, (v) obligations of such Person under
guaranties in respect of, and obligations (contingent or otherwise) to purchase
or otherwise acquire, or otherwise to assure a creditor against loss in respect
of, indebtedness or obligations of others of the kinds referred to in clauses
(i) through (iv) of this definition, and (vi) indebtedness or obligations of
others of the kinds referred to in clauses (i) through (v) of this definition
secured by any Lien on or in respect of any property of such Person; provided,
however, that Debt shall not include any obligation under or resulting from any
agreement referred to in paragraph (y) of Schedule I or resulting from any sale
and leaseback referred to in paragraph (aa) of Schedule I; and provided further,
it is the understanding of the parties hereto that Debt shall not include any
monetary obligations of Persons as lessee under leases that are in accordance
with GAAP, recorded as operating leases.

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

                  "EDGAR" means "Electronic Data Gathering, Analysis and
Retrieval" system, a database maintained by the Securities and Exchange
Commission containing electronic filings of issues of certain securities.

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

                  "Environmental Protection Statutes" means any United States
local, state of federal or any foreign Law or agreement arising from or in
connection with or relating to the protection or regulation of the environment
(as defined in 42 U.S.C. Section 9601(8) as of the date of the Credit
Agreement), including, those Laws or agreements relating to the disposal,
cleanup, production, storing, refining, handling, transferring, processing or
transporting of Hazardous Waste, Hazardous Substances or any pollutant or
contaminant, wherever located.

                  "Fitch" means Fitch, Inc.



                                       4
<PAGE>

                  "Guaranteed Instruments" means:

                  (i) If the Lessee shall have delivered an Offer to Purchase
         pursuant to the Lease or the Lessor shall have delivered a Termination
         Notice pursuant to the Lease, then the "Guaranteed Instruments" shall
         be all the Instruments;

                 (ii) If the Lessee has not delivered an Offer to Purchase and
         the Lessor has not delivered a Termination Notice, then (A) if no Event
         of Default has occurred and is continuing at such time, the "Guaranteed
         Instruments" shall be the A-Notes and B-Notes, to the extent of the
         Residual Value Amount; (B) if an Event of Default under Section 6.01(p)
         or 6.01(q)(i) of the Participation Agreement has occurred and is
         continuing at such time, the "Guaranteed Instruments" shall be the
         A-Notes and B-Notes, to the extent of the Residual Value Amount; (C) on
         or after the Completion Date, if an Event of Default (other than under
         Section 6.01(p) or 6.01(q)(i) of the Participation Agreement or an
         Event of Default relating to fraud, misapplication of funds, illegal
         acts, or willful misconduct on the part of the Lessee) has occurred and
         is continuing at such time, the "Guaranteed Instruments" shall be the
         A-Notes and B-Notes; (D) prior to the Completion Date, if an Event of
         Default (other than under Section 6.01(g) or 6.01(h) of the
         Participation Agreement or an Event of Default relating to fraud,
         misapplication of funds, illegal acts, or willful misconduct on the
         part of the Lessee) has occurred and is continuing at such time, the
         "Guaranteed Instruments" shall be the A-Notes and B-Notes, to the
         extent of the Residual Value Amount; and (E) prior to the Completion
         Date, if an Event of Default under Section 6.01(g) or 6.01(h) of the
         Participation Agreement has occurred and is continuing at such time, or
         to the extent of any claims brought by the Lessor relating to fraud,
         misapplication of funds, illegal acts, or willful misconduct on the
         part of the Lessee, the "Guaranteed Instruments" shall be the A-Notes
         and the B-Notes.

                  "Guaranteed Obligations" means, collectively the obligations
described in clauses (i) through (v) of Section 2.01(a), in each case, whether
arising under the Operative Documents referred to in the May Participation
Agreement or under the Operative Documents referred to in the Participation
Agreement.

                  "Guaranteed Parties" means each of the Agent, the Trustee, the
Collateral Agent, the APA Agent, the Purchasers, the APA Purchasers, CXC and
CXC's Credit Enhancer.

                  "Guaranty Default" means any one or more of the following
events or conditions occurs or exists:

                  (a) the Guarantor shall fail to pay, satisfy and perform the
         Guaranteed Obligations pursuant to Section 2.01 (after the passage of
         any applicable grace or cure period with respect thereto under the
         Operative Documents); or

                  (b) any certification, representation or warranty made by the
         Guarantor herein or by the Guarantor (or any officer of the Guarantor)
         in writing under or in connection with this Agreement or under any
         other Operative Document (including, without limitation,
         representations and warranties made or



                                       5
<PAGE>

         deemed made pursuant to Section 3.01 or 3.02) shall prove to have been
         incorrect in any material respect when made or deemed made; or

                  (c) the Guarantor shall fail to perform or observe (i) any
         term, covenant or agreement contained in Section 4.01(b) on its part to
         be performed or observed and such failure shall continue for ten
         Business Days after the earlier of the date notice thereof shall have
         been given to the Guarantor by the Agent or any Bank or the date the
         Guarantor shall have knowledge of such failure, or (ii) any term,
         covenant or agreement contained in this Agreement (other than a term,
         covenant or agreement contained in Section 4.01(b) or 2.01) or in any
         other Operative Document or on its part to be performed or observed and
         such failure shall continue for five Business Days after the earlier of
         the date notice thereof shall have been given to the Guarantor by the
         Agent or any Purchaser or the date the Guarantor shall have knowledge
         of such failure; or

                  (d) the Guarantor or any Subsidiary of the Guarantor shall
         fail to pay any principal of or premium or interest on any Debt which
         is outstanding in a principal amount of at least $60,000,000 in the
         aggregate of the Guarantor or such Subsidiary (as the case may be),
         when the same becomes due and payable (whether by scheduled maturity,
         required prepayment, acceleration, demand or otherwise), and such
         failure shall continue after the applicable grace period, if any,
         specified in the agreement or instrument relating to such Debt; or any
         other event shall occur or condition shall exist under any agreement or
         instrument relating to any such Debt and shall continue after the
         applicable grace period, if any, specified in such agreement or
         instrument, if the effect of such event or condition is to accelerate,
         or to permit the acceleration of, the maturity of such Debt; or any
         such Debt shall be declared to be due and payable, or required to be
         prepaid (other than by a regularly scheduled required prepayment or as
         required pursuant to an illegality event of the type set forth in
         Section 2.12 of the Credit Agreement), prior to the stated maturity
         thereof; provided, however, that the provisions of this subsection (d)
         shall not apply to any Non-Recourse Debt of any Non-Borrowing
         Subsidiary (as defined in the Credit Agreement) of the Guarantor under
         the Credit Agreement; or

                  (e) the Guarantor or any Material Subsidiary of the Guarantor
         shall generally not pay its debts as such debts become due, or shall
         admit in writing its inability to pay its debts generally, or shall
         make a general assignment for the benefit of creditors; or any
         proceeding shall be instituted by or against the Guarantor or any
         Material Subsidiary of the Guarantor seeking to adjudicate it a
         bankrupt or insolvent, or seeking liquidation, winding up,
         reorganization, arrangement, adjustment, protection, relief, or
         composition of it or its debts under any law relating to bankruptcy,
         insolvency or reorganization or relief of debtors, or seeking the entry
         of an order for relief or the appointment of a receiver, trustee, or
         other similar official for it or for any substantial part of its
         property and, in the case of any such proceeding instituted against it
         (but not instituted by it), shall remain undismissed or unstayed for a
         period of 60 days; or the Guarantor or any



                                       6
<PAGE>

         Material Subsidiary of the Guarantor shall take any action to authorize
         any of the actions set forth above in this subsection (e); or

                  (f) any judgment or order for the payment of money in excess
         of $60,000,000 shall be rendered against the Guarantor or any Material
         Subsidiary of the Guarantor and remain unsatisfied and either (i)
         enforcement proceedings shall have been commenced by any creditor upon
         such judgment or order or (ii) there shall be any period of 30
         consecutive days during which a stay of enforcement of such judgment or
         order, by reason of a pending appeal or otherwise, shall not be in
         effect; or

                  (g) any Termination Event with respect to a Plan shall have
         occurred and, 30 days after notice thereof shall have been given to the
         Guarantor by the Agent, (i) such Termination Event shall still exist
         and (ii) the sum (determined as of the date of occurrence of such
         Termination Event) of the Insufficiency of such Plan and the
         Insufficiency of any and all other Plans with respect to which a
         Termination Event shall have occurred and then exist (or in the case of
         a Plan with respect to which a Termination Event described in clause
         (ii) of the definition of Termination Event shall have occurred and
         then exist, the liability related thereto) is equal to or greater than
         $75,000,000; or

                  (h) the Guarantor or any ERISA Affiliate of the Guarantor
         shall have been notified by the sponsor of a Multiemployer Plan that it
         has incurred Withdrawal Liability to such Multiemployer Plan in an
         amount which, when aggregated with all other amounts required to be
         paid to Multiemployer Plans in connection with Withdrawal Liabilities
         (determined as of the date of such notification), exceeds $75,000,000
         in the aggregate or requires payments exceeding $50,000,000 per annum;
         or

                  (i) the Guarantor or any ERISA Affiliate of the Guarantor
         shall have been notified by the sponsor of a Multiemployer Plan that
         such Multiemployer Plan is in reorganization or is being terminated,
         within the meaning of Title IV of ERISA, if as a result of such
         reorganization or termination the aggregate annual contributions of the
         Guarantor and its ERISA Affiliates to all Multiemployer Plans which are
         then in reorganization or being terminated have been or will be
         increased over the amounts contributed to such Multiemployer Plans for
         the respective plan years which include the date hereof by an amount
         exceeding $75,000,000;

                  (j) any Event of Default under the Credit Agreement occurs and
         is continuing.

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



                                       7
<PAGE>

                  "Hazardous Waste" has the meaning set forth in 42
U.S.C. Section 6903(5) and shall also include each other substance considered to
be a hazardous waste under any Environmental Protection Statute (including 40
C.F.R. Section 261.3)

                  "Material Subsidiary" means, with respect to the Guarantor,
each Relevant Subsidiary and each "significant subsidiary" of the Guarantor (or
its Subsidiaries) as such term is defined in Rule 405 under the Securities Act,
excluding the WCG Subsidiaries.

                  "May Participation Agreement" means the Participation
Agreement dated as of May 6, 1998, as amended, among Williams Communications,
Inc., the Trustee, Citibank N.A. as the Agent and the Collateral Agent, and the
financial institutions named therein as Purchasers, as it may be amended,
modified, restated or supplemented from time to time in accordance with the
terms thereof.

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

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

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

                  "Non-Recourse Debt" means Debt incurred by any non-material,
Non-Borrowing Subsidiary (as defined in the Credit Agreement) to finance the
acquisition (other than any acquisition from the Guarantor or any Subsidiary) or
construction of a project, which Debt does not permit or provide for recourse
against the Guarantor or any Subsidiary of the Guarantor (other than the
Subsidiary that is to acquire or construct such project) or any property or
asset of the Guarantor or any Subsidiary of the Guarantor (other than property
or assets of the Subsidiary that is to acquire or construct such project). For
purposes of this definition, a "non-material Subsidiary" shall mean any
Subsidiary of the Guarantor which, as of the date of the most recent
Consolidating balance sheet of the Guarantor delivered pursuant to Section 4.01
as described in clause (ii) of the definition of "Consolidating," has total
assets which account for less than five percent (5%) of the total assets of the
Guarantor and its Subsidiaries, as shown in the column described in clause (ii)
of the definition of "Consolidating" of such Consolidating balance sheet;
provided that, the total aggregate assets of non-material Subsidiaries shall not
comprise at any time more than ten percent (10%) of the total assets of the
Guarantor and its Subsidiaries, as shown in such column of such Consolidating
balance sheet.

                  "Participation Agreement" means the Amended and Restated
Participation Agreement dated as of the date hereof among the Company, the
Trustee, the Persons named therein as Note Holders, Certificate Holders and APA
Purchasers, the Collateral Agent and the Agent.

                  "Permitted Liens" means, with respect to the Guarantor or any
Subsidiary of the Guarantor, Liens specifically described on Schedule I.

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



                                       8
<PAGE>

                  "Public Filings" means the Guarantor's Annual Report on Form
10-K/A for the year ended December 31, 1999 and Quarterly Report on Form 10-Q
for the quarter ended March 31, 2000.

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

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

                  "Subsidiary" of any Person means any corporation, partnership,
joint venture or other entity of which more than 50% of the outstanding capital
stock or other equity interests having ordinary voting power to elect a majority
of the board of directors of such corporation, partnership, joint venture or
other entity or others performing similar functions (irrespective of whether or
not at the time capital stock or other equity interests of any other class or
classes of such corporation, partnership, joint venture or other entity shall or
might have voting power upon the occurrence of any contingency) is at the time
directly or indirectly owned by such Person. Notwithstanding the above, in the
case of the Guarantor, "Subsidiary" shall not include the WCG Subsidiaries,
except that with respect to the Consolidated balance sheet and related
Consolidated statements of income and cash flows for TWC referred to in Section
3.01(e), 4.01(b)(ii) and 4.01(b)(iii) and as otherwise specifically provided
herein the term "Subsidiary" used with respect to the Guarantor shall include
the WCG Subsidiaries.

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

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

                  "WCG Subsidiaries" means, collectively, WCG and any direct or
indirect Subsidiary of WCG.

                  Section 1.02 Computation of Time Periods. In this Agreement in
the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
means "to but excluding."

                  Section 1.03 Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP applied
consistently.



                                       9
<PAGE>

                  Section 1.04 Use of Certain Terms. Unless the context of this
Agreement requires otherwise, the plural includes the singular, the singular
includes the plural, the part includes the whole, and "including" has the
inclusive meaning of "including without limitation." The words "hereof,"
"herein," "hereby," "hereunder," and other similar terms of this Agreement refer
to this Agreement as a whole and not exclusively to any particular provision of
this Agreement. All pronouns and any variations thereof shall be deemed to refer
to masculine, feminine, or neuter, singular or plural, as the identity of the
person or persons may require.

                  Section 1.05 Headings and References. Section and other
headings are for reference only, and shall not affect the interpretation or
meaning of any provision of this Agreement. Unless otherwise provided,
references to Articles, Sections, Schedules, and Exhibits shall be deemed
references to Articles, Sections, Schedules, and Exhibits of this Agreement.
References to this Agreement include this Agreement as the same may be modified,
amended, restated or supplemented from time to time pursuant to the provisions
hereof. A reference to any law shall mean that law as it may be amended,
modified or supplemented from time to time, and any successor law and to any
applicable rules, regulations or orders as in effect from time to time. A
reference to a Person includes the successors and assigns of such Person, except
to the extent that this Agreement or any other Operative Document may restrict
assignment or rights of assignees. A reference in this Agreement to any other
Operative Document shall be deemed a reference to that Operative Document as it
may be amended, modified or supplemented from time to time. A reference in
Section 2.01 to any Operative Document (or to any Fixed Rent, Additional Rent,
Additional Costs, Residual Value Amount, Termination Value, indemnification
payment or other amounts payable under representations or warranties in, or
covenants, undertakings or other obligations under any Operative Document) shall
be deemed a reference to both the Operative Documents (and such payment
obligations, representations, warranties, covenants, undertakings and other
obligations) as defined in the Original Guaranty and to the Operative Documents
(and such payment obligations, representations, warranties, covenants,
undertakings and other obligations) as defined in this Agreement.


                                   ARTICLE II

                              GUARANTY AND PAYMENT


                  Section 2.01 Guaranty.

                  (a) Guaranteed Obligations. The Guarantor hereby
unconditionally and irrevocably guarantees to, and agrees with and for the
benefit of the Guaranteed Parties that:

                  (i) The Fixed Rent, Additional Rent, Additional Costs,
         Residual Value Amount, Termination Value, indemnification payments and
         all other amounts payable by each Relevant Subsidiary under the
         Operative Documents will be promptly paid in full when due in
         accordance with the provisions thereof;

                 (ii) Each Relevant Subsidiary will perform, comply with and
         observe (or cause to be performed, complied with or observed) all
         obligations, covenants, terms, conditions, indemnities and undertakings
         required under the Operative Documents in accordance with the
         provisions thereof;



                                       10
<PAGE>

                (iii) All representations, warranties, certifications or
         statements made by each Relevant Subsidiary, and their respective
         officers, pursuant to each of the Operative Documents are true and
         correct as of the date made (or, if made or delivered after the date
         hereof, will be true and correct when made or delivered);

                 (iv) All amounts due in respect of the Guaranteed Instruments
         (including all principal or stated amount of, and interest or yield on,
         as applicable, the Guaranteed Instruments, together with any other sums
         which may become due pursuant to any Operative Document with respect to
         the Guaranteed Instruments) will be promptly paid in full (A) when due,
         whether at stated maturity, by acceleration or otherwise, in accordance
         with the provisions of such Guaranteed Instruments and of the Operative
         Documents and (B) upon the occurrence of an Event of Default; and

                  (v) All amounts due in respect of any Guaranteed Obligations
         or Guaranteed Instruments (each as defined in the Original Guaranty),
         to the extent such Guaranteed Obligations arose on or prior to the date
         hereof and remain unpaid or unsatisfied on or after the date hereof or
         such Guaranteed Instruments remaining outstanding and unpaid on or
         after the date hereof.

                  (b) Tax Gross-Up. Payments of Guaranteed Obligations shall be
made (or grossed-up, as applicable) free and clear of all Taxes and Other
Charges (other than Excluded Charges) in the manner set forth in Section 5.04 of
the Participation Agreement.

                  (c) Enforcement. Regardless of whether the Guaranteed Parties
are (at any time) precluded or stayed from enforcing or exercising any of their
rights or remedies under the Operative Documents against any Relevant
Subsidiary, the Guaranteed Obligations may be enforced directly against the
Guarantor (as a primary obligation of the Guarantor) without the joinder of,
demand on, or the taking of any other action against, any Relevant Subsidiary or
any other Person. Regardless of whether any Relevant Subsidiary is precluded or
stayed from paying or performing (or otherwise fails to pay or perform) any of
the Guaranteed Obligations (upon demand by any Guaranteed Party) the Guarantor
shall pay or perform (or cause to be paid or performed) such Guaranteed
Obligations. Without limiting the foregoing provisions of this Section 2.01(c),
if enforcement of the rights or remedies of any Guaranteed Party under the
Operative Documents is dependent upon delivering notices or taking any other
Actions (such as delivering a Termination Notice to the Lessee under the Lease),
then the Guaranteed Parties may deliver such notices to and take such other
Actions with or against the Guarantor (in lieu of a Relevant Subsidiary) for all
purposes under this Agreement and the other Operative Documents. This Section
2.01(c) should not be construed to (i) impose any conditions whatsoever on the
obligations of the Guarantor under this Agreement or (ii) require the Guaranteed
Parties to first exercise or exhaust remedies against any Relevant Subsidiary or
any other Person before exercising remedies against the Guarantor pursuant to
this Agreement.



                                       11
<PAGE>


                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES


                  Section 3.01 Representations and Warranties of the Guarantor.
The Guarantor represents and warrants as to itself and its Subsidiaries as
follows:

                  (a) Organization; Required Consents and Permits. The Guarantor
is duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all corporate powers and all governmental licenses,
authorizations, certificates, consents and approvals required to carry on its
business as now conducted in all material respects, except for those licenses,
authorizations, certificates, consents and approvals the failure to have which
could not reasonably be expected to have a Material Adverse Effect or create any
Trust Liability. Each Material Subsidiary of the Guarantor is duly organized or
validly formed, validly existing and (if applicable) in good standing under the
laws of its jurisdiction of incorporation or formation, except where the failure
to be so organized, existing and in good standing could not reasonably be
expected to have a Material Adverse Effect or create any Trust Liability. Each
Material Subsidiary of the Guarantor has all corporate or limited liability
company powers and all governmental licenses, authorizations, certificates,
consents and approvals required to carry on its business as now conducted in all
material respects, except for those licenses, authorizations, certificates,
consents and approvals the failure to have which could not reasonably be
expected to have a Material Adverse Effect or create any Trust Liability.

                  (b) Authorization; No Conflict. The execution, delivery and
performance by the Guarantor of this Agreement and the other Operative Documents
to which the Guarantor is party and the consummation of the transactions
contemplated by this Agreement and the other Operative Documents are within the
Guarantor's corporate powers, have been duly authorized by all necessary
corporate or other action on the Guarantor's part, do not contravene (i) the
certificate of incorporation or by-laws of the Guarantor or any Subsidiary of
the Guarantor, or (ii) any Law, judgment, order, decree, injunction, instrument
or contractual restriction binding on or affecting the Guarantor or any of its
Subsidiaries and will not result in or require the creation or imposition of any
Lien prohibited by this Agreement or any other Operative Document.

                  (c) Consents; Governmental Approvals. No consent,
authorization or approval or other action by, and no notice to or filing with,
any governmental authority, regulatory body or other Person is required for the
due execution, delivery and performance by the Guarantor of this Agreement and
the other Operative Documents to which the Guarantor is party or the
consummation of the transactions contemplated by this Agreement.

                  (d) Binding Agreement. This Agreement and each of the other
Operative Documents to which the Guarantor is party have been duly executed and
delivered by the Guarantor. This Agreement and each of the other Operative
Documents to which the Guarantor is party are the legal, valid and binding
obligations of the Guarantor enforceable against the Guarantor in accordance
with their respective terms, except as such enforceability may be limited by any
applicable bankruptcy, insolvency, reorganization, moratorium or similar Law
affecting creditors' rights generally and by general principles of equity.

                  (e) Financial Statements. The Consolidated and Consolidating
balance sheets of the Guarantor and its Subsidiaries as at December 31, 1999 and
at



                                       12
<PAGE>

March 31, 2000, and the related Consolidated and Consolidating statements of
income and cash flows of the Guarantor and its Subsidiaries for the fiscal year
and the fiscal quarter then ended, copies of which have been furnished to each
of the Agent and the Trustee, fairly present the Consolidated and Consolidating
financial condition of the Guarantor and its Subsidiaries as at such dates and
the Consolidated and Consolidating results of operations of the Guarantor and
its Subsidiaries for the year and quarter ended on such dates, all in accordance
with GAAP consistently applied subject, in the case of the March 31, 2000
financial statements, to normal, year-end audit adjustments. Except as set forth
in the Public Filings, since March 31, 2000, there has been no material adverse
change in the condition or operations of the Guarantor or its Subsidiaries.

                  (f) Litigation. Except as set forth in the Public Filings or
as otherwise disclosed in writing by the Guarantor to the Agent and the Trustee
after the date hereof and approved by the Majority Purchasers, there is no
pending or, to the knowledge of the Guarantor, threatened action or proceeding
affecting the Guarantor, any Material Subsidiary of the Guarantor or any WCG
Subsidiary before any Governmental Authority, which could reasonably be expected
to have a Material Adverse Effect or which purports to affect the legality,
validity, binding effect or enforceability of this Agreement or any other
Operative Document.

                  (g) Investment Company. The Guarantor is not an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.

                  (h) ERISA. No Termination Event has occurred or is reasonably
expected to occur with respect to any Plan that could reasonably be expected to
have a Material Adverse Effect on the Guarantor or any Material Subsidiary of
the Guarantor (including any material WCG Subsidiary). Neither the Guarantor nor
any ERISA Affiliate of the Guarantor has received any notification that any
Multiemployer Plan is in reorganization or has been terminated, within the
meaning of Title IV of ERISA, and the Guarantor is not aware of any reason to
expect that any Multiemployer Plan is to be in reorganization or to be
terminated within the meaning of Title IV of ERISA that could reasonably be
expected to have a Material Adverse Effect on the Guarantor or any Material
Subsidiary of the Guarantor (including any material WCG Subsidiary) or any ERISA
Affiliate of the Guarantor.

                  (i) Taxes. As of the date of this Agreement, the United States
federal income tax returns of the Guarantor and the Material Subsidiaries of the
Guarantor have been examined through the fiscal year ended December 31, 1995.
The Guarantor and the Subsidiaries of the Guarantor have filed all United States
Federal income tax returns and all other material domestic tax returns which are
required to be filed by them and have paid, or provided for the payment before
the same become delinquent of, all taxes due pursuant to such returns or
pursuant to any assessment received by the Guarantor or any such Subsidiary,
other than those taxes contested in good faith by appropriate proceedings. The
charges, accruals and reserves on the books of the Guarantor and the Material
Subsidiaries of the Guarantor in respect of taxes are adequate.

                  (j) PUHCA. The Guarantor is not a "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," or a "public
utility" within the meaning of the Public Utility Holding Company Act of 1935,
as amended.

                  (k) Environmental Matters. Except as set forth in the Public
Filings or as otherwise disclosed in writing by the Guarantor to the Trustee and
the Agent after the



                                       13
<PAGE>

date hereof and approved by the Majority Purchasers, the Guarantor and its
Material Subsidiaries are in compliance in all material respects with all
Environmental Protection Statutes to the extent material to their respective
operations or financial condition. Except as set forth in the Public Filings or
as otherwise disclosed in writing by the Guarantor to the Trustee and the Agent
after the date hereof and approved by the Majority Purchasers, the aggregate
contingent and non-contingent liabilities of the Guarantor and its Subsidiaries
(other than those reserved for in accordance with GAAP and set forth in the
financial statements regarding the Guarantor referred to in Section 3.01(e) and
delivered to the Trustee and the Agent and excluding liabilities to the extent
covered by insurance if the insurer has confirmed that such insurance covers
such liabilities or which the Guarantor reasonably expects to recover from
ratepayers) which are reasonably expected to arise in connection with (i) the
requirements of Environmental Protection Statutes or (ii) any obligation or
liability to any Person in connection with any Environmental matters (including,
without limitation, any release or threatened release (as such terms are defined
in the Comprehensive Environmental Response, Compensation and Liability Act of
1980) of any Hazardous Waste, Hazardous Substance, other waste, petroleum or
petroleum products into the Environment) could not reasonably be expected to
have a Material Adverse Effect on the business, assets, condition or operations
of the Guarantor and any Subsidiaries of the Guarantor, taken as a whole. For
purposes of this clause (k) of Section 3.01, Subsidiaries shall be deemed to
include WCG Subsidiaries.

                  (l) Compliance with Law. The Guarantor is not in material
violation of any Law (other than Environmental Protection Statutes, which are
the subject of Section 3.01(k) hereof) with respect to the Property or any part
thereof or with respect to its business, if any, related to the Property. The
Guarantor has not received any notice of, or citation for, any violation of any
Law which has not been resolved, which notice or citation relates to the
ownership or operation of the Property or any part thereof.

                  (m) Ownership. The Guarantor owns, directly or indirectly,
approximately 85% of the Voting Stock of WCG, the Lessee and each of the other
Relevant Subsidiaries.

                  (n) Full Disclosure. No statement or material furnished by or
on behalf of the Guarantor or any Relevant Subsidiary to the Collateral Agent,
the Agent, the Purchasers, the Trustee, Special Counsel or Trustee's Special
Counsel, in connection with any Operative Document or any transaction
contemplated thereby, contains any untrue statement of a material fact or omits
a material fact necessary to make the statements contained therein not
misleading.

                  Section 3.02 Satisfaction of Conditions Under Participation
Agreement. Upon the making of any Advance under the Participation Agreement, the
Guarantor shall be deemed (immediately prior to, and immediately after giving
effect to, such Advance) to have repeated and reaffirmed to the Trustee, the
Collateral Agent, the Agent, and the Purchasers on the date of such Advance each
of its representations and warranties under this Agreement as if stated on such
date.



                                       14
<PAGE>

                                   ARTICLE IV

                           COVENANTS OF THE GUARANTOR


                  Section 4.01 Affirmative Covenants. So long as any Instrument
or Guaranteed Obligation shall remain unpaid, the Guarantor will, unless the
Trustee, the Collateral Agent, the Agent, the APA Agent and the Majority
Purchasers shall otherwise consent in writing:

                  (a) Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, in all material respects with all applicable Laws
(except where failure to comply could not reasonably be expected to have a
Material Adverse Effect or create any Trust Liability), such compliance to
include, without limitation, the payment and discharge before the same become
delinquent of all taxes, assessments and governmental charges or levies imposed
upon it or any of its Subsidiaries or upon any of its property or any property
of any of its Subsidiaries, and all lawful claims which, if unpaid, might become
a Lien upon any property of it or any of its Subsidiaries, provided that neither
the Guarantor nor any Subsidiary of the Guarantor shall be required to pay any
such tax, assessment, charge, levy or claim which is being contested in good
faith and by proper proceedings and with respect to which reserves in conformity
with GAAP, if required by GAAP, have been provided on the books of the Guarantor
or such Subsidiary, as the case may be.

                  (b) Reporting Requirements. Furnish to the Trustee, the Agent
and each of the Purchasers:

                  (i) as soon as possible and in any event within five days
         after the occurrence of each Guaranty Default or each event which, with
         the giving of notice or lapse of time or both, would constitute an
         Guaranty Default, continuing on the date of such statement, a statement
         of an authorized financial officer of the Guarantor setting forth the
         details of such Guaranty Default or event and the actions, if any,
         which the Guarantor has taken and proposes to take with respect
         thereto;

                 (ii) as soon as available and in any event not later than 60
         days after the end of each of the first three quarters of each fiscal
         year of the Guarantor, the Consolidated and Consolidating balance sheet
         of the Guarantor and its Subsidiaries as of the end of such quarter and
         the Consolidated and Consolidating statements of income and cash flows
         of the Guarantor and its Subsidiaries for the period commencing at the
         end of the previous year and ending with the end of such quarter, all
         in reasonable detail and duly certified (subject to year-end audit
         adjustments) by an authorized financial officer of the Guarantor as
         having been prepared in accordance with GAAP, provided, that, if any
         financial statements referred to in this clause (ii) of Section 4.01(b)
         is readily available on-line through EDGAR, the Guarantor shall not be
         obligated to furnish copies of such financial statement. An authorized
         financial officer of the Guarantor shall furnish a certificate (a)
         stating that he has no knowledge that a Guaranty Default, or an event
         which, with notice or lapse of time or both, would constitute a
         Guaranty Default has occurred and is continuing or, if a Guaranty
         Default or such an event



                                       15
<PAGE>

         has occurred and is continuing, a statement as to the nature thereof
         and the action, if any, which the Guarantor proposes to take with
         respect thereto, and (b) showing in detail the calculation supporting
         such statement in respect of Section 4.02(b), provided that for the
         purposes of clauses (b)(ii) and (b)(iii) of this Section 4.01,
         "Subsidiaries" when used in relation to a Consolidated balance sheet
         and the related statements of income and cash flow shall include the
         WCG Subsidiaries;

                (iii) as soon as available and in any event not later than 105
         days after the end of each fiscal year of the Guarantor, a copy of the
         annual audit report for such year for the Guarantor and its
         Subsidiaries, including therein the Consolidated and Consolidating
         balance sheet of the Guarantor and its Subsidiaries as of the end of
         such fiscal year and the Consolidated and Consolidating statements of
         income and cash flows of the Guarantor and its Subsidiaries for such
         fiscal year, in each case prepared in accordance with GAAP and
         certified by Ernst & Young, LLP or other independent certified public
         accountants of recognized standing acceptable to the Trustee, the Agent
         and the Majority Purchasers, provided, that, if any financial statement
         referred to in this clause (iii) of Section 4.02(b) is readily
         available on-line through EDGAR, the Guarantor shall not be obligated
         to furnish such financial statements. The Guarantor shall also deliver
         in conjunction with such financial statements a certificate of such
         accounting firm to the Trustee, the Agent and the Purchasers (a)
         stating that, in the course of the regular audit of the business of the
         Guarantor and its Subsidiaries, which audit was conducted by such
         accounting firm in accordance with generally accepted auditing
         standards, such accounting firm has obtained no knowledge that a
         Guaranty Default or an event which, with notice or lapse of time or
         both, would constitute a Guaranty Default, has occurred and is
         continuing, or if, in the opinion of such accounting firm, a Guaranty
         Default or such an event has occurred and is continuing, a statement as
         to the nature thereof, and (b) showing in detail the calculations
         supporting such statement in respect of Section 4.02(b);

                 (iv) such other information respecting the business or
         properties, or the condition or operations, financial or otherwise, of
         the Guarantor or any of its Material Subsidiaries as any Purchaser
         through the Agent may from time to time reasonably request;

                  (v) promptly after the sending or filing thereof, copies of
         all proxy material, reports and other information which the Guarantor
         sends to any of its security holders, and copies of all final reports
         and final registration statements which the Guarantor or any Material
         Subsidiary of the Guarantor files with the Securities and Exchange
         Commission or any national securities exchange, provided, that, if such
         proxy materials and reports, registration statements and other
         information are readily available on-line through EDGAR, the Guarantor
         or Material Subsidiary shall not be obligated to furnish copies
         thereof;

                 (vi) as soon as possible and in any event within 30 Business
         Days after the Guarantor or any ERISA Affiliate of the Guarantor knows
         or has reason to



                                       16
<PAGE>

         know (A) that any Termination Event described in clause (i) of the
         definition of Termination Event with respect to any Plan has occurred
         that could have a Material Adverse Effect on the Guarantor, any
         Material Subsidiary of the Guarantor (including any material WCG
         Subsidiary) or any ERISA Affiliate of the Guarantor or (B) that any
         other Termination Event with respect to any Plan has occurred or is
         reasonably expected to occur that could have a Material Adverse Effect
         on the Guarantor, any Material Subsidiary of the Guarantor (including
         any material WCG Subsidiary) or any ERISA Affiliate of the Guarantor, a
         statement of the chief financial officer or chief accounting officer of
         the Guarantor describing such Termination Event and the action, if any,
         which the Guarantor, such Subsidiary or such ERISA Affiliate of the
         Guarantor proposes to take with respect thereto;

                (vii) promptly and in any event within 25 Business Days after
         receipt thereof by the Guarantor or any ERISA Affiliate of the
         Guarantor, copies of each notice received by the Guarantor or any ERISA
         Affiliate of the Guarantor from the PBGC stating its intention to
         terminate any Plan or to have a trustee appointed to administer any
         Plan;

               (viii) within 30 days following request therefor by any
         Purchaser, copies of each Schedule B (Actuarial Information) to each
         annual report (Form 5500 Series) of the Guarantor or any ERISA
         Affiliate of the Guarantor with respect to each Plan;

                 (ix) promptly and in any event within 25 Business Days after
         receipt thereof by the Guarantor or any ERISA Affiliate of the
         Guarantor from the sponsor of a Multiemployer Plan, a copy of each
         notice received by the Guarantor or any ERISA Affiliate of the
         Guarantor concerning (A) the imposition of a Withdrawal Liability by a
         Multiemployer Plan, (B) the determination that a Multiemployer Plan is,
         or is expected to be, in reorganization within the meaning of Title IV
         of ERISA, (C) the termination of a Multiemployer Plan within the
         meaning of Title IV of ERISA, or (D) the amount of liability incurred,
         or expected to be incurred, by the Guarantor or any ERISA Affiliate of
         the Guarantor in connection with any event described in clause (A), (B)
         or (C) above that, in each case, could have a Material Adverse Effect
         on the Guarantor or any ERISA Affiliate of the Guarantor;

                  (x) not more than 60 days (or 105 days in the case of the last
         fiscal quarter of a fiscal year of the Guarantor) after the end of each
         fiscal quarter of the Guarantor, a certificate of an authorized
         financial officer of the Guarantor stating the respective ratings, if
         any, by each of S&P and Moody's of the senior unsecured long-term debt
         of the Guarantor as of the last day of such quarter;

                 (xi) promptly after any withdrawal or termination of or any
         change in, or issuance, withdrawal or termination of, the rating of any
         senior unsecured long-term debt of the Guarantor by S&P or Moody's,
         written notice thereof;



                                       17
<PAGE>

                (xii) as soon as available and in any event not later than 60
         days after the end of each of the first three quarters of each fiscal
         year of WCG, the Consolidated unaudited balance sheet of WCG and its
         Subsidiaries as of the end of such quarter and the Consolidated
         statements of income and cash flows of WCG and its Subsidiaries for the
         period commencing at the end of the previous year and ending with the
         end of such quarter, all in reasonable detail and duly certified by an
         authorized financial officer of WCG; and

               (xiii) as soon as available and in any event not later than 105
         days after the end of each fiscal year of WCG, the Consolidated
         unaudited balance sheet of WCG and its Subsidiaries as of the end of
         such fiscal year and the Consolidated statements of income and cash
         flows of WCG and its Subsidiaries for such fiscal year, certified by an
         authorized financial officer of WCG.

                  (c) Maintenance of Insurance. Maintain, and cause each of its
Material Subsidiaries to maintain, insurance with responsible and reputable
insurance companies or associations in such amounts and covering such risks as
is usually carried by companies engaged in similar businesses and owning similar
properties in the same general areas in which the Guarantor or its Subsidiaries
operate, provided that the Guarantor or any of its Subsidiaries may self-insure
to the extent and in the manner normal for companies of like size, type and
financial condition, except as otherwise provided in the Lease.

                  (d) Preservation of Corporate Existence, Etc. Preserve and
maintain, and cause each of its Subsidiaries to preserve and maintain, its
corporate existence, rights, franchises and privileges in the jurisdiction of
its incorporation, and qualify and remain qualified, and cause each Subsidiary
to qualify and remain qualified, as a foreign corporation in each jurisdiction
in which qualification is necessary or desirable in view of its business and
operations or the ownership of its properties, except (i) where the failure of
the Guarantor or any Subsidiary of the Guarantor to preserve and maintain such
rights, franchises and privileges and to so qualify and remain qualified could
not reasonably be expected to have a Material Adverse Effect or create any Trust
Liability, (ii) the Guarantor and its Subsidiaries may consummate any merger or
consolidation permitted pursuant to Section 4.02(c) and (iii) the Guarantor and
any Subsidiary of the Guarantor may be converted into a limited liability
company by statutory election; provided that any such conversion of the
Guarantor shall not affect its obligations to the Trustee, the Agent or the
Purchasers pursuant to this Agreement.

                  (e) Ranking of Obligations. Assure, and cause each Relevant
Subsidiary to assure, that their obligations under this Agreement and the other
Operative Documents to which any Relevant Subsidiary is a party, respectively,
rank and will rank at all times at least equally and ratably in all respects
with all their respective other unsecured indebtedness.

                  Section 4.02 Negative Covenants. So long as any Instrument or
Guaranteed Obligation shall remain unpaid, the Guarantor will not, without the
written consent of the Trustee, the Agent, the APA Agent and the Majority
Purchasers:

                  (a) Liens, Etc. Create, assume, incur or suffer to exist, or
permit any of its Subsidiaries to create, assume, incur or suffer to exist, any
Lien on or in respect of any of its property, whether now owned or hereafter
acquired, or assign or otherwise convey, or permit any such Subsidiary to assign
or otherwise convey, any right to receive



                                       18
<PAGE>

income, in each case to secure or provide for the payment of any Debt of any
Person, except Permitted Liens.

                  (b) Debt. Permit the ratio of (A) the aggregate amount of Net
Debt of the Guarantor to (B) the sum of the Consolidated Net Worth of the
Guarantor plus Net Debt of the Guarantor to exceed 0.65 to 1.0 at any time.

                  (c) Merger and Sale of Assets. Merge or consolidate with or
into any other Person, or sell, lease or otherwise transfer all or substantially
all of its assets, or permit any of its Material Subsidiaries to merge or
consolidate with or into any other Person, or sell, lease or otherwise transfer
all or substantially all of its assets, except that this Section 4.02(c) shall
not prohibit:

                  (i) the Guarantor and its Subsidiaries from selling, leasing
         or otherwise transferring their respective assets in the ordinary
         course of business;

                 (ii) any merger, consolidation or sale, lease or other transfer
         of assets involving only TWC and its Subsidiaries; provided, however,
         that transactions under this paragraph (ii) shall be permitted if, and
         only if, (x) there shall not exist or result an Event of Default or an
         event which with notice or lapse of time or both would constitute an
         Event of Default and (y) in the case of each transaction referred to in
         this paragraph (ii) involving the Guarantor or any of its Subsidiaries,
         such transaction could not reasonably be expected to impair materially
         the ability of the Guarantor or its Subsidiaries to perform its
         obligations under this Agreement and the other Operative Documents and
         the Guarantor and Lessee shall continue to exist;

                (iii) the Guarantor and its Subsidiaries from selling, leasing
         or otherwise transferring their respective gathering assets and other
         production area facilities, or the stock of any Person substantially
         all of the assets of which are gathering assets and other production
         area facilities, to TWC or to any Subsidiary of TWC for consideration
         that is not materially less than the net book value of such assets and
         facilities; provided, however, that transactions under this paragraph
         (iii) shall be permitted if, and only if, there shall not exist or such
         transaction should not result in an Event of Default or an event which
         with notice or lapse of time or both would constitute an Event of
         Default;

                 (iv) sales of receivables of any kind by the Guarantor or any
         of its Subsidiaries other than the Lessee in respect of any amounts due
         under the Lease or any other Operative Documents.

                  (d) Agreements to Restrict Dividends and Certain Transfers.
Enter into or suffer to exist, or permit any of its Subsidiaries to enter into
or suffer to exist, any consensual encumbrance or restriction on the ability of
any Subsidiary of the Guarantor (i) to pay, directly or indirectly, dividends or
make any other distributions in respect of its capital stock or pay any Debt or
other obligation owed to the Guarantor or to any Subsidiary of the Guarantor; or
(ii) to make loans or advances to the Guarantor or any Subsidiary of the
Guarantor, except (1) those encumbrances and restrictions existing on the date
hereof, (2) other customary encumbrances and restrictions now or hereafter
existing of the Guarantor or any of its Subsidiaries entered into in the
ordinary course of



                                       19
<PAGE>

business that are not more restrictive in any material respect than the
encumbrances and restrictions with respect to the Guarantor or its Subsidiaries
existing on the date hereof.

                  (e) Loans and Advances; Investments. Make or permit to remain
outstanding, or allow any of its Subsidiaries to make or permit to remain
outstanding, any loan or advance to, or own, purchase or acquire any obligations
or debt securities of, any WCG Subsidiary, except that the Guarantor and its
Subsidiaries may permit to remain outstanding loans and advances to a WCG
Subsidiary existing as of the date hereof and listed on Exhibit B hereof (and
such WCG Subsidiaries may permit such loans and advances on Exhibit B to remain
outstanding). Except for those investments in existence on the date hereof and
listed on Exhibit B hereof, the Guarantor shall not, and the Guarantor shall not
permit any of its Subsidiaries to, acquire or otherwise invest in any stock or
other equity or other ownership interest in a WCG Subsidiary.

                  (f) Maintenance of Ownership of Certain Subsidiaries. Sell,
issue or otherwise dispose of, or create, assume, incur or suffer to exist any
Lien on or in respect of, or permit any of its Subsidiaries to sell, issue or
otherwise dispose of or create, assume, incur or suffer to exist any Lien on or
in respect of, any shares of or any interest in any shares of the capital stock
or other ownership interests of (i) any Relevant Subsidiary or any of their
respective Material Subsidiaries or (ii) any Subsidiary of the Guarantor at the
time it owns any shares of or any interest in any shares of the capital stock or
other ownership interests of any Relevant Subsidiary or any of their respective
Material Subsidiaries; provided, however, that, this Section 4.02(f) shall not
prohibit the sale or other disposition of the stock of any Subsidiary of the
Guarantor to the Guarantor or any Wholly-Owned Subsidiary of the Guarantor if,
but only if, (x) there shall not exist or result an Event of Default or an event
which with notice or lapse of time or both would constitute an Event of Default
and (y) in the case of each sale or other disposition referred to in this
proviso involving the Guarantor or any of its Subsidiaries, such sale or other
disposition could not reasonably be expected to impair materially the ability of
the Guarantor or its Subsidiaries to perform its obligations under this
Agreement and the other Operative Documents and the Guarantor and the Lessee
shall continue to exist. Nothing herein shall be construed to permit the
Guarantor or any Subsidiary of the Guarantor to purchase shares, any interest in
shares or any ownership interest in a WCG Subsidiary except as permitted by
clause (e) of this Section 4.02.

                  (g) Compliance with ERISA. (i) Terminate, or permit any ERISA
Affiliate of the Guarantor to terminate, any Plan so as to result in any
material liability of the Guarantor or any Material Subsidiary of the Guarantor
(including any material WCG Subsidiary) or any such ERISA Affiliate to the PBGC,
or (ii) permit to exist any occurrence of any Termination Event with respect to
a Plan which would have a Material Adverse Effect on the Guarantor or any
Material Subsidiary of the Guarantor (including any material WCG Subsidiary).

                  (h) Transactions with Related Parties. Except as required or
expressly permitted by the Operative Documents, make any sale to, make any
purchase from, extend credit to, make payment for services rendered by, or enter
into any other transaction with, or permit any material Subsidiary of the
Guarantor to make any sale to, make any purchase from, extend credit to, make
payment for services rendered by, or enter into any other transaction with, any
Related Party of the Guarantor or of such Subsidiary unless as a whole such
sales, purchases, extensions of credit, rendition of services and other
transactions are (at the time such sale, purchase, extension of credit,
rendition of services or other transaction is entered into) on terms and
conditions reasonably fair in all material respects to the Guarantor or such
Subsidiary in the good faith judgment of the Guarantor.



                                       20
<PAGE>

                  (i) Guarantees. Guarantee or otherwise become contingently
liable for, or permit any of its Subsidiaries to guarantee or otherwise become
contingently liable for, Debt or any other obligation of any WCG Subsidiary or
to otherwise insure a WCG Subsidiary against loss.

                  (j) Sale and Lease-Back Transactions. Enter into, or permit
any of its Subsidiaries to enter into, any Sale and Lease-Back Transaction, if
after giving effect thereto the Guarantor would not be permitted to incur at
least $1.00 of additional Debt secured by a Lien permitted by paragraph (z) of
Schedule 1.


                                    ARTICLE V

                                    REMEDIES


                  Section 5.01 Remedies. A Guaranty Default shall constitute an
Event of Default under the Participation Agreement and the other Operative
Documents. If a Guaranty Default or other Event of Default has occurred and is
continuing, the Trustee, the Collateral Agent, the Agent and the APA Agent may
exercise any of the rights or remedies granted to the Guaranteed Parties under
the Operative Documents. This Agreement may be enforced as to any one or more
Guaranty Defaults or other Events of Default either separately or cumulatively.


                                   ARTICLE VI

                               NATURE OF AGREEMENT


                  Section 6.01 Nature of Guaranty. This Agreement is (a)
irrevocable, unconditional and absolute; (b) a guaranty of payment, performance
and compliance and not of collection; and (c) in no way conditioned or
contingent upon any attempt to collect from or enforce performance or compliance
by any Relevant Subsidiary or any other Subsidiary or any assignees or
sublessees of any Relevant Subsidiary or any other Subsidiary, or upon any other
event, contingency or circumstance whatsoever. This Agreement and the Guaranteed
Obligations shall be binding upon and against the Guarantor without regard to
the validity or enforceability of any of the Operative Documents or the
Securitization Documents or any provision thereof and the Guarantor hereby
waives any defense relating to the enforceability of such documents or any
provision contained therein. The Guarantor also agrees to pay to the Guaranteed
Parties such further amounts as shall be sufficient to cover the costs of
collecting or enforcing the Guaranteed Obligations or otherwise enforcing this
Agreement (including reasonable fees, expenses and disbursements of their
counsel).

                  Section 6.02 Survival. The obligations of the Guarantor under
this Agreement shall survive in accordance with Section 8.01 of the
Participation Agreement.

                  Section 6.03 Waivers. The Guarantor hereby unconditionally (a)
waives any requirement that the Guaranteed Parties or any other Person first
make demand upon, or seek to enforce remedies against, any other Person or any
collateral or property of such other Person before demanding payment from, or
seeking to enforce this Agreement against, the Guarantor; (b) covenants that
this Agreement will not be discharged and shall survive in accordance with
Section 8.01 of the Participation Agreement; (c) agrees that this Agreement
shall remain in full effect without regard to, and shall not be affected or



                                       21
<PAGE>

impaired by, any invalidity, irregularity or unenforceability in whole or in
part of, any Operative Document (or any other document executed in connection
therewith), or any limitation of the liability of any Relevant Subsidiary or any
other Person thereunder, or any limitation on the method or terms of payment
thereunder which may now or hereafter be caused or imposed in any manner
whatsoever; and (d) except for notices expressly required under the Operative
Documents, waives diligence, notice of intent to accelerate, notice of default
and notice of acceleration, presentment and protest with respect to the payment
of any amount at any time payable under or in connection with the Operative
Documents or Securitization Documents. Notice of acceptance of this Agreement
and notice of execution, delivery and acceptance of any other instrument or
agreement referred to herein, are hereby waived by the Guarantor.

                  Section 6.04 The Guarantor's Obligations Unconditional. The
covenants, agreements and duties of the Guarantor set forth in this Agreement
shall not be subject to any counterclaim, setoff, deduction, diminution,
abatement, stay, recoupment, suspension, deferment, reduction or defense (other
than full and strict compliance or performance by the Guarantor with its
obligations hereunder) based upon any claim that the Guarantor, or any other
Person, may have against any Relevant Subsidiary, or any other Person, and shall
remain in full force and effect without regard to, and shall not be released,
discharged or in any way affected by, any circumstance or condition whatsoever
(whether or not the Guarantor or any Relevant Subsidiary shall have knowledge or
notice thereof or shall have assented thereto and notwithstanding the fact that
no rights were reserved against the Guarantor in connection therewith)
including:

                  (a) the validity, legality, regularity or enforceability of
         the Operative Documents, or any of the Guaranteed Obligations or any
         other collateral security therefor or guaranty or right of offset with
         respect thereto at any time or from time to time held by the Agent, the
         Trustee, the APA Agent, any Purchaser or any APA Purchaser;

                  (b) any amendment, modification, renewal, extension, addition,
         acceleration, deletion or supplement to, or termination of (in whole or
         in part) or other change in or waiver under the Operative Documents or
         any of the agreements referred to therein, or any other instrument or
         agreement applicable to any of the parties to such agreements or any
         assignment, mortgaging or transfer of any thereof or of any interest
         therein, or any furnishing or acceptance of additional security or any
         release of any security; or the failure of any security or the failure
         of any Person to perfect any interest in any such collateral;

                  (c) any failure, omission or delay on the part of any
         Guaranteed Party (i) to enforce, assert or exercise any right, power or
         remedy under any instrument or agreement referred to in clauses (a) or
         (b) above or any assignment of any thereof or (ii) to conform with any
         term of any such instrument or agreement (and notwithstanding that any
         demand for payment of any of the Guaranteed Obligations made by any
         Guaranteed Party shall have been rescinded by such party and any of the
         Guaranteed Obligations continued);

                  (d) any waiver, consent, extension, indulgence, compromise,
         surrender, release or other action or inaction under or in respect of
         any instrument



                                       22
<PAGE>

         or agreement referred to in clauses (a) or (b) above or of any
         agreement, covenant, term or condition contained therein or any
         obligation or liability of any Guaranteed Party or any exercise or
         non-exercise of any right, remedy, power or privilege under or in
         respect of any such instrument or agreement or any such obligation or
         liability (and notwithstanding that any collateral security, guaranty
         or right of offset at any time held by any Guaranteed Party for the
         payment of the Guaranteed Obligations shall have been sold, exchanged,
         waived, surrendered or released);

                  (e) the voluntary or involuntary liquidation, dissolution,
         sale of all or substantially all of the assets, marshaling of assets
         and liabilities, receiver-ship, conservatorship, insolvency,
         bankruptcy, assignment for the benefit of creditors, reorganization,
         arrangement, composition or readjustment of, or other similar
         proceeding with respect to the Guarantor, any Relevant Subsidiary or
         any Guaranteed Party or any other Person or any action taken by any
         trustee or receiver or by any court in any such proceeding;

                  (f) any defect in the title, compliance with specifications,
         conditions, design, operation or fitness for use of, or any damage to
         or loss or destruction of, or any interruption or cessation in the use
         or operation of the Property or any portion thereof by any Relevant
         Subsidiary or any other Person for any reason whatsoever (including,
         any Loss Event or Environmental Event) regardless of the duration
         thereof (even though such duration would otherwise constitute a
         frustration of the purpose of the Operative Documents, whether or not
         resulting from accident and whether or not without default on the part
         of any other Person;

                  (g) any assignment of the Operative Documents or subletting or
         sale of the Property or any part thereof;

                  (h) any merger or consolidation of the Guarantor or any
         Relevant Subsidiary into or with any other Person or any sale, lease,
         transfer, divestiture or other disposition of any or all of the assets
         of the Guarantor or any Relevant Subsidiary to any other Person (and
         regardless of whether such transactions are permitted under the
         Operative Documents);

                  (i) any change in the ownership of any shares of capital stock
         of the Guarantor or any Relevant Subsidiary;

                  (j) any attachment, claim, demand, charge, lien, levy, order,
         process, encumbrance or any other happening or event or reason, similar
         or dissimilar to the foregoing; or any withholding or diminution at the
         source, by reason of any Charges, expenses, indebtedness, obligations
         or liabilities of any character, foreseen or unforeseen, and whether or
         not valid, incurred by or against any Person; or any claims, demands,
         charges or liens of any nature, foreseen or unforeseen, incurred by any
         Person, or against any sums payable under this Agreement, so that such
         sums would be rendered inadequate or would be unavailable to make the
         payments herein provided;



                                       23
<PAGE>

                  (k) any order, judgment, decree, ruling or regulation (whether
         or not valid) of any court or any Governmental Authority or any other
         action, happening, event or reason whatsoever which shall delay,
         interfere with, hinder or prevent, or in any way adversely affect, the
         performance by the Guarantor or any Relevant Subsidiary under the
         Operative Documents or any assignments thereof;

                  (l) any action or inaction or election of remedies by any
         Guaranteed Party, including any failure by any Guaranteed Party to
         protect, secure, perfect or insure any Lien at any time held by it as
         security for the Guaranteed Obligations or for this Agreement or any
         property subject thereto;

                  (m) any release, discharge or rejection of any Relevant
         Subsidiary for performance or payment of their obligations under the
         Operative Documents (including any release, discharge or rejection
         arising under any Bankruptcy Law or as a result of any bankruptcy or
         reorganization case affecting the Guarantor or any Relevant
         Subsidiary);

                  (n) any other occurrence or circumstance whatsoever, whether
         similar or dissimilar to the foregoing and any other circumstances that
         might otherwise constitute a legal or equitable defense or discharge of
         a guarantor, indemnitor or surety or that might otherwise limit
         recourse against the Guarantor;

                  (o) any change in circumstances, whether or not foreseen or
         foreseeable, whether or not imputable to the Guarantor or any
         Guaranteed Party and whether or not such change in circumstances shall
         or might in any manner and to any extent vary the risk of the Guarantor
         hereunder; or

                  (p) any other circumstance whatsoever (with or without notice
         to or knowledge of the Guarantor, the Relevant Subsidiaries or any of
         their Subsidiaries) which constitutes, or might be construed to
         constitute, an equitable or legal discharge of any of their obligations
         under the Operative Documents in bankruptcy or in any other instance.

The obligations of the Guarantor set forth in this Agreement constitute the full
recourse obligations of the Guarantor enforceable against it to the full extent
of all its assets and properties, notwithstanding any provisions in any
agreements from time to time relating to the acquisition, financing and
refinancing by the Trustee of its interest in the Property which may limit the
liability of the Trustee or any other Person pursuant to such agreements.


                                   ARTICLE VII

                                   BANKRUPTCY


                  Section 7.01 No Subrogation. THE GUARANTOR HEREBY WAIVES (FOR
ALL PERIODS OF TIME THAT THE GUARANTEED OBLIGATIONS HAVE NOT BEEN IRREVOCABLY
PAID IN FULL) ANY AND ALL RIGHTS OF



                                       24
<PAGE>

SUBROGATION, INDEMNITY, CONTRIBUTION OR REIMBURSEMENT, ANY BENEFIT OF, OR RIGHT
TO ENFORCE ANY REMEDY THAT THE GUARANTEED PARTIES NOW HAVE OR MAY HEREAFTER HAVE
AGAINST EACH OF THE RELEVANT SUBSIDIARIES IN RESPECT OF THE GUARANTEED
OBLIGATIONS, OR ANY PROPERTY, NOW OR HEREAFTER HELD BY THE AGENT, THE COLLATERAL
AGENT, THE TRUSTEE OR THE PURCHASERS AS SECURITY FOR THE GUARANTEED OBLIGATIONS
AND ANY AND ALL SIMILAR RIGHTS THE GUARANTOR MAY HAVE AGAINST EACH OF THE
RELEVANT SUBSIDIARIES UNDER APPLICABLE LAW OR OTHERWISE. If, notwithstanding the
foregoing, any amount shall be paid to the Guarantor on account of any such
subrogation, indemnity, contribution or reimbursement rights at any time, such
amount shall be held in trust for the benefit of the Guaranteed Parties and
shall forthwith be paid to the Trustee to be credited and applied against the
Guaranteed Obligations, whether matured, unmatured, absolute or contingent, as
the Agent and the Trustee may see fit in their discretion.

                  Section 7.02 Reinstatement. Notwithstanding anything to the
contrary herein contained, this Agreement and all obligations of the Guarantor
hereunder, shall continue to be effective or be reinstated, as applicable, if at
any time, payment, or any part thereof, of any or all obligations performed by
the Guarantor or any Relevant Subsidiary are rescinded, invalidated, or
otherwise required to be restored or returned by any Guaranteed Party pursuant
to any Bankruptcy Law or upon the insolvency, bankruptcy or reorganization of
the Guarantor or any Relevant Subsidiary (or otherwise) all as though such
payment or application of proceeds had not been made. Without limiting the
generality of the foregoing, if prior to any such rescission, invalidation,
declaration, restoration or return, this Agreement or any other Operative
Document shall have been canceled or surrendered, this Agreement and the
Guaranteed Obligations shall be reinstated in full force and effect, and such
prior cancellation or surrender shall not diminish, release, discharge, impair
or otherwise affect the obligations of the Guarantor in respect of the amount of
the affected payment or application of proceeds (or any Lien or collateral
securing such obligation).

                  Section 7.03 Non-Discharged Obligations. Notwithstanding (a)
any modification, discharge or extension of the obligations of the Guarantor
hereunder or the obligations of any Relevant Subsidiary under the Operative
Documents, (b) any disallowance of all or any portion of any Guaranteed Party's
claim for repayment or performance of such obligations, (c) any use of cash or
other collateral pursuant to any Bankruptcy Law or in any bankruptcy or
reorganization case, (d) any agreement or stipulation as to adequate protection
pursuant to any Bankruptcy Law or in any bankruptcy or reorganization case, (e)
any failure by any Guaranteed Party to file or enforce a claim against the
Guarantor, any Relevant Subsidiary or its estate pursuant to any Bankruptcy Law
or in any bankruptcy or reorganization case, or (f) any release, discharge,
rejection, amendment, modification, stay or cure of the rights or obligations of
any Guaranteed Party, the Guarantor or any Relevant Subsidiary that may occur
pursuant to any Bankruptcy Law or in any bankruptcy or reorganization case or
proceeding affecting such parties, whether permanent or temporary, and whether
assented to by any Guaranteed Party, the Guarantor hereby agrees that the
Guarantor shall be obligated to perform hereunder.



                                       25
<PAGE>

                                  ARTICLE VIII

                                  MISCELLANEOUS


                  Section 8.01 Notices. All notices, consents, offers,
directions, approvals, instructions, requests, and other communications given to
any Person pursuant to this Agreement shall be in writing and be given in the
manner set forth in the Participation Agreement, at the address set forth on the
signature page of this Agreement or at such other address as such party shall
designate by notice to each of the other parties to the Operative Documents.

                  Section 8.02 Immunity. The Guarantor represents and warrants
that it is not entitled to immunity from judicial proceedings and agrees that,
should the Trustee, the Agent, the Collateral Agent, the APA Agent or other
Person bring any judicial proceedings to enforce the liability of the Guarantor
under this Agreement, no immunity from such proceedings will be claimed by or on
behalf of the Guarantor or with respect to the Guarantor's property. Nothing in
this Section 8.02 shall affect the right of the Trustee, the Agent, the
Collateral Agent, the APA Agent or any other Person to serve process in any
manner permitted by Law or to commence legal proceedings or otherwise proceed
against the Guarantor in any court in which the Guarantor is subject to suit.

                  Section 8.03 Non-Exclusive Remedies. No right or remedy of any
Guaranteed Party under any Operative Document shall be exclusive of any other
right, power or remedy, but shall be cumulative and in addition to any other
right, power or remedy thereunder or now or hereafter existing by Law or in
equity and the exercise by any Guaranteed Party of any one or more of such
rights, powers or remedies shall not preclude the simultaneous or further
exercise of any or all of such other rights, powers or remedies. Any failure to
insist upon the strict performance of any provision hereof or to exercise any
option, right, power or remedy contained herein shall not constitute a waiver or
relinquishment thereof for the future. Receipt by any Guaranteed Party of any
amount payable under any Operative Document with knowledge of a Default or Event
of Default shall not constitute a waiver of such Default or Event of Default,
and no waiver by any Guaranteed Party of any provision of the Operative
Documents shall be deemed to be made unless made in writing. The Guaranteed
Parties shall be entitled to injunctive relief in case of the violation or
attempted or threatened violation of any of the provisions of the Operative
Documents by any other party hereto, a decree compelling performance of any of
the provisions hereof, or any other remedy allowed by Law or in equity.

                  Section 8.04 Amendments and Waivers. All amendments, waivers,
consents, or approvals arising pursuant to this Agreement shall be consummated
in accordance with Section 8.04 of the Participation Agreement. No waiver by the
Guaranteed Parties of any Default or Event of Default shall in any way be, or be
construed to be, a waiver of any further or subsequent Default or Event of
Default.

                  Section 8.05 Severability. If any provision of this Agreement
or the application thereof to any Person or circumstance shall be invalid or
unenforceable, then the remaining provisions or the application of such
provision to Persons or circumstances other than those as to which it is invalid
or enforceable, shall continue to be valid and enforceable. The provisions of
this Section 8.05 shall not be construed to limit the rights of the Guaranteed
Parties to exercise remedies as a consequence of an Event of Default arising
pursuant to Section 6.01(o) of the Participation Agreement.



                                       26
<PAGE>

                  Section 8.06 Further Assurances. The Guarantor hereby agrees
to execute and deliver all such instruments and take all such action as the
Guaranteed Parties may from time to time reasonably request in order fully to
effectuate the purposes of this Agreement.

                  Section 8.07 Governing Law and Submission to Jurisdiction. (a)
THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK.

                  (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO ANY
OPERATIVE DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF
THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, THE GUARANTOR HEREBY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. THE GUARANTOR HEREBY IRREVOCABLY WAIVES
ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS. THIS
SUBMISSION TO JURISDICTION IS NONEXCLUSIVE AND DOES NOT PRECLUDE ANY GUARANTEED
PARTY FROM OBTAINING JURISDICTION OVER THE GUARANTOR IN ANY COURT OTHERWISE
HAVING JURISDICTION.

                  (c) THE GUARANTOR AND EACH GUARANTEED PARTY HEREBY (I)
IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW,
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO ANY OPERATIVE
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN; (II) IRREVOCABLY WAIVE, TO THE
MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER
IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (III) CERTIFY
THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR COUNSEL FOR ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS; AND (IV)
ACKNOWLEDGE THAT IT ENTERED INTO THIS AGREEMENT, AND THE TRANSACTIONS
CONTEMPLATED HEREBY AND THEREBY, BASED UPON AMONG OTHER THINGS THE MUTUAL
WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION.

                  Section 8.08 Time. Time is of the essence in this Agreement,
and the terms herein shall be so construed.

                  Section 8.09 Benefit. The parties hereto, the Purchasers and
their permitted successors and assigns (including participants in the
Instruments pursuant to Section 5.03 of the Participation Agreement), and any
successor Trustee or successor Collateral Agent or Agent appointed in accordance
with the provisions in the Operative Documents, or successor APA Agent appointed
in accordance with the provisions of the APA, but no others, shall be bound
hereby or entitled to the benefits hereof.



                                       27
<PAGE>

                  Section 8.10 Entire Agreement. The parties hereto hereby
acknowledge and agree that the Operative Documents represent all of the
agreements and understandings relating to the transactions contemplated by such
documents as between or among the Guaranteed Parties on the one hand and the
Guarantor and its Subsidiaries on the other hand and the parties hereto
acknowledge and agree that all prior written and oral agreements or
understandings between or among such Persons are hereby superseded in their
entirety. Notwithstanding the foregoing, the Guarantor agrees that the
beneficiaries of the Original Guaranty shall continue to have the benefit of the
Original Guaranty (in addition to this Agreement and any other rights they may
have under the Operative Documents, applicable Law or otherwise) and may enforce
the Original Guaranty in accordance with its terms in respect of any Guaranteed
Obligations or Guaranteed Instruments referred to therein, to the extent such
Guaranteed Obligations arose on or prior to the date hereof and remain unpaid or
unsatisfied on or after the date hereof or such Guaranteed Instruments remaining
outstanding and unpaid on or after the date hereof.

                  Section 8.11 Counterparts. The parties may sign this Agreement
in any number of counterparts and on separate counterparts, each of which shall
be an original but all of which when taken together shall constitute one and the
same instrument.

                  Section 8.12 Reliance. The Guarantor acknowledges that it has
not relied upon any statements, representations or warranties of any of the
Guaranteed Parties or any of their agents, representatives, counsel, officers or
directors in entering into or guaranteeing any of the Operative Documents,
except for the representations and warranties of SSBTC and State Street set
forth in Sections 3.02 and 3.03, respectively, of the Participation Agreement.

                  Section 8.13 Survival of Indemnities. All indemnities under
this Guaranty Agreement shall survive the termination of this Agreement, the
Lease and the other Operative Documents.

                  Section 8.14 APA. The Guarantor acknowledges the matters set
forth in Section 1.06(d) of the Participation Agreement and confirms that the
circumstances referred to therein shall not alter, diminish or otherwise impair
or affect the obligations of the Guarantor under this Agreement.

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first set forth above.



                                       28
<PAGE>


                      SIGNATURE PAGE FOR GUARANTY AGREEMENT



                                            THE WILLIAMS COMPANIES, INC.


                                            By:
                                                --------------------------------
                                                Name:  James G. Ivey
                                                Title: Treasurer

                                                Address for Notices:

                                                The Williams Companies, Inc..
                                                One Williams Center, Suite 500
                                                Tulsa, Oklahoma  74172
                                                Attention: Mr. James G. Ivey
                                                Facsimile: (918) 573-2065




<PAGE>
                     SIGNATURE PAGE FOR GUARANTY AGREEMENT


                                           STATE STREET BANK AND TRUST COMPANY
                                           OF CONNECTICUT, NATIONAL
                                           ASSOCIATION, in its individual
                                           capacity as its interests may appear
                                           in the Operative Documents, but
                                           otherwise not in its individual
                                           capacity but solely as Trustee


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

                                               Address for Notices:

                                               Two International Plaza
                                               Boston, Massachusetts  02110-2804
                                               Attention: Mr. Earl Dennison
                                               Telephone: (617) 664-5670
                                               Facsimile: (617) 664-5371


                                           STATE STREET BANK AND TRUST COMPANY,
                                           not in its individual capacity, but
                                           solely as Collateral Agent


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

                                               Address for Notices:

                                               Two International Plaza
                                               Boston, Massachusetts  02110-2804
                                               Attention: Mr. Earl Dennison
                                               Telephone: (617) 664-5670
                                               Facsimile: (617) 664-5371




<PAGE>
                     SIGNATURE PAGE FOR GUARANTY AGREEMENT


                                            CITIBANK N.A., as Agent


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

                                               Address for Notices:

                                               Citibank, N.A.
                                               1200 Smith Street, Suite 2000
                                               Houston, Texas  77002
                                               Attention: Ms. Lydia Junek
                                               Facsimile: (713) 654-2849

                                               with a copy to:

                                               Citibank, N.A., as Agent
                                               Two Penns Way, Suite 200
                                               New Castle, Delaware  19720
                                               Attention: Mr. Brian Maxwell
                                               Facsimile: (302) 894-6120


                                            CITIBANK, N.A., as APA Agent


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





<PAGE>

                                   SCHEDULE I

                                 PERMITTED LIENS


                  (a) Any purchase money Lien created by the Guarantor or any of
its Subsidiaries to secure all or part of the purchase price of any property (or
to secure a loan made to enable the Guarantor or any of its Subsidiaries to
acquire the property secured by such Lien), provided that the principal amount
of the Debt secured by any such Lien, together with all other Debt secured by a
Lien on such property, shall not exceed the purchase price of the property
acquired.

                  (b) Any Lien existing on any property at the time of the
acquisition thereof by the Guarantor or any of its Subsidiaries, whether or not
assumed by the Guarantor or any of its Subsidiaries, and any Lien on any
property acquired or constructed by the Guarantor or any of its Subsidiaries and
created not later than 12 months after (i) such acquisition or completion of
such construction or (ii) commencement of full operation of such property,
whichever is later; provided, however, that if assumed or created by the
Guarantor or any of its Subsidiaries, the principal amount of the Debt secured
by such Lien, together with all other Debt secured by a Lien on such property,
shall not exceed the purchase price of the property acquired and/or the cost of
the property constructed.

                  (c) Any Lien created or assumed by the Guarantor or any of its
Subsidiaries on any contract for the sale of any product or service or any
rights thereunder or any proceeds therefrom, including accounts and other
receivables, related to the operation or use of any property acquired or
constructed by the Guarantor or any of its Subsidiaries and created not later
than 12 months after (i) such acquisition or completion of such construction or
(ii) commencement of full operation of such property, whichever is later;
provided, however, that the principal amount of the Debt secured by such
mortgage together with all other Debt secured by any such contract, rights or
property, shall not exceed the purchase price of the property acquired and/or
the cost of the property constructed.

                  (d) Any Lien existing on any property of a Subsidiary of the
Guarantor at the time it becomes a Subsidiary of the Guarantor.

                  (e) Any refunding or extension of maturity, in whole or in
part, of any Lien created or assumed in accordance with the provisions of
paragraph (a), (b), (c) or (d) above or (j) below, provided that the principal
amount of the Debt secured by such refunding Lien or extended Lien shall not
exceed the principal amount of the Debt secured by the Lien to be refunded or
extended outstanding at the time of such refunding or extension and that such
refunding Lien or extended Lien shall be limited to the same property that
secured the Lien so refunded or extended.

                  (f) Mechanics' or materialmen's liens arising in the ordinary
course of business which are not more than 90 days past due or are being
contested in good faith by appropriate proceedings or any Lien arising by reason
of pledges or deposits to secure



                                     S-I-1
<PAGE>

payment of workmen's compensation or other insurance, good faith deposits in
connection with tenders or leases of real estate, bids or contracts (other than
contracts for the payment of money), in each case to secure obligations of the
Guarantor or any of its Subsidiaries.

                  (g) Deposits to secure public or statutory obligations,
deposits to secure or in lieu of surety, stay or appeal bonds and deposits as
security for the payment of taxes or assessments or other similar charges, in
each case to secure obligations of the Guarantor or any of its Subsidiaries;
provided, however, that the aggregate amount of obligations secured by Liens
permitted by this paragraph (g) shall not exceed 10% of Consolidated Tangible
Net Worth of the Guarantor.

                  (h) Any Lien arising by reason of deposits with or the giving
of any form of security to any governmental agency or any body created or
approved by law or governmental regulation for any purpose at any time as
required by law or governmental regulation (i) as a condition to the transaction
by the Guarantor or any of its Subsidiaries of any business or the exercise by
the Guarantor or any of its Subsidiaries of any privilege or license, (ii) to
enable the Guarantor or any of its Subsidiaries to maintain self-insurance or to
participate in any fund for liability on any insurance risks or (iii) in
connection with workmen's compensation, unemployment insurance, old age pensions
or other social security with respect to the Guarantor or any of its
Subsidiaries or to enable the Guarantor or any of its Subsidiaries to share in
the privileges or benefits required for companies participating in such
arrangements.

                  (i) Any Lien which is payable, both with respect to principal
and interest, solely out of the proceeds of oil, gas, coal or other minerals or
timber to be produced from the property subject thereto and to be sold or
delivered by the Guarantor or any of its Subsidiaries, including any interest of
the character commonly referred to as a "production payment".

                  (j) Any Lien created or assumed by a Subsidiary of the
Guarantor on oil, gas, coal or other mineral or timber property, owned or leased
by such Subsidiary to secure loans to such Subsidiary for the purposes of
developing such properties, including any interest of the character commonly
referred to as a "production payment"; provided, however, that neither the
Guarantor nor any other Subsidiary of the Guarantor shall assume or guarantee
such loans or otherwise be liable in respect thereto.

                  (k) Liens incurred in the ordinary course of business upon
rights-of-way.

                  (l) Undetermined mortgages and charges incidental to
construction or maintenance arising in the ordinary course of business which are
not more than 90 days past due or are being contested in good faith by
appropriate proceedings.

                  (m) The right reserved to, or vested in, any municipality or
governmental or other public authority or railroad by the terms of any right,
power, franchise, grant, license, permit or by any provision of law, to
terminate or to require annual or other periodic payments as a condition to the
continuance of such right, power, franchise, grant, license or permit.



                                     S-I-2
<PAGE>

                  (n) The Lien of taxes and assessments which are not at the
time delinquent.

                  (o) The Lien of specified taxes and assessments which are
delinquent but the validity of which is being contested in good faith by the
Guarantor or any of its Subsidiaries by appropriate proceedings and with respect
to which reserves in conformity with generally accepted accounting principles,
if required by such principles, have been provided on the books of the Guarantor
or the relevant Subsidiary of the Guarantor, as the case may be.

                  (p) The Lien reserved in leases entered into in the ordinary
course of business for rent and for compliance with the terms of the lease in
the case of real property leasehold estates.

                  (q) Defects and irregularities in the titles to any property
(including rights-of-way and easements) which are not material to the business,
assets, operations or financial condition of the Guarantor and its Subsidiaries
considered as a whole.

                  (r) Any Liens securing Debt neither assumed nor guaranteed by
the Guarantor or any of its Subsidiaries nor on which any of them customarily
pays interest, existing upon real estate or rights in or relating to real estate
(including rights-of-way and easements) acquired by the Guarantor or any of its
Subsidiaries for pipeline, metering station or right-of-way purposes, which
Liens were not created in anticipation of such acquisition and do not materially
impair the use of such property for the purposes for which it is held by the
Guarantor or such Subsidiary.

                  (s) Easements, exceptions or reservations in any property of
the Guarantor or any of its Subsidiaries granted or reserved in the ordinary
course of business for the purpose of pipelines, roads, telecommunication
equipment and cable, streets, alleys, highways, railroads, the removal of oil,
gas, coal or other minerals or timber, and other like purposes, or for the joint
or common use of real property, facilities and equipment, which do not
materially impair the use of such property for the purposes for which it is held
by the Guarantor or such Subsidiary.

                  (t) Rights reserved to or vested in any municipality or public
authority to control or regulate any property of the Guarantor or any of its
Subsidiaries, or to use such property in any manner which does not materially
impair the use of such property for the purposes for which it is held by the
Guarantor or such Subsidiary.

                  (u) Any obligations or duties, affecting the property of the
Guarantor or any of its Subsidiaries, to any municipality or public authority
with respect to any franchise, grant, license or permit.

                  (v) (i) The Liens of any judgments in an aggregate amount for
the Guarantor and all of its Subsidiaries not in excess of $5,000,000, execution
of which has not been stayed and (ii) the Liens of any judgments in an aggregate
amount for the Guarantor and all of its Subsidiaries not in excess of
$25,000,000, the execution of which has been stayed and which have been appealed
and secured, if necessary and permitted hereby, by the filing of an appeal bond.



                                     S-I-3
<PAGE>

                  (w) Zoning laws and ordinances.

                  (x) Any Lien existing on any office equipment, data processing
equipment (including computer and computer peripheral equipment), motor
vehicles, aircraft, marine vessels or similar transportation equipment.

                  (y) Any Lien consisting of interests in receivables in
connection with agreements for sales of receivables of any kind by the Guarantor
or any of its Subsidiaries for cash.

                  (z) Any Lien not permitted by paragraphs (a) through (y) above
or (aa) below securing Debt of the Guarantor and its Subsidiaries or securing
any Debt of the Guarantor and its Subsidiaries which constitutes a refunding or
extension of any such Debt if at the time of, and after giving effect to, the
creation or assumption of any such Lien, the sum of the aggregate of all Debt of
the Guarantor and its Subsidiaries secured by all such Liens not so permitted by
paragraphs (a) through (y) above or (aa) below plus the amount of Attributable
Obligations of the Guarantor and its Subsidiaries in respect of Sale and
Lease-Back Transactions permitted by Section 5.02(j) does not exceed 5% of the
sum of (i) Consolidated Tangible Net Worth of the Guarantor plus (ii) Debt of
the Guarantor and its Subsidiaries on a Consolidated basis.

                  (aa) Any overriding royalties or other rights of Pacific
Northwest Pipeline Corporation, a Delaware corporation ("Pacific") and Phillips
Petroleum Company ("Phillips") or their respective successors in interest under
a contract dated January 9, 1953, as amended, between Phillips and Pacific, to
which the Guarantor is successor in interest; and the obligations of the
Guarantor to surrender, transfer, release or reassign the leases or interests or
rights to which said instruments relate under the conditions and upon the
occurrence of the events specified in said instruments.

                  (bb) Any Lien created by the Guarantor or any of its
Subsidiaries on any contract (or any rights thereunder or proceeds therefrom)
providing for advances by the Guarantor or any of its Subsidiaries to finance
gas exploration and development, which Lien is created to secure only
indebtedness incurred to finance such advances.



                                     S-I-4
<PAGE>

                                    EXHIBIT A



               EXISTING LOANS AND INVESTMENTS IN WCG SUBSIDIARIES


Loan Agreement dated as of September 8, 1999 between Williams Communications,
Inc., as Borrower, and TWC, as Lender, filed as Exhibit 10.57 to WCG's Form
10-K/A for the fiscal year ended December 31, 1999.

Various immaterial intercompany receivables between TWC or its Subsidiaries and
the WCG Subsidiaries for services rendered, which are settled on a reasonably
prompt basis. Services are rendered to the WCG Subsidiaries by TWC or its
Subsidiaries pursuant to certain intercompany services agreements, all of which
are filed as exhibits to WCG's Form 10-K/A for the fiscal year ended December
31, 1999.

As of July 25, 2000, TWC's investment in WCG consists of 395,434,965 shares of
Class B common stock.




                                     S-I-5

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(R)
<SEQUENCE>9
<FILENAME>d93687ex10-r.txt
<DESCRIPTION>AMENDMENT, WAIVER AND CONSENT DATED 1/31/01
<TEXT>
<PAGE>
                                                                   EXHIBIT 10(r)

                          AMENDMENT, WAIVER AND CONSENT

              AMENDMENT, WAIVER AND CONSENT dated as of January 31, 2001 (this
"Agreement") by the undersigned persons (the "Parties").

                             PRELIMINARY STATEMENTS

                  A. The Parties are parties to certain Operative Documents
referred to in the Amended and Restated Participation Agreement dated as of
September 2, 1998 (the "Participation Agreement") among Williams Communications,
LLC, formerly Williams Communications, Inc. ("WCLLC"), State Street Bank and
Trust Company of Connecticut, National Association, not in its individual
capacity except as expressly set forth therein, but solely as Trustee (the
"Trustee"), the persons named therein as note purchasers and their permitted
successors and assigns (the "Note Holders"), the persons named therein as
certificate purchasers and their permitted successors and assigns (the
"Certificate Holders"), the persons named therein as APA Purchasers and their
permitted successors and assigns (the "APA Purchasers"), State Street Bank and
Trust Company ("State Street") not in its individual capacity but solely as
collateral agent (the "Collateral Agent"), and Citibank, N.A., in its capacity
as agent for the Note Holders and the Certificate Holders (the "Agent").

                  B. The Williams Companies, Inc. (the "Guarantor"), the
Trustee, the Collateral Agent, the Agent and Citibank, N.A., as agent for the
APA Purchasers, are parties to the Second Amended and Restated Guaranty
Agreement, dated as of August 17, 2000 (the "Guaranty").

                  C. WCLLC and the Guarantor have requested certain waivers and
amendments to the Guaranty, the Participation Agreement and Appendix A to the
Participation Agreement.

                  D. The Parties, other than WCLLC and the Guarantor, are
willing to consent to such waivers and amendments, subject to the terms and
conditions set forth in this Agreement.

              NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Parties agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

                  1.1 Defined Terms. As used in this Agreement, (i) terms
defined in the first paragraph, preliminary statements or other sections of this
Agreement shall have the meanings set forth therein, and (ii) capitalized terms
used in this Agreement and not otherwise defined herein shall have the meanings
set forth in Appendix A to the Participation Agreement and the other Operative
Documents referred to therein.



<PAGE>

                                   ARTICLE II

                             AMENDMENTS AND WAIVERS

                  2.1 Amendment of Section 1.01. Section 1.01 of the Guaranty is
hereby amended as follows:

                  (a) The definition of "Consolidated Net Worth" in such Section
         1.01 is hereby amended and restated to read in its entirety as follows:

                           "Consolidated Net Worth" of any Person means the Net
                  Worth of such Person and its Subsidiaries on a Consolidated
                  basis plus, in the case of the Guarantor, the Designated
                  Minority Interests to the extent not otherwise included;
                  provided that, in no event shall the value ascribed to
                  Designated Minority Interests for the Subsidiaries of the
                  Guarantor described in clauses (i) through (v) and (vii) of
                  the definition of 'Designated Minority Interests' exceed
                  $136,892,000 in the aggregate.

                  (b) The definition of "Debt" in such Section 1.01 is hereby
         amended and restated to read in its entirety as follows:

                           "Debt" means, in the case of any Person, (i)
                  indebtedness of such Person for borrowed money, (ii)
                  obligations of such Person evidenced by bonds, debentures or
                  notes, (iii) obligations of such Person to pay the deferred
                  purchase price of property or services (other than trade
                  payables not overdue by more than 60 days incurred in the
                  ordinary course of business), (iv) monetary obligations of
                  such Person as lessee under leases that are, in accordance
                  with GAAP, recorded as capital leases, (v) obligations of such
                  Person under guaranties in respect of, and obligations
                  (contingent or otherwise) to purchase or otherwise acquire, or
                  otherwise to assure a creditor against loss in respect of,
                  indebtedness or obligations of others of the kinds referred to
                  in clauses (i) through (iv) of this definition and (vi)
                  indebtedness or obligations of others of the kinds referred to
                  in clauses (i) through (v) of this definition secured by any
                  Lien on or in respect of any property of such Person;
                  provided, however, that Debt shall not include (A) any
                  obligation under or resulting from any agreement referred to
                  in paragraph (y) of Schedule I or resulting from any sale and
                  leaseback referred to in paragraph (aa) of Schedule I, (B) any
                  contingent obligation of the Guarantor relating to
                  indebtedness incurred by any Williams SPV, WCG or a WCG
                  Subsidiary pursuant to the WCG Structured Financing or (C) any
                  monetary obligations or guaranties of monetary obligations of
                  Persons as lessee under leases that are, in accordance with
                  GAAP, recorded as operating leases.

                  (c) The definition of "Designated Minority Interests" in such
         Section 1.01 is hereby amended and restated to read in its entirety as
         follows:

                           "Designated Minority Interests" of the Guarantor
                  means, as of any date of determination, the total of the
                  minority interests in the following Subsidiaries of the
                  Guarantor: (i) El Furrial, (ii) PIGAP II, (iii) Nebraska
                  Energy, (iv) Seminole,



                                       2
<PAGE>

                  (v) American Soda, (vi) the Midstream Asset MLP, and (vii)
                  other Subsidiaries, as presented in the Consolidating balance
                  sheet of the Guarantor, in an amount not to exceed in the
                  aggregate $9,000,000 for such other Subsidiaries not referred
                  to in items (i) through (vi); provided that minority interests
                  which provide for a stated preferred cumulative return shall
                  not be included in "Designated Minority Interests."

                  (d) The definition of "Material Subsidiary" in such Section
         1.01 is hereby amended and restated to read in its entirety as follows:

                           "Material Subsidiary" means each "significant
                  subsidiary" of the Guarantor (or its Subsidiaries) as such
                  term is defined in Rule 405 under the Securities Act,
                  excluding the WCG Subsidiaries.

                  (e) The following definitions are added to Section 1.01 of the
         Guaranty in the appropriate alphabetical order:

                           "Borrower" means any of the Guarantor, NWP, TGPL or
                  TGT and "Borrowers" means collectively the Guarantor, NWP,
                  TGPL and TGT.

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

                           "Midstream Asset MLP" means one or more master
                  limited partnerships included in the Consolidated financial
                  statements of the Guarantor to which the Guarantor has
                  transferred or shall transfer certain assets relating to the
                  distribution, storage and transportation of petroleum products
                  and ammonia, including without limitation marine and inland
                  terminals and related pipeline systems, including, without
                  limitation, Williams Energy Partners L.P.

                           "Sale Lease-Back Transaction" of any Person means any
                  arrangement entered into by such Person or any Subsidiary of
                  such Person, directly or indirectly, whereby such Person or
                  any Subsidiary of such Person shall sell or transfer any
                  property, whether now owned or hereafter acquired, and whereby
                  such Person or any Subsidiary of such Person shall then or
                  thereafter rent or lease as lessee such property or any part
                  thereof or other property which such Person or any Subsidiary
                  of such Person intends to use for substantially the same
                  purpose or purposes as the property sold or transferred.

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

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

                           "WCG Structured Financing" means a certain series of
                  related transactions in anticipation of the spin-off of WCG
                  pursuant to which WCG or a WCG Subsidiary shall obtain loans
                  or equity contributions, either directly from investors in the
                  marketplace or through one or more special purpose vehicles



                                       3
<PAGE>

                  (each, a "Williams SPV"), which Williams SPV or Williams SPVs
                  may be Subsidiaries of the Guarantor. Principal of such loans
                  and such equity contributions shall be in a cumulative amount
                  after January 31, 2001 which does not exceed in the aggregate
                  $1.5 billion. The Guarantor shall have a contingent obligation
                  with respect to repayment of indebtedness or return on and of
                  equity of the Williams SPV (or Williams SPVs) or WCG or a WCG
                  Subsidiary in regard to such transaction, which contingent
                  obligation shall terminate in each case no later than four (4)
                  years after the effective date of such transaction and shall
                  be satisfied only through the issuance of equity securities
                  unless further sales of equity securities of the Guarantor are
                  not possible or will not result in additional proceeds.

                           "Williams SPV" is used as defined in the definition
                  of "WCG Structured Financing."

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

                  2.2 Amendment of Section 4.02. Section 4.02(f) of the Guaranty
is hereby amended and restated to read in its entirety as follows:

                           (f) Maintenance of Ownership of Certain Subsidiaries.
                  Sell, issue or otherwise dispose of, or create, assume, incur
                  or suffer to exist any Lien on or in respect of, or permit any
                  of its Subsidiaries to sell, issue or otherwise dispose of or
                  create, assume, incur or suffer to exist any Lien on or in
                  respect of, any shares of or any interest in any shares of the
                  capital stock or other ownership interests of (i) WPC, TGPL,
                  TGT or NWP or any of their respective Material Subsidiaries or
                  (ii) any Subsidiary of the Guarantor at the time it owns any
                  shares of or any interest in any shares of the capital stock
                  or other ownership interests of WPC, TGPL, TGT or NWP or any
                  of their respective Material Subsidiaries; provided, however,
                  that, this Section 4.02(f) shall not prohibit the sale or
                  other disposition of the stock of any Subsidiary of the
                  Guarantor to the Guarantor or any Wholly-Owned Subsidiary of
                  the Guarantor if, but only if, (x) there shall not exist or
                  result an Event of Default or an event which with notice or
                  lapse of time or both would constitute an Event of Default and
                  (y) in the case of each sale or other disposition referred to
                  in this proviso involving the Guarantor or any of its
                  Subsidiaries, such sale or other disposition could not
                  reasonably be expected to impair materially the ability of the
                  Guarantor or its Subsidiaries to perform its obligations under
                  this Agreement and the other Operative Documents and the
                  Guarantor and the Lessee shall continue to exist. Nothing
                  herein shall be construed to permit the Guarantor or any
                  Subsidiary of the Guarantor to purchase shares, any interest
                  in shares or any ownership interest in a WCG Subsidiary except
                  as permitted by clause (e) of this Section 4.02.



                                       4
<PAGE>

                  2.3 Amendment of Appendix A. Appendix A of the Participation
Agreement is hereby amended as follows:

                  (a) The definition of "Relevant Subsidiaries" in such Appendix
A is hereby amended and restated to read in its entirety as follows:

                           "Relevant Subsidiaries" means collectively the Lessee
                  and those Affiliates of the Lessee performing services under
                  the Services Agreement.

                  (b) The definition of "Change of Control" in such Appendix A
is hereby deleted.

                  2.4 Amendment of Participation Agreement. Section 6.01 of the
Participation Agreement is hereby amended by deleting Section 6.01(u) in its
entirety and substituting therefor "(u) Intentionally Omitted".

                  2.5 Waivers. The Guarantor has requested the waiver of, and
each of the other Parties hereto hereby agrees to waive, certain provisions of
the Guaranty for and in connection with the transactions described below:

                  (a) The Guarantor or certain of its Subsidiaries are currently
         the owners of certain assets described on Schedule A-1 hereto which the
         Guarantor or such certain Subsidiaries wish to transfer to WCG and/or
         certain WCG Subsidiaries. In exchange for the transfer to WCG and/or
         certain WCG Subsidiaries of the assets listed on Schedule A-1 and the
         assumption by the Guarantor and/or its Subsidiaries of those certain
         liabilities of WCG or WCG Subsidiaries listed on Schedule A-2, WCG
         and/or certain WCG Subsidiaries will transfer to the Guarantor and/or
         its Subsidiaries, the assets listed on Schedule B-1 and will assume
         those certain liabilities of the Guarantor and/or its Subsidiaries
         listed on Schedule B-2. The Guarantor hereby represents and warrants
         that such transaction is being entered into on terms and conditions
         reasonably fair in all material respects to the Guarantor and its
         Subsidiaries.

                  (b) The Guarantor anticipates that it or one of its
         Subsidiaries may purchase certain assets of WCG or a WCG Subsidiary
         listed on Schedule A-1 and enter into a Sale Lease-Back Transaction in
         which the Guarantor or one of its Subsidiaries will lease such assets
         to WCG or a WCG Subsidiary. The Guarantor hereby covenants that such
         transaction shall be entered into on terms and conditions reasonably
         fair in all material respects to the Guarantor and its Subsidiaries. To
         the extent that such Sale Lease-Back Transaction may be, or may be
         deemed to be, an investment in WCG or a WCG Subsidiary, such
         transaction is prohibited by Section 4.02(e) of the Guaranty.

                  (c) In connection with such asset exchange and the Sale
         Lease-Back Transaction, and only for purposes of such transactions, the
         Guarantor requests that the other Parties waive the provisions of
         Section 4.02(e) of the Guaranty to allow the Guarantor and/or its
         Subsidiaries to effect the Sale Lease-Back Transaction, described in
         the preceding paragraph, and to acquire the equity interests and stock
         in WCG and certain WCG Subsidiaries, as described on Schedule B-1, and
         to transfer assets to WCG and/or WCG Subsidiaries on the terms set
         forth above. Nothing herein shall be construed or



                                       5
<PAGE>

         deemed to permit the Guarantor or its Subsidiaries to invest in or
         acquire stock or equity interests in WCG or any WCG Subsidiaries except
         to the extent described above. Nothing herein shall, or shall be deemed
         to, waive the provisions of Section 4.02(j) of the Guaranty or any
         other provisions of the Guaranty applicable to the Sale Lease-Back
         Transaction, except as expressly set forth above with respect to
         Section 4.02(e) of the Guaranty.

                  (d) In connection with the WCG Structured Financing, and only
         with respect to such WCG Structured Financing, the Guarantor requests
         that the other Parties waive:

                           (i) the provisions of Section 4.02(d) of the Guaranty
                  to allow consensual encumbrances and restrictions on the
                  ability of any Williams SPV to make or pay any distributions,
                  dividends, loans or advances to the Guarantor or its
                  Subsidiaries; provided, that, such consensual encumbrances or
                  restrictions (x) are pursuant to the documents governing the
                  WCG Structured Financing and (y) restrict making or paying
                  distributions, dividends, loans or advances of or on only
                  those assets held by a Williams SPV directly relating to the
                  WCG Structured Financing; and

                           (ii) the provisions of Section 4.02(i) of the
                  Guaranty to allow the Guarantor or a Subsidiary of the
                  Guarantor to be contingently liable for the obligations of any
                  Williams SPV, WCG or WCG Subsidiaries for payments relating to
                  indebtedness or return on and of equity incurred by such
                  entity pursuant to the WCG Structured Financing.

                  (e) By its signature hereto, each party hereto agrees to waive
         and does hereby waive (i) Section 4.02(e) of the Guaranty to allow the
         Guarantor and its Subsidiaries to acquire the equity interests and
         stock in WCG and certain WCG Subsidiaries, to the extent set forth
         above and to allow the Guarantor and its Subsidiaries to act as lessor
         pursuant to the Sale Lease-Back Transaction described above involving
         assets listed on Schedule A-1; (ii) Section 4.02(d) of the Guaranty to
         allow consensual encumbrances and restrictions on the ability of any
         Williams SPV to make or pay distributions, dividends, loans or advances
         to the Guarantor or its Subsidiaries if such encumbrances and
         restrictions are pursuant to documents governing the WCG Structured
         Financing and apply only to assets of such Williams SPV which are
         directly related to the WCG Structured Financing and (iii) Section
         4.02(i) of the Guaranty to allow the Guarantor or a Subsidiary of the
         Guarantor to be contingently liable with respect to the indebtedness or
         return on and of equity incurred pursuant to the WCG Structured
         Financing. Nothing herein shall be deemed or construed to waive any
         other breach of Sections 4.02(d), 4.02(e) or 4.02(i) of the Guaranty or
         to waive a breach of any other provision of the Guaranty or any other
         Operative Document or to require any similar or dissimilar waiver to be
         granted hereafter.



                                       6
<PAGE>

                                   ARTICLE III

                          REPRESENTATION AND WARRANTIES

                  3.1 Representations and Warranties of the Guarantor. To induce
the other Parties to enter into this Amendment, the Guarantor hereby reaffirms
as to itself and its Subsidiaries, as of the date hereof, its representations
and warranties contained in Section 3.01 of the Guaranty (except to the extent
such representations and warranties relate solely to an earlier date) and
additionally represents and warrants as follows:

                  (a) The Guarantor is duly organized, validly existing and in
         good standing under the laws of the State of Delaware and has all
         corporate powers and all governmental licenses, authorizations,
         certificates, consents and approvals required to carry on its business
         as now conducted in all material respects, except for those licenses,
         authorizations, certificates, consents and approvals which the failure
         to have could not reasonably be expected to have a material adverse
         effect on the business, assets, condition or operation of the Guarantor
         and its Subsidiaries taken as a whole. Each Material Subsidiary of the
         Guarantor is duly organized or validly formed, validly existing and (if
         applicable) in good standing under the laws of its jurisdiction of
         incorporation or formation, except where the failure to be so
         organized, existing and in good standing could not reasonably be
         expected to have a material adverse effect on the business, assets,
         condition or operations of the Guarantor and its Subsidiaries taken as
         a whole. Each Material Subsidiary of the Guarantor has all corporate or
         limited liability company powers and all governmental licenses,
         authorizations, certificates, consents and approvals required to carry
         on its business as now conducted in all material respects, except for
         those licenses, authorizations, certificates, consents and approvals
         which the failure to have could not reasonably be expected to have a
         material adverse effect on the business, assets, condition or operation
         of the Guarantor and its Subsidiaries taken as a whole.

                  (b) The execution, delivery and performance by the Guarantor
         of this Agreement and the consummation of the transactions contemplated
         by this Agreement are within the Guarantor's corporate powers, have
         been duly authorized by all necessary corporate action, do not
         contravene (i) the Guarantor's charter or by-laws or (ii) any law or
         any contractual restriction binding on or affecting the Guarantor and
         will not result in or require the creation or imposition of any Lien.

                  (c) No authorization or approval or other action by, and no
         notice to or filing with, any governmental authority or regulatory body
         is required for the due execution, delivery and performance by the
         Guarantor of this Agreement or the consummation of the transactions
         contemplated by this Agreement.

                  (d) This Agreement has been duly executed and delivered by the
         Guarantor. This Agreement and the Guaranty as amended by this Agreement
         are the legal, valid and binding obligations of the Guarantor
         enforceable against the Guarantor in accordance with its terms, except
         as such enforceability may be limited by any applicable bankruptcy,
         insolvency, reorganization, moratorium or similar law affecting
         creditors' rights generally and by general principles of equity.



                                       7
<PAGE>

                  (e) Except as set forth in the Public Filings, there is no
         pending or, to the knowledge of the Guarantor, threatened action or
         proceeding affecting the Guarantor or any Material Subsidiary of the
         Guarantor (or in the case of the Guarantor, the Borrowers, any
         Subsidiary of a Borrower or any WCG Subsidiary) before any court,
         governmental agency or arbitrator, which could reasonably be expected
         to materially and adversely affect the financial condition or
         operations of the Guarantor and its Subsidiaries taken as a whole or
         which purports to affect the legality, validity, binding effect or
         enforceability of this Agreement, the Guaranty or any other Operative
         Document. For the purposes of this Section, "Public Filings" shall mean
         the respective annual reports of the Guarantor on Form 10-K or Form
         10-K/A for the year ended December 31, 1999, and the Guarantor's
         quarterly reports on Form 10-Q for the quarter ended September 30,
         2000.

                  (f) Upon giving effect to this Agreement, no event has
         occurred and is continuing which constitutes a Guaranty Default or
         which would constitute a Guaranty Default but for the requirement that
         notice be given or time elapse or both.

                                   ARTICLE IV

                                  MISCELLANEOUS

                  4.1 Effectiveness. The effectiveness of this Agreement is
conditioned upon receipt by the Agent of all the following documents, each in
form and substance satisfactory to the Agent:

                  (a) Counterparts of this Agreement executed by the Guarantor,
         the Agent, the Majority Holders and by CXC and the Majority Purchasers
         (as defined in the APA);

                  (b) A certificate of the Secretary or Assistant Secretary of
         the Guarantor as to (i) any changes (or the absence of changes) since
         August 17, 2000 to its certificate of incorporation and its by-laws as
         of the date hereof, (ii) the resolutions of the Guarantor authorizing
         the execution of this Agreement and (iii) the names and true signatures
         of the officers authorized to execute this Agreement;

                  (c) A certificate, in form and substance satisfactory to the
         Agent, dated the date hereof addressed to the Trustee, the Collateral
         Agent, the Agent and the APA Agent of a responsible officer of WCG
         and/or each relevant WCG Subsidiary as to (i) its title to those assets
         transferred to the Guarantor or a Subsidiary of the Guarantor pursuant
         to the transactions described in Section 2.5 hereof, and (ii) the
         equity interests and shares of stock issued to the Guarantor or a
         Subsidiary of the Guarantor; and

                  (d) Such other documents as the Agent shall have reasonably
         requested.



                                       8
<PAGE>

                  4.2 Trustee. The undersigned Note Holders and Certificate
Holders hereby (a) direct the Trustee to give its consent to the actions
contemplated hereby by executing and delivering this Agreement, and (b) consent
to the execution and delivery by the Trustee of this Agreement.

                  4.3 Consent. Pursuant to the APA, CXC and the Majority
Purchasers hereby consent to execution of this Agreement by the SPV.

                  4.4 Full Force and Effect. Except as specifically amended
hereby, the Operative Documents and the Securitization Documents shall remain in
full force and effect and are hereby ratified and confirmed.

                  4.5 Exculpation of the Trustee. Except for its own gross
negligence and willful misconduct and as otherwise expressly provided in the
Operative Documents, it is expressly understood and agreed by the parties hereto
that (a) this Agreement is executed and delivered by the Trustee, not in its
individual capacity but solely as Trustee under the Declaration of Trust, in the
exercise of the powers and authority conferred and vested in it as the Trustee,
(b) each of the undertakings and agreements herein made on the part of the
Trustee is made and intended not as a personal representation, undertaking and
agreement by the Trustee but is made and intended for the purpose for binding
only the Trust Estate created by the Declaration of Trust, (c) nothing herein
contained shall be construed as creating any liability on the Trustee,
individually or personally, to perform any obligation of the Trustee either
expressed or implied contained herein or in the Operative Documents, all such
liability, if any, being expressly waived by the Parties and by any Person
lawfully claiming by, through or under the Parties and (d) under no
circumstances shall the Trustee be personally liable for the payment of any
indebtedness or expenses of the Trustee or be liable for the breach or failure
of any obligation, representation, warranty or covenant made or undertaken by
the Trustee under the Operative Documents.

                  4.6 Exculpation of The Collateral Agent. Except for its own
gross negligence and willful misconduct and as otherwise provided in the
Operative Documents, it is expressly understood and agreed by the parties hereto
that (a) this Agreement is executed and delivered by the Collateral Agent, not
in its individual capacity but solely as Collateral Agent, under the Interparty
Agreement, in the exercise of the powers and authority conferred and vested in
it as the Collateral Agent, (b) nothing herein contained shall be construed as
creating any liability on the Collateral Agent, individually or personally, to
perform any obligation of the Collateral Agent either expressed or implied
contained herein or in the Operative Documents, all such liability, if any,
being expressly waived by the Parties and by any Person claiming by, through or
under the Parties and (c) under no circumstances shall the Collateral Agent be
personally liable for the payment of any indebtedness or expenses of the
Collateral Agent or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Collateral Agent
under this Agreement or the Operative Documents except where such breach or
failure is the result of the Collateral Agent's willful misconduct or gross
negligence.

                  4.7 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK.



                                       9
<PAGE>

                  4.8 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall, when executed, be deemed to be an original
and all of which taken together shall be deemed to be one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.

              IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their officers thereunto duly authorized as of the day
and year first above written.

                            [SIGNATURE PAGES FOLLOW]



                                       10
<PAGE>

                 Signature Page to Amendment, Waiver and Consent
                          Dated as of January 31, 2001




                                       WILLIAMS COMMUNICATIONS, LLC


                                       By: /s/ Howard S. Kalika
                                          --------------------------------------
                                          Name: Howard S. Kalika
                                          Title: Treasurer


                                       THE WILLIAMS COMPANIES, INC.


                                       By: /s/ James G. Ivey
                                          --------------------------------------
                                          Name: James G. Ivey
                                          Title: Treasurer


                                       STATE STREET BANK AND TRUST COMPANY OF
                                       CONNECTICUT NATIONAL ASSOCIATION, not in
                                       its individual capacity but solely as
                                       Trustee of the 1998 WCI Trust, as Trustee
                                       and Lessor


                                       By: /s/ Earl W. Dennison, Jr.
                                          --------------------------------------
                                          Name: Earl W. Dennison, Jr.
                                          Title: Vice President




<PAGE>

                 Signature Page to Amendment, Waiver and Consent
                          Dated as of January 31, 2001




                                       STATE STREET BANK AND TRUST COMPANY, not
                                       in its individual capacity but solely as
                                       Collateral Agent


                                       By: /s/ Earl W. Dennison, Jr.
                                          --------------------------------------
                                          Name: Earl W. Dennison, Jr.
                                          Title: Vice President


                                       CITIBANK, N.A., as Agent


                                       By: /s/ Bran. A. Raskovic
                                          --------------------------------------
                                          Name: Bran. A. Raskovic
                                          Title: Vice President


                                       CITIBANK, N.A.
                                       as APA Purchaser


                                       By: /s/ Bran. A. Raskovic
                                          --------------------------------------
                                          Name: Bran. A. Raskovic
                                          Title: Vice President


                                       CXC INCORPORATED

                                       By: CITICORP NORTH AMERICA, INC.,
                                           as attorney-in-fact


                                       By: /s/ Bran. A. Raskovic
                                          --------------------------------------
                                          Name: Bran. A. Raskovic
                                          Title: Vice President



<PAGE>

                 Signature Page to Amendment, Waiver and Consent
                          Dated as of January 31, 2001




                                       WC NETWORK FUNDING LLC,
                                       as Note Holder

                                       By: WC Network Holdings, Inc.,
                                           its sole member


                                       By: /s/ Dwight Jenkins
                                          --------------------------------------
                                          Name: Dwight Jenkins
                                          Title: Vice President


                                       FBTC LEASING CORP.,
                                       as Certificate Holder


                                       By: /s/ Victor Mora
                                          --------------------------------------
                                          Name: Victor Mora
                                          Title: Vice President


                                       SCOTIABANC INC.,
                                       as Certificate Holder


                                       By: /s/ M. D. Smith
                                          --------------------------------------
                                          Name: M. D. Smith
                                          Title: Agent



<PAGE>

                 Signature Page to Amendment, Waiver and Consent
                          Dated as of January 31, 2001




                                       THE BANK OF NOVA SCOTIA,
                                       as APA Purchaser


                                       By: /s/ A. S. Norsworthy
                                          --------------------------------------
                                          Name: A. S. Norsworthy
                                          Title: Sr. Team Leader-Loan Operations


                                       BANK OF MONTREAL,
                                       as APA Purchaser


                                       By: /s/ James B. Whitmore
                                          --------------------------------------
                                          Name: James B. Whitmore
                                          Title: Director


                                        ROYAL BANK OF CANADA,
                                        as APA Purchaser


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



<PAGE>

                 Signature Page to Amendment, Waiver and Consent
                          Dated as of January 31, 2001




                                       BANK OF AMERICA, N.A. (formerly named
                                       Bank of America National Trust & Savings
                                       Association and successor to NationsBank,
                                       N.A.)




                                       By: /s/ Claire Liu
                                          --------------------------------------
                                          Name: Claire Liu
                                          Title: Managing Director


                                       THE CHASE MANHATTAN BANK,
                                       as APA Purchaser


                                       By: /s/ Constance M. Coleman
                                          --------------------------------------
                                          Name: Constance M. Coleman
                                          Title: Vice President


                                       BARCLAYS BANK PLC,
                                       as APA Purchaser


                                       By: /s/ Nicholas A. Bell
                                          --------------------------------------
                                          Name: Nicholas A. Bell
                                          Title: Director, Loan Transaction
                                                 Management



<PAGE>

                 Signature Page to Amendment, Waiver and Consent
                          Dated as of January 31, 2001




                                       TORONTO DOMINION (TEXAS), INC.
                                       as APA Purchaser


                                       By: /s/ Debbie A. Greene
                                          --------------------------------------
                                          Name: Debbie A. Greene
                                          Title: Vice President


                                       ABN AMRO BANK, N.V.
                                       as APA Purchaser


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


                                       FLEET NATIONAL BANK FKA., BANKBOSTON,
                                       N.A., as APA Purchaser


                                       By: /s/ Kristine A. Kasselman
                                          --------------------------------------
                                          Name: Kristine A. Kasselman
                                          Title: Managing Director


                                       CIBC INC., as APA Purchaser


                                       By: /s/ Nora Q. Catiis
                                          --------------------------------------
                                          Name: Nora Q. Catiis
                                          Title: Authorized Signature



<PAGE>

                 Signature Page to Amendment, Waiver and Consent
                          Dated as of January 31, 2001




                                       THE BANK OF NEW YORK,
                                       as APA Purchaser


                                       By: /s/ Raymond J. Palmer
                                          -------------------------------------
                                          Name: Raymond J. Palmer
                                          Title: Vice President


                                       BNP Paribas,
                                       as APA Purchaser


                                       By: /s/ Serge Desrayaud
                                          --------------------------------------
                                          Name: Serge Desrayaud
                                          Title: Head of Asset Management


                                       COMMERZBANK AG, New York and Grand
                                       Cayman Branches as APA Purchaser


                                       By: /s/ Subash R. Viswanathan
                                          --------------------------------------
                                          Name: Subash R. Viswanathan
                                          Title: Senior Vice President

                                       By: /s/ Brian J. Campbell
                                          --------------------------------------
                                          Name: Brian J. Campbell
                                          Title: Senior Vice President



<PAGE>

                 Signature Page to Amendment, Waiver and Consent
                          Dated as of January 31, 2001




                                       CREDIT AGRICOLE INDOSUEZ,
                                       as APA Purchaser


                                        By: /s/ Brian D. Knezeak
                                           -------------------------------------
                                           Name: Brian D. Knezeak
                                           Title: First Vice President


                                       By: /s/ Douglas A. Whiddon
                                          --------------------------------------
                                          Name: Douglas A. Whiddon
                                          Title: Senior Relationship Manager



<PAGE>

                                 SCHEDULE A - 1



       ASSETS TO BE TRANSFERRED FROM THE GUARANTOR AND/OR ITS SUBSIDIARIES
                         TO WCG AND/OR WCG SUBSIDIARIES

1.       Those certain three aircraft owned by Williams Aviation, Inc., or under
         contract for purchase by Williams Aviation, Inc, more specifically
         identified as follows:

                  Citation V - located in Chesterfield, Missouri, Tail Number
                  N352WC

                  Citation X - located in Tulsa, Oklahoma, Tail Number N358WC

                  Citation Excel - scheduled for delivery by April 1, 2001, Tail
                  Number N359WC

         The aggregate value of the three aircraft is $32,000,000.

2.       That certain Williams Technology Center located in Tulsa, Oklahoma, and
         owned by the Williams Headquarters Building Company. The Williams
         Technology Center is constructing a fifteen story office building that
         will house various Williams energy and communications employees. It
         will be attached to the east-end of the existing Bank of Oklahoma Tower
         at the Plaza, Ground and Service levels. The building is bounded on the
         north by First Street, east by Cincinnati Avenue, south by Second
         Street, and west by the podium of the Bank of Oklahoma Tower. The
         building will contain 733,391 net rentable square feet and accommodate
         up to 4,000 employees.

3.       That certain Parking Garage being constructed on the northeast corner
         of First Street and Cincinnati Avenue, directly south of the LaPetite
         Academy daycare center. The parking garage will be six levels tall and
         contain 1,029 parking spaces. It will be connected to the Williams
         Technology Center by pedestrian bridges west across Cincinnati and
         south across First Street.

         The aggregate value of the Williams Technology Center and the Parking
         Garage (items 2 and 3) is $85,000,000.

4.       That certain Intercompany Note executed between the Guarantor and
         Williams Communications, Inc., on September 8, 1999. The note is for
         seven years and has approximately $975 million outstanding, bears
         interest at rates equal to LIBOR, or an alternate base rate, plus a
         margin based on the debt rating of WCG's credit facility by S&P and
         Moody's, plus 0.25% based on WCG's ratio of total debt to EBITDA
         greater than or equal to 6.0 to 1.0. Principle is paid quarterly
         beginning July 1, 2000.

         The value of the Intercompany Note is $630,000,000.



<PAGE>

                                 SCHEDULE A - 2



                   LIABILITIES OF WCG AND/OR WCG SUBSIDIARIES
             TO BE ASSUMED BY THE GUARANTOR AND/OR ITS SUBSIDIARIES



1.       Payment obligations with respect to those certain building
         improvements, fixtures and equipment including all construction,
         design, flooring, food service equipment, security, audio equipment,
         video equipment, telecommunication equipment, furniture and fixtures,
         and related costs, including but not limited to material, labor,
         installation and taxes, as set forth in the Authorization for
         Expenditure(s) dated September 18, 2000.

         The aggregate value of the building improvements, fixtures and
         equipment is $160,000,000.



<PAGE>

                                 SCHEDULE B - 1



            ASSETS TO BE TRANSFERRED FROM WCG AND/OR WCG SUBSIDIARIES
                    TO THE GUARANTOR AND/OR ITS SUBSIDIARIES

1.       All losses or credit carryovers or other similar attributes of WCG not
         in existence on September 30, 1999, but arising thereafter, and
         utilized by the Guarantor as part of its consolidated tax return for
         any consolidated returns filed following September 30, 1999, as
         described in the Tax Sharing Agreement dated September 30, 1999.

         The aggregate value is $317,000,000.

2.       That certain Telecommunications Services Agreement dated January 5,
         1995, between The Guarantor and Wiltel, Inc., and subsequently amended.
         WorldCom, as the successor to Wiltel, provides WCG a specific amount of
         long distance, frame relay and private line services free of costs
         other than its out of pocket expenses payable to third parties. WCG
         resells these services to the Guarantor , its subsidiaries and
         affiliates at market rates. The term of the agreement is 35 years
         beginning January 1995.

         The value is $65,000,000.

3.       Those certain two dark fibers capable of providing a minimum capacity
         up to an OC-12 along the entire length of the fiber optic facilities
         along Transco's main line pipelines from Houston, Texas to Manassas,
         Virginia and Washington, D.C. to Station 200 outside Philadelphia,
         Pennsylvania which include property in the states of Texas, Louisiana,
         Mississippi, Alabama, Georgia, South Carolina, North Carolina,
         Virginia, the District of Columbia, Maryland and Pennsylvania,
         including the dark fiber needed to connect the non-contiguous points
         along the Transco right of way (the "Transco Fiber"). The general
         description of this service is provided in that certain Construction,
         Operating, Maintenance Agreement dated January 1, 1997. The Transco
         Fiber excludes any incidental services required to support the dark
         fiber pair, such as collocation, power, and maintenance fees.

         The aggregate value is $15,000,000.

4.       That number of shares of WCG Class A stock to be issued to the
         Guarantor having an aggregate value equal to approximately $470
         million, to be priced based upon the average of the high and low for
         each of the five business days beginning January 17, 2001 and ending
         January 23, 2001.]



<PAGE>

                                 SCHEDULE B - 2



              LIABILITIES OF THE GUARANTOR AND/OR ITS SUBSIDIARIES
                  TO BE ASSUMED BY WCG AND/OR WCG SUBSIDIARIES

1.       All incremental costs to be incurred by WCG in connection with the
         replacement of certain shared hardware, systems and applications that
         will need to be replicated upon the separation of the two companies. In
         addition, WCG will need to procure it own unique software licenses on
         everything from Microsoft products to the PeopleSoft applications. Also
         included in this category are those miscellaneous costs incurred to
         effect the spin- off of WCG from the Guarantor.

         The aggregate value is $40,000,000.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(S)
<SEQUENCE>10
<FILENAME>d93687ex10-s.txt
<DESCRIPTION>AMENDMENT AND CONSENT DATED 2/7/02
<TEXT>
<PAGE>
                                                                   EXHIBIT 10(s)




                              AMENDMENT AND CONSENT

         AMENDMENT AND CONSENT dated as of February 7, 2002 (this "Agreement")
by the undersigned persons (the "Parties").

                             PRELIMINARY STATEMENTS

                  A. The Parties are parties to certain Operative Documents
referred to in the Amended and Restated Participation Agreement dated as of
September 2, 1998 (the "Participation Agreement") among Williams Communications,
LLC, formerly Williams Communications, Inc. ("WCLLC"), State Street Bank and
Trust Company of Connecticut, National Association, not in its individual
capacity except as expressly set forth therein, but solely as Trustee (the
"Trustee"), the persons named therein as note purchasers and their permitted
successors and assigns (the "Note Holders"), the persons named therein as
certificate purchasers and their permitted successors and assigns (the
"Certificate Holders"), the persons named therein as APA Purchasers and their
permitted successors and assigns (the "APA Purchasers"), State Street Bank and
Trust Company ("State Street"), not in its individual capacity but solely as
collateral agent (the "Collateral Agent"), and Citibank, N.A., in its capacity
as agent for the Note Holders and the Certificate Holders (the "Agent").

                  B. The Williams Companies, Inc. (the "Guarantor"), the
Trustee, the Collateral Agent, the Agent and Citibank, N.A., as agent for the
APA Purchasers, are parties to the Second Amended and Restated Guaranty
Agreement, dated as of August 17, 2000 (as amended through the date hereof, the
"Guaranty").

                  C. The Guarantor has requested certain amendments to the
Guaranty.

                  D. The Parties, other than the Guarantor, are willing to
consent to such amendments, subject to the terms and conditions set forth in
this Agreement.

         NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Parties agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

                  1.1 Defined Terms. As used in this Agreement, (i) terms
defined in the first paragraph, preliminary statements or other sections of this
Agreement shall have the meanings set forth therein, and (ii) capitalized terms
used in this Agreement and not otherwise defined herein shall have the meanings
set forth in Appendix A to the Participation Agreement and the other Operative
Documents referred to therein.


<PAGE>

                                   ARTICLE II

                                   AMENDMENTS

                  2.1 Amendment of Section 1.01. Section 1.01 of the Guaranty is
hereby amended as follows:

                  (a) The definition of "Debt" in such Section 1.01 is hereby
amended and restated to read in its entirety as follows:

                  "Debt" means, in the case of any Person, (i) indebtedness of
         such Person for borrowed money, (ii) obligations of such Person
         evidenced by bonds, debentures or notes, (iii) obligations of such
         Person to pay the deferred purchase price of property or services
         (other than trade payables not overdue by more than 60 days incurred in
         the ordinary course of business), (iv) monetary obligations of such
         Person as lessee under leases that are, in accordance with generally
         accepted accounting principles, recorded as capital leases, (v)
         obligations of such Person under guaranties in respect of, and
         obligations (contingent or otherwise) to purchase or otherwise acquire,
         or otherwise to assure a creditor against loss in respect of,
         indebtedness or obligations of others of the kinds referred to in
         clauses (i) through (iv) of this definition and (vi) indebtedness or
         obligations of others of the kinds referred to in clauses (i) through
         (v) of this definition secured by any Lien on or in respect of any
         property of such Person; provided, however, that (w) Debt shall not
         include any obligations of the Guarantor in respect of the FELINE PACS;
         (x) Debt shall not include any obligation under or resulting from any
         agreement referred to in paragraph (y) of Schedule I; (y) in the case
         of the Guarantor, Debt shall not include any contingent obligation of
         the Guarantor relating to indebtedness incurred by any Williams SPV,
         WCG or a WCG Subsidiary pursuant to the WCG Structured Financing
         (except that in the event that the WCG Refinancing Transaction shall
         have occurred, then Debt shall include the aggregate amount of the WCG
         Structured Financing for which the Guarantor or any of its Subsidiaries
         shall have become directly and primarily liable); and (z) it is the
         understanding of the parties hereto that Debt shall not include any
         monetary obligations or guaranties of monetary obligations of Persons
         as lessee under leases that are, in accordance with generally accepted
         accounting principles, recorded as operating leases.

                  (b) The following definition of "FELINE PACS" is hereby
inserted in the alphabetically appropriate location in such Section 1.01:

                  "FELINE PACS" means those certain units, as described in the
         Guarantor's prospectus supplement dated January 7, 2002, issued by the
         Guarantor in January, 2002 in an aggregate face amount of
         $1,100,000,000.

                  (c) The definition of "Net Worth" in such Section 1.01 is
hereby amended and restated to read in its entirety as follows:





                                       2
<PAGE>

                  "Net Worth" of any Person means, as of any date of
         determination the excess of total assets of such Person over total
         liabilities of such Person, total assets and total liabilities each to
         be determined in accordance with generally accepted accounting
         principles; provided, however, that for purposes of calculating Net
         Worth, total liabilities shall not include any obligations of the
         Guarantor in respect of the FELINE PACS.

                  (d) The definition of "WCG Note" is hereby inserted in the
alphabetically appropriate location in such Section 1.01:

                  "WCG Note" means that certain promissory note dated March 28,
         2001 issued by WCG to WCG Note Trust, a Delaware business trust, in a
         principal amount of $1,500,000,000 with a maturity date of March 31,
         2008.

                  (e) The definition of "WCG Refinancing Transaction" is hereby
inserted in the alphabetically appropriate location in such Section 1.01:

                  "WCG Refinancing Transaction" means any transaction or series
         of related transactions pursuant to which the Guarantor or any
         Subsidiary of the Guarantor becomes directly and primarily liable to
         the holders of the WCG Senior Notes for an aggregate amount not
         exceeding the outstanding principal amount of the WCG Senior Notes,
         together with all accrued and unpaid interest thereon, any fees, and
         any premiums or make-whole payments payable as a result of a prepayment
         or early redemption of the WCG Senior Notes, including, without
         limitation, by means of (i) any amendment to the transaction documents
         pursuant to which the WCG Senior Notes were issued, (ii) an exchange
         offer or tender offer for the WCG Senior Notes or the WCG Note in
         consideration for which the Guarantor or any Subsidiary of the
         Guarantor issues debt securities of the Guarantor or any Subsidiary of
         the Guarantor, (iii) any redemption or repurchase, in whole or in part,
         of the WCG Senior Notes by the Guarantor or any Subsidiary of the
         Guarantor, (iv) any exercise of the "Share Trust Release Option" as
         defined in the transaction documents pursuant to which the WCG Senior
         Notes were issued, or (v) the Guarantor or any Subsidiary of the
         Guarantor making any payments in respect of the WCG Senior Notes or the
         WCG Note.

                  (f) The definition of "WCG Reimbursement Obligations" is
hereby inserted in the alphabetically appropriate location in such Section 1.01:

                  "WCG Reimbursement Obligations" means any obligations of any
         WCG Subsidiary in favor of the Guarantor, any Subsidiary of the
         Guarantor or the WCG Senior Notes Issuer pursuant to which such WCG
         Subsidiary has agreed to pay the Guarantor, any Subsidiary of the
         Guarantor or the WCG Senior Notes Issuer an amount equal to or less
         than the total amount of the obligations incurred by the Guarantor
         and/or its Subsidiaries in connection with the WCG Refinancing
         Transaction, including, without limitation, in respect of principal,
         interest, fees and any premiums or make-whole payments payable as a
         result of a prepayment or early redemption of the WCG Senior Notes.



                                       3
<PAGE>

                  (g) The definition of "WCG Senior Notes" is hereby inserted in
the alphabetically appropriate location in such Section 1.01:

                  "WCG Senior Notes" means those certain 8.25% Senior Secured
         Notes due 2004 in an aggregate principal amount of $1,400,000,000
         issued by the WCG Senior Notes Issuer.

                  (h) The definition of "WCG Senior Notes Issuer" is hereby
inserted in the alphabetically appropriate location in such Section 1.01:

                  "WCG Senior Notes Issuer" means, collectively, WCG Note Trust,
a Delaware business trust, and WCG Note Corp., Inc., a Delaware corporation.

                  2.2 Amendment of Section 4.02. Section 4.02 of the Guaranty is
hereby amended as follows:

                  (a) Clause (c) of Section 4.02 is hereby amended by deleting
the period at the end of subclause (iv) thereof, inserting in its place a
semicolon and inserting the following new subclause (v) immediately following
the existing clause (iv):

                  "(v) Williams Pipeline Company, LLC from (1) selling,
         conveying or otherwise transferring all or substantially all of its
         assets to another Person or (2) merging or consolidating with or into
         another Person, in either case, for fair-market value and on
         commercially reasonable terms and conditions in the good faith judgment
         of the Guarantor."

                  (b) Clause (e) of Section 4.02 is hereby amended and restated
to read in its entirety as follows:

                  "(e) Loans and Advances; Investments. Make or permit to remain
         outstanding, or allow any of its Subsidiaries to make or permit to
         remain outstanding, any loan or advance to, or own, purchase or acquire
         any obligations or debt securities of, any WCG Subsidiary, except that
         the Guarantor and its Subsidiaries may (i) permit to remain outstanding
         loans and advances to a WCG Subsidiary existing as of the date hereof
         and listed on Exhibit A hereof (and such WCG Subsidiaries may permit
         such loans and advances to remain outstanding), (ii) purchase or
         acquire the WCG Senior Notes or the WCG Note pursuant to the WCG
         Refinancing Transaction, and (iii) purchase or acquire and permit to
         remain outstanding, the WCG Reimbursement Obligations. Except for those
         investments in existence on the date hereof and listed on Exhibit A
         hereof, purchases or acquisitions pursuant to the WCG Refinancing
         Transaction and purchases or acquisitions of WCG Reimbursement
         Obligations, the Guarantor shall not, and shall not permit any of its
         Subsidiaries to, acquire or otherwise invest in any stock or other
         equity or other ownership interest in a WCG Subsidiary."

                  (c) Clause (i) of Section 4.02 is hereby amended by deleting
the period at the end of the existing clause (i) and inserting in its place the
following:



                                       4
<PAGE>

                  "; provided, however, that nothing contained herein shall
         prohibit or otherwise restrict the ability of the Guarantor or any
         Subsidiary of the Guarantor from incurring liability pursuant to the
         WCG Refinancing Transaction."

                                   ARTICLE III

                          REPRESENTATION AND WARRANTIES

                  3.1 Representations and Warranties of the Guarantor. To induce
the other Parties to enter into this Agreement, the Guarantor hereby reaffirms
as to itself and its Subsidiaries, as of the date hereof, its representations
and warranties contained in Section 3.01 of the Guaranty (except to the extent
such representations and warranties relate solely to an earlier date) and
additionally represents and warrants as follows:

                  (a) The Guarantor is duly organized, validly existing and in
         good standing under the laws of the State of Delaware and has all
         corporate powers and all governmental licenses, authorizations,
         certificates, consents and approvals required to carry on its business
         as now conducted in all material respects, except for those licenses,
         authorizations, certificates, consents and approvals which the failure
         to have could not reasonably be expected to have a material adverse
         effect on the business, assets, condition or operation of the Guarantor
         and its Subsidiaries taken as a whole. Each Material Subsidiary of the
         Guarantor is duly organized or validly formed, validly existing and (if
         applicable) in good standing under the laws of its jurisdiction of
         incorporation or formation, except where the failure to be so
         organized, existing and in good standing could not reasonably be
         expected to have a material adverse effect on the business, assets,
         condition or operations of the Guarantor and its Subsidiaries taken as
         a whole. Each Material Subsidiary of the Guarantor has all corporate or
         limited liability company powers and all governmental licenses,
         authorizations, certificates, consents and approvals required to carry
         on its business as now conducted in all material respects, except for
         those licenses, authorizations, certificates, consents and approvals
         which the failure to have could not reasonably be expected to have a
         material adverse effect on the business, assets, condition or operation
         of the Guarantor and its Subsidiaries taken as a whole.

                  (b) The execution, delivery and performance by the Guarantor
         of this Agreement and the consummation of the transactions contemplated
         by this Agreement are within the Guarantor's corporate powers, have
         been duly authorized by all necessary corporate action, do not
         contravene (i) the Guarantor's charter or by-laws or (ii) any law or
         any contractual restriction binding on or affecting the Guarantor and
         will not result in or require the creation or imposition of any Lien.

                  (c) No authorization or approval or other action by, and no
         notice to or filing with, any governmental authority or regulatory body
         is required for the due execution, delivery and performance by the
         Guarantor of this Agreement or the consummation of the transactions
         contemplated by this Agreement.

                  (d) This Agreement has been duly executed and delivered by the
         Guarantor. This Agreement and the Guaranty as amended by this Agreement
         are the legal, valid and



                                       5
<PAGE>

         binding obligations of the Guarantor enforceable against the Guarantor
         in accordance with its terms, except as such enforceability may be
         limited by any applicable bankruptcy, insolvency, reorganization,
         moratorium or similar law affecting creditors' rights generally and by
         general principles of equity.

                  (e) Except as set forth in the Public Filings and except for
         certain class-action lawsuits filed on or after January 29, 2002
         alleging fraud and other violations of applicable securities laws,
         there is, as to the Guarantor, no pending or, to the knowledge of the
         Guarantor, threatened action or proceeding affecting the Guarantor or
         any material Subsidiary of the Guarantor before any court, governmental
         agency or arbitrator, which could reasonably be expected to materially
         and adversely affect the financial condition or operations of the
         Guarantor and its Subsidiaries taken as a whole or which purports to
         affect the legality, validity, binding effect or enforceability of this
         Agreement, the Guaranty or any other Operative Document. For the
         purposes of this Section, "Public Filings" shall mean the Guarantor's
         annual report on Form 10-K for the year ended December 31, 2000, and
         the Guarantor's quarterly reports on Form 10-Q for the quarters ended
         March 31, 2001, June 30, 2001 and September 30, 2001.

                  (f) Upon giving effect to this Agreement, no event has
         occurred and is continuing which constitutes a Guaranty Default or
         which would constitute a Guaranty Default but for the requirement that
         notice be given or time elapse or both.

                                   ARTICLE IV

                                  MISCELLANEOUS

                  4.1 Effectiveness. The effectiveness of this Agreement is
conditioned upon receipt by the Agent of all the following documents, each in
form and substance satisfactory to the Agent:

                  (a) Counterparts of this Agreement executed by the Guarantor,
         WCLLC, the Agent, the Majority Holders and by CXC and the Majority
         Purchasers (as defined in the APA);

                  (b) A certificate of the Secretary or Assistant Secretary of
         the Guarantor as to (i) any changes (or the absence of changes) since
         August 17, 2001 to its certificate of incorporation and its by-laws as
         of the date hereof, (ii) the resolutions of the Guarantor authorizing
         the execution of this Agreement and (iii) the names and true signatures
         of the officers authorized to execute this Agreement; and

                  (c) Such other documents as the Agent shall have reasonably
         requested.

                  4.2 Trustee. The undersigned Note Holders and Certificate
Holders hereby (a) direct the Trustee to give its consent to the actions
contemplated hereby by executing and delivering this Agreement, and (b) consent
to the execution and delivery by the Trustee of this Agreement.



                                       6
<PAGE>

                  4.3 Consent. Pursuant to the APA, CXC and the Majority
Purchasers hereby consent to execution of this Agreement by the SPV.

                  4.4 Full Force and Effect. Except as specifically amended
hereby, the Operative Documents and the Securitization Documents shall remain in
full force and effect and are hereby ratified and confirmed. All references to
the Guaranty in any other document, instrument, agreement or writing shall
hereafter be deemed to refer to the Guaranty as amended hereby.

                  4.5 Exculpation of the Trustee. Except for its own gross
negligence and willful misconduct and as otherwise expressly provided in the
Operative Documents, it is expressly understood and agreed by the parties hereto
that (a) this Agreement is executed and delivered by the Trustee, not in its
individual capacity but solely as Trustee under the Declaration of Trust, in the
exercise of the powers and authority conferred and vested in it as the Trustee,
(b) each of the undertakings and agreements herein made on the part of the
Trustee is made and intended not as a personal representation, undertaking and
agreement by the Trustee but is made and intended for the purpose for binding
only the Trust Estate created by the Declaration of Trust, (c) nothing herein
contained shall be construed as creating any liability on the Trustee,
individually or personally, to perform any obligation of the Trustee either
expressed or implied contained herein or in the Operative Documents, all such
liability, if any, being expressly waived by the Parties and by any Person
lawfully claiming by, through or under the Parties and (d) under no
circumstances shall the Trustee be personally liable for the payment of any
indebtedness or expenses of the Trustee or be liable for the breach or failure
of any obligation, representation, warranty or covenant made or undertaken by
the Trustee under the Operative Documents.

                  4.6 Exculpation of the Collateral Agent. Except for its own
gross negligence and willful misconduct and as otherwise provided in the
Operative Documents, it is expressly understood and agreed by the parties hereto
that (a) this Agreement is executed and delivered by the Collateral Agent, not
in its individual capacity but solely as Collateral Agent, under the Interparty
Agreement, in the exercise of the powers and authority conferred and vested in
it as the Collateral Agent, (b) nothing herein contained shall be construed as
creating any liability on the Collateral Agent, individually or personally, to
perform any obligation of the Collateral Agent either expressed or implied
contained herein or in the Operative Documents, all such liability, if any,
being expressly waived by the Parties and by any Person claiming by, through or
under the Parties and (c) under no circumstances shall the Collateral Agent be
personally liable for the payment of any indebtedness or expenses of the
Collateral Agent or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Collateral Agent
under this Agreement or the Operative Documents except where such breach or
failure is the result of the Collateral Agent's willful misconduct or gross
negligence.

                  4.7 Governing Law. THIS AGREEMENT SHALL BE A CONTRACT MADE
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICT OF LAW EXCEPT SECTION
5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW). Whenever possible each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such




                                       7
<PAGE>

provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.

                  4.8 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall, when executed, be deemed to be an original
and all of which taken together shall be deemed to be one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their officers thereunto duly authorized as of
the day and year first above written.

                            [SIGNATURE PAGES FOLLOW]




                                       8
<PAGE>



                           WILLIAMS COMMUNICATIONS, LLC


                           By:        /s/ Howard S. Kalika
                               -------------------------------------------------
                               Name:  Howard S. Kalika
                               Title: Senior Vice President & Treasurer


                           THE WILLIAMS COMPANIES, INC.


                           By:        /s/ James G. Ivey
                               -------------------------------------------------
                               Name:  James G. Ivey
                               Title: Treasurer



<PAGE>








                           STATE STREET BANK AND TRUST
                           COMPANY OF CONNECTICUT NATIONAL
                           ASSOCIATION, not in its individual capacity but
                           solely as Trustee  of the 1998 WCI Trust, as
                           Trustee and Lessor


                           By:        /s/ Earl W. Dennison, Jr.
                               -------------------------------------------------
                               Name:  Earl W. Dennison, Jr.
                               Title: Vice President


                           STATE STREET BANK AND TRUST
                           COMPANY, not in its individual capacity but
                           solely as Collateral Agent


                           By:        /s/ Earl W. Dennison, Jr.
                               -------------------------------------------------
                               Name:  Earl W. Dennison, Jr.
                               Title: Vice President




<PAGE>








                           CITIBANK, N.A., as Agent


                           By:        /s/ Todd J. Mogil
                               -------------------------------------------------
                               Name:  Todd J. Mogil
                               Title: Attorney-In-Fact


                           CITIBANK, N.A.
                           as APA Purchaser


                           By:        /s/ Todd J. Mogil
                               -------------------------------------------------
                               Name:  Todd J. Mogil
                               Title: Attorney-In-Fact



<PAGE>







                           CXC INCORPORATED

                           By: CITICORP NORTH AMERICA, INC.,
                               as attorney-in-fact

                           By:        /s/ Kimberly A. Conyngham
                               -------------------------------------------------
                               Name:  Kimberly A. Conyngham
                               Title: Vice President


                           CITICORP NORTH AMERICA, INC.,
                             as administrative agent for CXC
                             Incorporated and as RCE Agent

                           By:        /s/ Kimberly A. Conyngham
                               -------------------------------------------------
                               Name:  Kimberly A. Conyngham
                               Title: Vice President



<PAGE>





                           WC NETWORK FUNDING LLC,
                           as Note Holder

                           By:  WC Network Holdings, Inc.,
                                its sole member

                           By:        /s/ Susan C. Ciaramella
                               -------------------------------------------------
                               Name:  Susan C. Ciaramella
                               Title: Vice President




<PAGE>




                           FBTC LEASING CORP.,
                           as Certificate Holder

                           By:        /s/ Victor Mora
                               -------------------------------------------------
                               Name:  Victor Mora
                               Title: Vice President


<PAGE>





                           SCOTIABANC INC.,
                           as Certificate Holder


                           By:        /s/ W. J. Brown
                               -------------------------------------------------
                               Name:  W. J. Brown
                               Title:





                           THE BANK OF NOVA SCOTIA,
                           as APA Purchaser


                           By:        /s/ M. D. Smith
                               -------------------------------------------------
                               Name:  M. D. Smith
                               Title: Agent Operations




<PAGE>





                           BANK OF MONTREAL,
                           as APA Purchaser


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




<PAGE>





                           ROYAL BANK OF CANADA,
                           as APA Purchaser


                           By:        /s/ Tom J. Oberaigner
                               -------------------------------------------------
                               Name:  Tom J. Oberaigner
                               Title: Senior Manager



<PAGE>





                           BANK OF AMERICA, N.A., as APA Purchaser






                           By:        /s/ Claire M. Liu
                               -------------------------------------------------
                               Name:  Claire M. Liu
                               Title: Managing Director


<PAGE>





                           JP MORGAN CHASE BANK (f/k/a The Chase
                           Manhattan Bank), as APA Purchaser


                           By:        /s/ Steven Wood
                               -------------------------------------------------
                               Name:  Steven Wood
                               Title: Vice President


<PAGE>





                           BARCLAYS BANK PLC,
                           as APA Purchaser


                           By:        /s/ Nicholas A. Bell
                               -------------------------------------------------
                               Name:  Nicholas A. Bell
                               Title: Loan Transaction Manager


<PAGE>





                           TORONTO DOMINION (TEXAS), INC.
                           as APA Purchaser


                           By:        /s/ Jill Hall
                               -------------------------------------------------
                               Name:  Jill Hall
                               Title: Vice President


<PAGE>





                           ABN AMRO BANK, N.V.
                           as APA Purchaser


                           By:        /s/ Neil J. Bivona
                               -------------------------------------------------
                               Name:  Neil J. Bivona
                               Title: Group Vice President



                           By:        /s/ William J. Teresky, Jr.
                               -------------------------------------------------
                               Name:  William J. Teresky, Jr.
                               Title: Group Vice President




<PAGE>





                           FLEET NATIONAL BANK (f/k/a BankBoston,
                           N.A.), as APA Purchaser

                           By:        /s/ Daniel S. Schockling
                               -------------------------------------------------
                               Name:  Daniel S. Schockling
                               Title: Director


<PAGE>





                           CIBC INC., as APA Purchaser


                           By:        /s/ Mark H. Wolf
                               -------------------------------------------------
                               Name:  Mark H. Wolf
                               Title: Executive Director


<PAGE>





                           THE BANK OF NEW YORK,
                           as APA Purchaser


                           By:        /s/ Raymond J. Palmer
                               -------------------------------------------------
                               Name:  Raymond J. Palmer
                               Title: Vice President


<PAGE>





                           BNP PARIBAS, as APA Purchaser


                           By:        /s/ Gregg Bonardi
                               -------------------------------------------------
                               Name:  Gregg Bonardi
                               Title: Director, Media & Telecom Finance


                           By:        /s/ Ben Todres
                               -------------------------------------------------
                               Name:  Ben Todres
                               Title: Director, Media & Telecom Finance



<PAGE>





                           COMMERZBANK AG, NEW YORK AND
                           GRAND CAYMAN BRANCHES, as APA
                           Purchaser


                           By:        /s/ Brian J. Campbell
                               -------------------------------------------------
                               Name:  Brian J. Campbell
                               Title: Senior Vice President


                           By:        /s/ D. L. Ward, Jr.
                               -------------------------------------------------
                               Name:  Assistant Vice President
                               Title: Assistant Vice President



<PAGE>





                           CREDIT AGRICOLE INDOUSUEZ,
                           as APA Purchaser

                           By:        /s/ Brian Knezeak
                               -------------------------------------------------
                               Name:  Brian Knezeak
                               Title: First Vice President



                           By:        /s/ Mark Lyoff
                               -------------------------------------------------
                               Name:  Mark Lyoff
                               Title: Head of Energy Platform



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(T)
<SEQUENCE>11
<FILENAME>d93687ex10-t.txt
<DESCRIPTION>MEMBERSHIP INTEREST PURCHASE AGREEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10(t)


                     MEMBERSHIP INTEREST PURCHASE AGREEMENT


         This Membership Interest Purchase Agreement (this "Agreement"), dated
as of September 13, 2001, is by and Williams Communications, LLC, a Delaware
limited liability company ("Seller"), and Williams Aircraft, Inc., a Delaware
corporation ("Buyer").

                                    RECITALS

         Seller is the owner of the entire membership interest of Williams
Communications Aircraft, LLC, a Delaware Limited Liability Company (the
"Company").

         Buyer desires to purchase from Seller, and Seller desires to sell to
Buyer, the entire membership interest in the Company upon the terms and subject
to the conditions contained herein.

         NOW, THEREFORE, in consideration of the premises, agreements and
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged and in reliance upon
the mutual representations and warranties contained herein, Seller and Buyer
agree, upon the terms and subject to the conditions contained herein, as
follows:


                                    ARTICLE I

                                PURCHASE AND SALE

         1.01 Transfer of Membership Interest. Upon the terms and subject to the
conditions of this Agreement, at the Closing Date (as hereinafter defined),
Seller agrees to sell, assign and deliver to Buyer the entire membership
interest in the Company (the "Interest") together with all of the rights titles
and interests of Seller in or relating in any way to the Company.

         1.02 Purchase Price. The consideration (the "Purchase Price") for the
Interest shall be the sum of Thirty-One Million U.S. Dollars (US$31,000,000.00)
and the assumption by Buyer of all of the liabilities and obligations relating
to the Interest. On the Closing Date, pursuant to the terms and conditions of
this Agreement, Buyer agrees to wire transfer the Purchase Price to the Seller
in accordance with Seller's instructions.

         1.03 Effective Date. The effective date of the transaction
contemplated by this Agreement shall be the Closing Date (as hereinafter
defined).



                                       1
<PAGE>



                                   ARTICLE II

                                     CLOSING

         2.01 Time and Place of Closing. The closing of the transactions
contemplated hereby (the "Closing") shall be held at the offices of Buyer
located One Williams Center, Tulsa, Oklahoma 74172 , at 1:00 p.m., local time,
on the later to occur of the date which is the first business day following the
day that the conditions specified in Article 5 below shall have been satisfied
in all material respects (or waived by the party or parties entitled to the
benefit thereof), unless another time, date and place is agreed to in writing by
Buyer and Seller. The date upon which Closing occurs shall be referred to herein
as the "Closing Date".

         2.02 Deliveries by Seller. (a) Delivery of Documents. At Closing,
Seller shall deliver to Buyer:

                  (i) One or more certificates evidencing that Buyer is the
owner of the Interest, including without limitation an Assignment of Limited
Liability Membership Interest substantially in the form attached hereto as
Exhibit A; and

                  (ii) A legal opinion as to the title and lien status to the
Aircraft;

                  (iii) All waivers, consents, permissions, or other documents
that may be necessary for the transfer of the Interest to Buyer; and

                  (iv) The duly executed Aircraft Dry Leases for the Aircraft
and Releases of all liens on the Aircraft.

         2.03 Deliveries By Buyer. At Closing, Buyer shall deliver the
consideration described in Article 1.02 to Seller together with evidence of
Buyer's power and authority to purchase the Interest.

                                   ARTICLE III

                    REPRESENTATIONS AND WARRANTIES OF SELLER

         Seller represents and warrants to Buyer as follows:

         3.01 Existence and Qualification. The Company is a limited liability
company duly formed and validly existing under the laws of Delaware. The Company
has all requisite corporate power and authority to own, operate and lease its
properties and to carry on its business as presently conducted. All of the
minute books, including all minutes, consents and other records of actions taken
by the members and managers (including any committee thereof) of the Company are
held by the Company.


                                       2
<PAGE>


         3.02 Authority, Approval and Enforceability. Seller has all requisite
power and authority to execute and deliver this Agreement and to perform its
obligations under this Agreement. This Agreement has been duly executed and
delivered on behalf of Seller and constitutes the legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms.
At the Closing all documents required hereunder to be executed and delivered by
Seller will have been duly authorized, executed and delivered by Seller and will
constitute legal, valid and binding obligations of Seller, enforceable in
accordance with their terms.

         3.03 The Interest. The Interest is the sole membership interest in the
Company and is owned beneficially and in the name of Seller, free and clear of
all mortgages, pledges, security interests, liens or encumbrances of any kind
and is not subject to any agreements or understandings among any persons with
respect to the voting or transfer thereof. There are no outstanding
subscriptions, options, convertible securities, warrants, calls or other
securities granting rights to purchase or otherwise acquire interests in the
Company or any commitments or agreements of any character obligating Seller
regarding the foregoing.

         3.04 Governmental Authorizations. The Seller has obtained and holds
all governmental permits, licenses, orders and approvals necessary to own the
Interest.

         3.05 Assets. The only assets of the Company are the Aircraft as
described in Article 5.01, and the Company has no liabilities, obligations,
commitments or undertakings except as regards the ongoing ownership and
operation of the Aircraft. All filings and certificates necessary for the
Company to own and operate the Aircraft have been filed or obtained.

         3.06 Airworthiness. At Closing the Aircraft shall be in an airworthy
condition with all systems functioning within tolerances as stated in the
manufacturer's maintenance criteria. The Aircraft are and shall be at Closing
free and clear of all liens and encumbrances, and the Company will have good and
marketable title thereto. Seller has previously delivered to the Company a
Certificate of Airworthiness issued by the U.S. Federal Aviation Administration
("FAA") certifying that, at the date of issuance, the Aircraft has been
inspected and found to conform in all respects to the applicable FAA Certificate
of Airworthiness.

                                   ARTICLE IV

                              CONDITIONS TO CLOSING

         4.01 Conditions to Obligations of Buyer and Seller. The obligations of
Buyer and Seller to proceed with the Closing are subject to the satisfaction at
or prior to Closing of all of the following conditions.


                                       3
<PAGE>


                  (a) Compliance. Buyer and Seller shall have complied in all
material respects with their respective covenants and agreements contained
herein. The representations and warranties contained herein, or in any
certificate or similar instrument required to be delivered by or on behalf of
each of Seller or Buyer pursuant hereto shall be true and correct in all
material respects on and as of the Closing Date, with the same effect as though
made at such time;

                  (b) No Orders. No order, writ, injunction or decree shall have
been entered and be in effect by any court of competent jurisdiction or any
governmental or regulatory instrumentality or authority, and no statute, rule,
regulation or other requirement shall have been promulgated or enacted and be in
effect, that restrains, enjoins or invalidates the transactions contemplated
hereby;

                  (c) No Suits. No suit or other proceeding shall be pending or
threatened by any third party before any court or governmental agency seeking to
restrain or prohibit or declare illegal, or seeking substantial damages in
connection with, the transactions contemplated by this Agreement.

                                    ARTICLE V

                                     ASSETS

         5.01 Asset. The only assets or property of any kind owned by the
Company are the Aircraft identified on Exhibit "B". All of the above, together
with the existing components, avionics, accessories, equipment attached or
unattached, instrumentation and log books, including without limitation the
specifications and features set forth in Exhibit B hereto, are collectively
referred to herein as the "Aircraft".

                                   ARTICLE VI

                             POST CLOSING INSPECTION

         6.01 Inspection of the Aircraft. On a date that is mutually agreed
between Buyer and Seller, but not later than October 31, 2001, Seller will
present the Aircraft for inspection to Buyer, or Buyers designated
representative. The location of such presentation for inspection shall be the
Buyer's hangar located at Tulsa International Airport, Tulsa, Oklahoma, and the
direct cost of presenting the Aircraft for inspection shall be borne by the
Seller. The cost of the inspection shall be borne by Seller. Upon such
presentation of the Aircraft for inspection by Seller, Buyer shall have the
right for a period of up to seven (7) days to inspect the Aircraft, to conduct a
test flight under the supervision and control of Seller, and to review all
maintenance records, all flight and other records and to otherwise conduct such
physical, technical, engineering and mechanical reviews and tests as would a
normal prudent purchaser of similar aircraft. Within two (2) business days
following the end of such seven (7) day period, Buyer or its representative
shall deliver to Seller a detailed list of any defects (whether physical,
mechanical or otherwise) that Buyer requires to be remedied as a condition of
completing the purchase of the Interest. Seller shall have fifteen (15) days
following


                                       4
<PAGE>


the receipt of such notice to either (i) remedy defects affecting
airworthiness of the Aircraft to the reasonable satisfaction of Buyer, or (ii)
agree to pay Buyer an amount that the parties agree is the projected cost of
remedying such defects affecting the airworthiness of the Aircraft. In the event
that Seller undertakes to remedy any defects notified by Buyer, Buyer shall have
a reasonable period thereafter to conduct such further tests of the Aircraft to
confirm the completion of any repairs made by Seller as provided above. Defects
not affecting the airworthiness of the Aircraft shall be itemized and, subject
to mutual agreement by the parties, the Seller shall pay Buyer the reasonable
cost of such repairs. Notwithstanding the above, any Defects existing on or
prior to February 26, 2001, shall not be subject to this Section. Buyer and
Seller shall coordinate on any such preexisting defects.

         6.02 All flight manuals, maintenance manuals, parts catalogs, wiring
diagrams as well as all other records, paperwork, or minor equipment as is
normally considered to be part of the Aircraft will be given to Buyer at closing
or at a later time consented to in writing by the Buyer.

                                   ARTICLE VI

                                  MISCELLANEOUS

         7.01 Notices. Any notice, request, instruction, correspondence or other
communication to be given or made hereunder by either party to the other (herein
collectively called "Notice") shall be in writing and (a) delivered by hand, (b)
mailed by certified mail, postage prepaid and return receipt requested, (c) sent
by telecopier, or (d) sent by Express Mail, Federal Express, or other express
delivery service.

         7.02 Governing Law. The provisions of this agreement, the schedules
hereto, and the documents delivered pursuant hereto shall be governed by and
construed in accordance with the laws of the State of Oklahoma (excluding any
conflicts-of-law rule or principle that might refer such matters to the laws of
another jurisdiction), except to the extent that such matters are mandatorily
subject to the laws of another jurisdiction pursuant to the laws of such other
jurisdiction.

         7.03 Entire Agreement; Amendments and Waivers. This Agreement, together
with all Schedules hereto, constitutes the entire agreement between the parties
hereto pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties regarding the Interest or the Aircraft. No supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (regardless of whether similar), nor shall any such waiver
constitute a continuing waiver unless otherwise expressly provided.

         7.04 Binding Effect and Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns. Neither this


                                       5
<PAGE>


Agreement nor any of the rights, benefits or obligations hereunder shall be
assigned, by operation of law or otherwise, by any party hereto prior to the
Closing without the prior written consent of the other party. Except as
expressly provided herein, nothing in this Agreement is intended to confer upon
any Person other than the parties hereto and their respective permitted
successors and assigns, any rights, benefits or obligations hereunder.

         7.05 Severability. If any one or more of the provisions contained in
this Agreement or in any other document delivered pursuant hereto shall, for any
reason, be held to be invalid, illegal or unenforceable in any material respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement or any other such document.

         7.06 No Implied Warranty on Aircraft. BUYER UNDERSTANDS THAT THE
AIRCRAFT WAS ACQUIRED BY THE COMPANY FROM SELLER ON AN "AS IS" CONDITION. UNLESS
OTHERWISE PROHIBITED BY LAW, BUYER AGREES THAT (i) SELLER MAKES NO WARRANTIES,
EXPRESSED OR IMPLIED WITH RESPECT TO THE AIRCRAFT THAT CONTINUE BEYOND THE
CLOSING, EXCEPT THAT SELLER WARRANTS THAT THE COMPANY HAS GOOD AND MARKETABLE
TITLE TO THE AIRCRAFT AND THE AIRCRAFT WAS ACQUIRED BY THE COMPANY FROM SELLER
WITH A FAA 8050-2 BILL OF SALE, FREE AND CLEAR OF ALL LIENS, (ii) BUYER WAIVES
AS TO SELLER ALL OTHER WARRANTIES RELATING TO THE AIRCRAFT, WHETHER OF
MERCHANTABILITY, FITNESS OR OTHERWISE, (iii) SELLER DISCLAIMS ALL LEGAL
RESPONSIBILITY FOR PRODUCT DEFECTS RELATING TO THE AIRCRAFT THAT MIGHT CAUSE
HARM, (iv) SELLER SHALL NOT BE LIABLE FOR ANY GENERAL, CONSEQUENTIAL OR
INCIDENTAL DAMAGES, INCLUDING, WITHOUT LIMITATION, ANY DAMAGES FOR LOSS OF USE,
LOSS OF PROFITS OR DIMINUTION OF MARKET VALUE OF THE AIRCRAFT, AND SELLER SHALL
NOT BE LIABLE FOR ANY DAMAGES CLAIMED BY BUYER OR ANY OTHER PERSON OR ENTITY
UPON THE THEORIES OF NEGLIGENCE OR STRICT LIABILITY IN TORT, (v) IF THE AIRCRAFT
SHOULD FOR ANY REASON PROVE TO BE DEFECTIVE, SELLER AND COMPANY BEAR NO
OBLIGATION FOR SERVICING AND REPAIR OF SUCH DEFECT(S), AND (vi) ALL RISK AS TO
THE QUALITY AND PERFORMANCE OF THE AIRCRAFT IS THAT OF THE COMPANY. Upon
Delivery the Seller shall deliver to the Company an assignment of all
manufacturer's warranties, if any, with respect to the Aircraft that are
assignable (other than those warranties which by their terms are not
assignable). Seller shall also, upon Buyer's request, reasonably execute, or
cause to be executed such further documents as may be necessary to assist the
Company to maintain continuity of the warranties and to assist the Company to
process warranty claims directly with the manufacturers. All costs, if any, to
transfer said manufacturer's warranties shall be at Buyer's expense.

         7.07 Headings and Schedules. The headings of the several Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the


                                       6
<PAGE>


meaning or interpretation of this Agreement. The Schedules referred to herein
are attached hereto and incorporated herein by this reference. Seller may revise
or supplement the Schedules at any time prior to Closing.

         7.08 Further Assurances. After the Closing, Seller and Buyer will take
all appropriate action and execute any documents, instruments or conveyances of
any kind that may be reasonably necessary to effectuate the intent of this
Agreement.

         7.09 Taxes. Seller hereby agrees to pay, and indemnify and hold
harmless the Buyer from and against, any and all taxes (including interest and
penalties), duties and fees assessed or levied by any federal, state or local
taxing authority as a result of this Agreement or the sale, delivery,
registration or ownership of the Aircraft by the Company. Seller shall not,
however, be liable for any tax imposed with respect to, or measured by, the net
income of the Buyer.

         7.10 Confidentiality. The terms and conditions of this offer shall
remain confidential. Seller and Buyer agree to not divulge any terms and/or
conditions contained herein prior to, or subsequent to delivery, with the
exception of filings with federal or state agencies.

         7.12 Counterparts and Binding Effect. This Agreement may be executed in
counterparts and each counterpart shall be an original, and all counterparts
together shall be one and the same. This Agreement shall be binding and
enforceable against, and run to the benefit of, the successors and assigns of
the parties hereto.


[Signature page follows]





                                       7
<PAGE>







EXECUTED as of the date first set forth above.


SELLER:

WILLIAMS COMMUNICATIONS, LLC


By:     /s/   Howard S. Kalika
     ------------------------------------------------
Name:         Howard S. Kalika
       ----------------------------------------------
Title:        Treasurer and Vice President
        ---------------------------------------------




BUYER:

WILLIAMS AIRCRAFT, INC.


By:     /s/  Mark W. Husband
     ------------------------------------------------
Name:        Mark W. Husband
       ----------------------------------------------
Title:       Assistant Treasurer
        ---------------------------------------------





              Signature Page to that certain Membership  Interest
            Purchase Agreement between Williams Communications, LLC
                          and Williams Aircraft, Inc.



                                       8
<PAGE>



                                    EXHIBIT A

           ASSIGNMENT OF LIMITED LIABILITY COMPANY MEMBERSHIP INTEREST


THIS ASSIGNMENT OF LIMITED LIABILITY COMPANY MEMBERSHIP INTEREST (this
"Assignment"), dated effective as of September 13, 2001, is WILLIAMS
COMMUNICATIONS LLC, a Delaware limited liability company ("Assignor"), WILLIAMS
AIRCRAFT, INC., a Delaware corporation ("Assignee").

                                    Recitals

A.       Assignor is the owner of the entire membership interest in Williams
Communications Aircraft, LLC, a Delaware limited liability company (the
"Company").

B.       Assignor has agreed to assign to Assignee all of its interest in the
Company and Assignee has agreed to accept such assignment.

                            Assignment and Assumption

For $10 and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Assignor and Assignee agree as follows:

1.      Assignor hereby transfers, grants, contributes, conveys and assigns to
Assignee all of its ownership rights, titles and interests in and to the
Company, including but not limited to all of Assignor's membership interest in
the Company (collectively, the "Assigned Interests").

2.       Assignee hereby assumes all liabilities and obligations accruing with
respect to the Assigned Interests from and after September 13, 2001.

3.      Assignor will, upon request from Assignee, execute and deliver any
additional documents necessary to complete the sale, assignment and transfer of
the Assigned Interests tendered hereby. Assignor authorizes the Company to
transfer ownership of the Assigned Interests to Assignee on the books and
records of the Company.

4.       This Assignment shall be binding upon, and shall inure to the benefit
of the parties hereto and their successors, heirs and assigns.

5.       This Assignment shall be governed by the laws of the State of Oklahoma,
without regard for its conflict of laws rules.




                                       9
<PAGE>


6.       This Assignment may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
document.


EXECUTED to be effective as of the date first set forth above.


ASSIGNOR:

WILLIAMS COMMUNICATIONS, LLC


By:      /s/  Howard S. Kalika
     ------------------------------------------------

Name:         Howard S. Kalika
         --------------------------------------------

Title:        Treasurer and Vice President
         --------------------------------------------


ASSIGNEE:

WILLIAMS AIRCRAFT, INC.


By:      /s/  Mark W. Husband
     ------------------------------------------------

Name:         Mark W. Husband
       ----------------------------------------------

Title:        Assistant Treasurer
        ---------------------------------------------





                                       10
<PAGE>





                                    EXHIBIT B

                     DESCRIPTION OF AIRCRAFT SPECIFICATIONS

         1.       CESSNA MODEL 560 CITATION V AIRCRAFT WITH MANUFACTURER'S
                  SERIAL NUMBER 560-0194 AND UNITED STATES NATIONALITY AND
                  REGISTRATION MARKS N352WC.

                  PRATT & WHITNEY MODEL JT15D-5D AIRCRAFT ENGINES WITH
                  MANUFACTURER'S SERIAL NUMBERS PCE-108400 AND PCE-108397.

                  SUCH AIRCRAFT TO BE BASED AT TULSA INTERNATIONAL AIRPORT, CITY
                  OF TULSA, OKLAHOMA, COUNTRY OF U.S.A.

         2.       CESSNA MODEL 750 CITATION X AIRCRAFT WITH MANUFACTURER'S
                  SERIAL NUMBER 750-0121 AND UNITED STATES NATIONALITY AND
                  REGISTRATION MARKS N358WC.

                  ALLISON MODEL AE3007C AIRCRAFT ENGINES WITH MANUFACTURER'S
                  SERIAL NUMBERS CAE330260 AND CAE330261.

                  SUCH AIRCRAFT TO BE BASED AT TULSA INTERNATIONAL AIRPORT, CITY
                  OF TULSA, OKLAHOMA, COUNTRY OF U.S.A.

         3.       CESSNA MODEL 560XL CITATION EXCEL AIRCRAFT WITH MANUFACTURER'S
                  SERIAL NUMBER 560-5129 AND UNITED STATES NATIONALITY AND
                  REGISTRATION MARKS N359WC.

                  PRATT & WHITNEY MODEL PW545A AIRCRAFT ENGINES WITH
                  MANUFACTURER'S SERIAL NUMBERS PCEDB0271 AND PCEDB0265.

                  SUCH AIRCRAFT TO BE BASED AT SPIRIT OF SAINT LOUIS AIRPORT,
                  CITY OF CHESTERFIELD, MISSOURI, COUNTRY OF U.S.A.




                                       11






</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(U)
<SEQUENCE>12
<FILENAME>d93687ex10-u.txt
<DESCRIPTION>AIRCRAFT DRY LEASE N352WC, DATED 9/13/01
<TEXT>
<PAGE>
                                                                   EXHIBIT 10(u)

                               AIRCRAFT DRY LEASE
                                     N352WC

                  This Aircraft Dry Lease ("Lease") dated as of September 13,
2001 ("Effective Date"), is by and between Williams Communications Aircraft,
LLC, a Delaware limited liability company and a wholly owned subsidiary of
Williams Aircraft, Inc. ("Lessor") and Williams Communications, LLC, a Delaware
limited liability company (the "Lessee").

                  Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor the aircraft described on Schedule "B" attached hereto, together with all
engines, equipment, attachments, substitutions, replacements and additions
(collectively, the "Aircraft").

         1. Certain Definitions: For purposes of this Lease the terms
"Additional Charge", "Affiliate", "Change in Control", "Debt", "Encumbrance",
"Environmental Laws", "ERISA", "ERISA Event", "GAAP:", "Governmental Authority",
"Hazardous Materials", "Material Adverse Affect", "Material Debt", "Notice",
"Officer's Certificate", "Overdue Rate", "Permitted Encumbrances", "Person",
"Plan", "Prime Rate", "Proceeding", "Transfer", and "WCG" shall have the
meanings described for such capitalized terms as contained in the Master Lease
dated September 13, 2001, among Williams Headquarters Building Company, Williams
Technology Center, LLC, and Williams Communications, LLC. Capitalized terms not
otherwise specifically defined in this Lease shall have the meanings described
for such capitalized terms as contained in the Credit Agreement dated as of
September 8, 1999 (the "Credit Agreement") among Lessee, Bank of America, N.A.,
The Chase Manhattan Bank and other parties (and capitalized terms contained
within such definitions as set forth in the Credit Agreement shall similarly
have the meanings described for such capitalized terms therein) with respect to
the financial covenants therein. A copy of the Credit Agreement is attached
hereto as Exhibit I. Lessee shall provide copies of any amendments or
restatements or waivers to the Credit Agreement to Lessor within five (5) days
of execution thereof. Such amendments or restatements or waivers shall
automatically become a part hereof with respect to the financial covenants.

         2. Term and Rent: This Lease is for a term of ten (10) years, beginning
September 13, 2001, and ending September 1, 2011. For said term or any portion
thereof, Lessee shall pay to Lessor rentals ("Rent") payable in accordance with
Schedule "A", of which the first is due October 1, 2001, and the others on a
like date of each month thereafter. All Rent shall be paid at Lessor's place of
business shown below, or such other place as the Lessor may designate by written
notice to the Lessee. All Rent shall be paid without notice or demand and
without abatement, deduction or set-off of any amount whatsoever. The operation
and use of the Aircraft shall be at the risk of Lessee, and not of Lessor and
the obligation of Lessee to pay Rent hereunder shall be unconditional.

                  2.1 Late Charge; Interest: If any Rent payable to Lessor is
         not paid when due, Lessee shall pay Lessor on demand, as an Additional
         Charge, (a) a late charge equal to (i) two percent (2%) of the amount
         not paid within five (5) days of the date when due plus (b) if such
         Rent (including the late charge) is not paid within ten (10) days of
         the date due,

<PAGE>

         interest thereon at the Overdue Rate from such tenth (10th) day until
         such Rent (including the late charge and interest) is paid in full.

         3. Destruction of Aircraft: If the Aircraft is lost, stolen, totally
destroyed, damaged beyond repair or permanently rendered unfit for use for any
reason whatsoever, the liability of the Lessee to pay Rent therefor may be
discharged by paying to Lessor all the Rent due thereon, plus all the Rent to
become due thereon less the net amount of the recovery, if any, actually
received by Lessor from insurance or otherwise for such loss or damage. Lessor
shall not be obligated to undertake, by litigation or otherwise, the collection
of any claim against any person for loss or damage of the Aircraft. Except as
expressly provided in this paragraph, the total or partial destruction of the
Aircraft, or total or partial loss of use or possession thereof to Lessee, shall
not release or relieve Lessee from the duty to pay the Rent herein provided.

         4. No Warranties by Lessor; Compliance with Laws and Insurance: Lessor,
not being the manufacturer of the Aircraft, nor manufacturer's agent, makes no
warranty or representation, either express or implied, as to the fitness,
quality, design, condition, capacity, suitability, merchantability or
performance of the Aircraft or of the material or workmanship thereof, or that
the Aircraft will satisfy the requirements of any law, rule, specification or
contract, it being agreed that the Aircraft is leased "as is" and that all such
risks, as between the Lessor and the Lessee, are to be borne by the Lessee at
its sole risk and expense, Lessee accordingly agrees not to assert any claim
whatsoever against the Lessor based thereon. Lessee further agrees, regardless
of cause, not to assert any claim whatsoever against the Lessor for loss of
anticipatory profits or consequential, indirect, special or punitive damages.
Lessor shall have no obligation to test or service the Aircraft. Lessee agrees,
at its own cost and expense, (a) to pay all charges and expenses in connection
with the operation of the Aircraft; (b) to comply with all governmental laws,
ordinances, regulations, requirements and rules with respect to the use and
operation of the Aircraft; and (c) to maintain at all times (i) Aircraft hull
insurance, including all-risk ground and flight insurance on the Aircraft for
the stated value thereof (not to be less than the full current market value as
determined annually by the parties) for the term of this Lease, plus other
insurance thereon in amounts and against such risks as Lessor may specify, and
deliver each policy to Lessor with a standard long form endorsement attached
thereto showing loss payable to Lessor as its interest may appear, and (ii)
combined single limit liability insurance covering bodily injury liability,
property damage liability and passenger liability for the term of this Lease
naming Lessor its parent and affiliates as additional insureds to the full
extent of the policies carried, but in no event less than $200,000,000.00 per
occurrence. Lessee shall deliver to Lessor evidence of such insurance coverage.
All insurance policies must provide that no cancellation or non-renewal thereof
shall be effective without 30 days prior written notice to Lessor and all
insurance policies shall be in form, terms and amounts and with insurance
carriers satisfactory to Lessor.


                                       2
<PAGE>

         5. Maintenance. Lessee, at its cost and expense, shall:

                  5.1 perform or cause to be performed all airworthiness
         directives, mandatory manufacturer's service bulletins, and all other
         mandatory service, inspections, repair, maintenance, overhaul and
         testing: (a) as may be required under applicable Federal Aviation
         Administration (the "FAA") rules and regulations, (b) in the same
         manner and with the same care as shall be the case with similar
         aircraft and engines owned by or operated on behalf of Lessee without
         discrimination, and (c) so as to keep the Aircraft in as good operating
         condition as when delivered to the Lessee, ordinary wear and tear
         excepted, with all systems in good operating condition;

                  5.2 keep the Aircraft in such condition as is necessary to
         enable the airworthiness certification of the Aircraft to be maintained
         at all times under applicable FAA regulations and any other applicable
         law, including, but not limited to any equipment modifications or
         installations required by the FAA;

                  5.3 maintain, in the English language, all records and other
         materials required by and in a manner acceptable to the FAA and any
         other governmental entity having jurisdiction over the Aircraft and its
         operation;

                  5.4 Lessee shall furnish Lessor reports on an annual basis a
         list of those service bulletins, airworthiness directives and
         engineering modifications incorporated on the Aircraft during the
         preceding calendar year.

         6. Taxes: Lessee agrees that, during the term of this Lease, in
addition to the Rent and all other amounts provided herein to be paid, it will
promptly pay all taxes, assessments and other governmental charges (including
penalties and interest, if any, and fees for titling or registration, if
required) levied or assessed: (a) upon the interest of the Lessee in the
Aircraft or upon the use or operation thereof or on the earnings arising
therefrom; and (b) against Lessor on account of its acquisition or ownership of
the Aircraft, or the use or operation thereof or the leasing thereof to the
Lessee, or the Rent herein provided for, or the earnings arising therefrom,
exclusive, however, of any taxes based on net income of Lessor ("Taxes"). Lessee
agrees to file, on behalf of Lessor, all required tax returns and reports
concerning the Aircraft with all appropriate governmental agencies, and within
not more than 45 days after the due date of such filing to send Lessor
confirmation, in form satisfactory to Lessor, of such filing.

                  6.1 Lease Characterization: Lessor and Lessee agree that the
         terms of this Lease create an operating lease for federal and state
         income tax purposes. Consistent with the foregoing, Lessor intends to
         retain all tax benefits associated with this Lease and Lessee agrees
         not to take an inconsistent position on its federal or state income tax
         filings. If any action taken by one party under this Lease causes this
         Lease to be ultimately determined by any taxing authority not to be an
         operating lease, that party shall indemnify the other party for any
         resulting increase in the other party's federal or state income tax
         liability for any period.


                                       3
<PAGE>

                  6.2 Permitted Contests: Lessee, on its own or on Lessor's
         behalf or in Lessor's name, but at Lessee's sole cost and expense,
         shall have the right to contest, by an appropriate legal proceeding
         conducted in good faith and with due diligence, the amount or validity
         of any levy or assessment of Taxes provided (a) prior notice of such
         contest is given to Lessor, (b) the Aircraft would not be in any danger
         of being sold, forfeited or attached as a result of such contest, and
         there is no risk to Lessor of a loss of or interruption in the payment
         of Rent, (c) in the case of unpaid Taxes, collection thereof is
         suspended during the pendency of such contest, and (d) compliance may
         legally be delayed pending such contest. Upon request of Lessor, Lessee
         shall deposit funds or assure Lessor in some other manner reasonably
         satisfactory to Lessor that the Taxes, together with interest and
         penalties, if any, thereon, and any and all costs for which Lessee is
         responsible will be paid if and when required upon the conclusion of
         such contest. Lessee shall defend, indemnify and save harmless Lessor
         from all costs or expenses arising out of or in connection with any
         such contest, including but not limited to payment of Taxes and
         attorneys' fees. If at any time Lessor reasonably determines that
         payment of the Taxes contested by Lessee is necessary in order to
         prevent loss of the Aircraft or Rent or civil or criminal penalties or
         other damage, upon such prior notice to Lessee as is reasonable in the
         circumstances Lessor may pay such amount or take such other action as
         it may deem necessary to prevent such loss or damage. If reasonably
         necessary, upon Lessee's written request Lessor, at Lessee's expense,
         shall cooperate with Lessee in a permitted contest, provided Lessee
         upon demand reimburses Lessor for Lessor's costs incurred in
         cooperating with Lessee in such contest.

         7. Lessor's Right of Inspection and Identification of Aircraft: All
equipment, engines, radios, accessories, instruments and parts now or hereafter
used in connection with the Aircraft shall become part of the Aircraft by
accession. Lessor warrants that the Aircraft is not registered under the laws of
any foreign country. Lessee shall permit Lessor or its designee, on 5 days prior
written notice to visit and inspect the Aircraft, its condition, use and
operation, and the records maintained in connection therewith, at any reasonable
time without interfering with the normal operation of the Aircraft, at Lessor's
cost and expense, provided that no Default or Event of Default has occurred and
is continuing. Lessor shall have no duty to make any such inspection and shall
not incur any liability or obligation by reason of not making any such
inspection. Lessor's failure to object to any condition or procedure observed or
observed in the course of an inspection hereunder shall not be deemed to waive
or modify any of the terms of this Lease with respect to such condition or
procedure.

         8. Possession and Place of Use: The Aircraft shall be based at the
location specified in Schedule "B", and shall not be permanently removed
therefrom without Lessor's prior written consent. Lessee shall not, without
Lessor's prior written consent, (a) part with possession or control of the
Aircraft, (b) attempt or purport to sell, pledge, mortgage or otherwise encumber
the Aircraft


                                       4
<PAGE>

or otherwise dispose of or encumber any interest under this Lease, or (c) fly or
permit the Aircraft to be flown or located outside the area covered by insurance
required by paragraph 3 of this Lease.

         9. Lessee's Warranties: Lessee warrants that the Aircraft will be
registered under the laws of the United States and will not be registered under
the laws of any foreign country; that the Aircraft and/or equipment will not be
held, maintained or used in violation of any law, regulation, ordinance or
policy of insurance affecting the maintenance, use or flight of Aircraft. These
warranties are conditions of Lessee's right of possession and use, and delivery
is made in reliance thereon.

         10. Performance of Obligations of Lessee by Lessor: In the event that
Lessee shall fail duly and promptly to perform any of its obligations under the
provisions of this Lease, Lessor may, at its option, perform the same for the
account of Lessee without thereby waiving such default, and any amount paid or
expense (including reasonable attorneys' fees), penalty or other liability
incurred by Lessor in such performance, together with interest at the Overdue
Rate until paid by Lessee to Lessor, shall be payable by Lessee upon demand as
additional rent for the Aircraft.

         11. Purchase Option: At any time during the term of this Lease, if
Lessee has paid in full all rentals owing hereunder and is not in default
hereunder, Lessee shall have the option to purchase the Aircraft for an amount
equal to the greater of (1) fair market value of the Aircraft or (2) the
Termination Value in accordance with Schedule "C" plus accrued interest. Lessee
shall give Lessor written notice of its intent to exercise such option not less
than 30 days prior to the transfer of the Aircraft to Lessee. Fair market value
shall be determined by a mutually agreed upon independent aircraft broker. If
the parties cannot agree on the selection of a broker, each party shall
designate a broker. Such selected brokers will then select a third broker to
appraise the Aircraft. Such third party broker appraisal shall be binding upon
the parties.

              Lessee shall also have the right to purchase the Aircraft as of
October 1, 2006 ("Early Buy-Out Option") for the Termination Value for such date
in accordance with Schedule "C" plus accrued interest.

         Lessee shall also be responsible for all transaction costs associated
with any exercise in accordance with this Section 11.

         12. Put Option: Upon the expiration of the original term of this Lease,
Lessor shall have the option to require the Lessee to purchase the Aircraft for
an amount equal to the agreed fair market value of the Aircraft as defined in
Section 11 hereof. Lessor shall provide Lessee written notice of its intent to
exercise such option not less than 30 days prior to the expiration of the
original term of this Lease.

         Lessee shall also be responsible for all transaction costs associated
with any exercise in accordance with this Section 12.


                                       5
<PAGE>

         13. Default: An event of default ("Event of Default") shall occur if:

                  (a) Lessee fails to pay or cause to be paid the Rent when due
and payable;

                  (b) Either Lessee or WCG, has a petition in bankruptcy filed
against it, is adjudicated a bankrupt or has an order for relief thereunder
entered against it, or a court of competent jurisdiction enters an order or
decree appointing a receiver of Lessee or WCG or of the whole or substantially
all of its property, or approving a petition filed against Lessee seeking
reorganization or arrangement of Lessee under the federal bankruptcy laws or any
other applicable law or statute of the United States of America or any state
thereof, any such judgment, order or decree is not vacated or set aside or
stayed within sixty (60) days from the date of the entry thereof, subject to the
applicable provisions of the Bankruptcy Code (11 U.S.C Section 101, et seq);

                  (c) Lessee or WCG: (i) admits in writing its inability to pay
its debts generally as they become due, (ii) files a petition in bankruptcy or a
petition to take advantage of any insolvency law, (iii) makes a general
assignment for the benefit of its creditors, (iv) consents to the appointment of
a receiver of itself or of the whole or any substantial part of its property, or
(v) files a petition or answer seeking reorganization or arrangement under the
Federal bankruptcy laws or any other applicable law or statute of the United
States of America or any state thereof, subject to the applicable provisions of
the Bankruptcy Code (11 U.S.A. Section 101, et seq);

                  (d) Lessee or WCG, is liquidated or dissolved, or begins a
Proceeding toward liquidation or dissolution, or has filed against it a petition
or other Proceeding to cause it to be liquidated or dissolved and the Proceeding
is not dismissed within thirty (30) days thereafter, or Lessee in any manner
permits the sale or divestiture of substantially all of its assets;

                  (e) The estate or interest of Lessee in the Aircraft or any
part thereof is levied upon or attached in any Proceeding and the same is not
vacated or discharged within thirty (30) days thereafter (unless Lessee is in
the process of consenting such lien or attachment in good faith);

                  (f) Any representation or warranty made by Lessee in the
Membership Interest Purchase Agreement or in the certificate delivered in
connection therewith shall prove to be incorrect in any material respect when
made or deemed made, Lessor is materially and adversely affected thereby and
Lessee fails within twenty (20) days after Notice from Lessor thereof to cure
such condition by terminating such adverse effect and making Lessor whole for
any damage suffered therefrom, or, if with due diligence such cure cannot be
effected within twenty (20) days, if Lessee has failed to commence to cure the
same within the twenty (20) days or failed thereafter to proceed promptly and
with due diligence to cure such condition and complete such cure prior to the
time that such condition causes a default in any other lease to which Lessee is
subject and prior to the time that the same results in civil or criminal
penalties to Lessor, Lessee, or any Affiliates of any of such parties or the
Aircraft;


                                       6
<PAGE>

                  (g) A Transfer occurs without the prior written consent of
Lessor;

                  (h) Except as otherwise provided in subsection (m) below, a
default occurs under any Material Debt when and as the same become due and
payable (subject to any applicable grace period);

                  (i) Lessee fails to purchase the Aircraft if and as required
under this Lease;

                  (j) Lessee or WCG breaches any of the financial covenants set
forth in Section 14 hereof and the breach is not cured within a period of thirty
(30) days after the earlier to occur of (i) the Notice thereof from Lessor, or
(ii) knowledge thereof by Lessee or WCG;

                  (k) Lessee fails to observe or perform any other term,
covenant or condition of this Lease and the failure is not cured by Lessee
within a period of thirty (30) days after Notice thereof from Lessor:

                  (l) Lessee breaches any representation or warranty made by it
in this Lease;

                  (m) An Event of Default as defined in the Credit Agreement,
occurs and an acceleration of any of the Loans as defined in the Credit
Agreement results;

                  (n) One or more judgments for the payment of money in an
aggregate amount in excess of $25,000,000 shall be rendered against Lessee or
WCG, or any combination thereof and the same shall remain undischarged for a
period of thirty (30) consecutive days during which execution shall not be
effectively stayed, or any action shall be legally taken by a judgment creditor
to attach or levy upon any assets of Lessee or WCG to enforce any such judgment;

                  (o) An ERISA Event shall have occurred that, in the opinion of
the Lessor, when taken together with all other ERISA Events that have occurred,
could reasonable be expected to result in liability of Lessee or WCG in an
aggregate amount exceeding $25,000,000 for all periods;

                  (p) Lessee fails to maintain the Aircraft in accordance with
the terms of this Lease;

                  (q) A Change in Control shall occur;

                  (r) Lessee fails to observe or perform any provisions of
Section 4 and Section 14.4 regarding insurance; or

                  (s) Lessee defaults on any other Aircraft Dry Lease dated
concurrently herewith.


                                       7
<PAGE>

         Upon the occurrence of an Event of Default, Lessor, at Lessor's option,
may: (a) proceed by appropriate court action or actions or other proceedings
either at law or in equity to enforce performance by Lessee of any and all
covenants of this Lease and to recover damages for the breach thereof; (b)
demand that Lessee deliver the Aircraft forthwith to Lessor at Lessee's expense
at such place as Lessor may designate; (c) Lessor and/or Lessor's agents may,
without notice or liability or legal process, enter into any premises of or
under control or jurisdiction of Lessee or any agent of Lessee where the
Aircraft may be or by Lessor is believed to be, and repossess the Aircraft,
using all force necessary or permitted by applicable law so to do, Lessee hereby
expressly waiving all further rights to possession of the Aircraft and all
claims for injuries suffered through or loss caused by such repossession; (d)
terminate this Lease, whereupon Lessee shall, without further demand, as
liquidated damages for loss of the bargain and not as a penalty forthwith pay to
Lessor any unpaid Rent that accrued on or before the occurrence of the event of
default plus an amount equal to the difference between the value, as of the date
of the occurrence of such event of default, of the aggregate Rent reserved
hereunder for the unexpired term of this Lease and the then value of the
aggregate rental value of the Aircraft for such unexpired term which the Lessor
reasonably estimates to be obtainable for the use of the Aircraft during such
unexpired terms. Should any proceedings be instituted by or against Lessor for
monies due to Lessor hereunder and/or for possession of the Aircraft or for any
other relief, Lessee shall pay a reasonable sum as attorneys' fees. If any
statute governing the proceeding in which damages are to be proved specifies the
amount of such claim, Lessor shall be entitled to prove as and for damages for
the breach an amount equal to that allowed under such statute. The remedies of
this Lease provided in favor of Lessor shall not be deemed exclusive, but shall
be cumulative, and shall be in addition to all other remedies in its favor
existing at law or in equity, and the exercise, or beginning of exercise by
Lessor of any one or more of such remedies shall not preclude the simultaneous
or later exercise by Lessor of any or all such remedies. No express or implied
waiver by Lessor of any event of default hereunder shall in any way be, or be
construed to be, a waiver of any future or subsequent events of default.

         14. Covenants: Lessee represents, warrants and covenants that:

                14.1 Existence; Conduct of Business. Lessee and WCG each will
         (i) continue to engage in business of the same general type as now
         conducted and (ii) do or cause to be done all things necessary to
         preserve, renew and keep in full force and effect its legal existence
         and the rights, licenses, permits, privileges, franchises, patents,
         copyrights, trademarks and trade names material to the conduct of its
         business.

                14.2 Payment of Obligations. Lessee and WCG each (i) will pay
         its Debt and other material obligations, including tax liabilities,
         before the same shall become delinquent or in default, except where (a)
         the validity or amount thereof is being contested in good faith by
         appropriate legal process, (b) has set aside on its books adequate
         reserves with respect thereto in accordance with GAAP, (c) such contest
         effectively suspends collection of the contested obligation and the
         enforcement of any Encumbrance securing such obligation and (d) the
         failure to make payment pending such contest could not reasonably be
         expected to


                                       8
<PAGE>

         result in a Material Adverse Effect and (ii) shall not breach, in any
         material respect, or permit to exist any material default under, the
         terms of any material lease, commitment, contract, instrument or
         obligation to which it is a party, or by which its properties or assets
         are bound, except where the failure to do the foregoing would not in
         the aggregate have a Material Adverse Effect.

                14.3 Maintenance of Properties. Lessee and WCG each will keep
         and maintain all property material to the conduct of its business in
         good working order and condition, ordinary wear and tear excepted.

                14.4 Insurance. In addition to the insurance required in Section
         4, Lessee and WCG each will maintain, with financially sound and
         reputable insurance companies, insurance in such amounts and against
         such risks as are customarily maintained by companies engaged in the
         same or similar businesses operating in the same or similar locations.
         As of the Effective Date, all premiums in respect of all insurance
         described in the Lease have been paid. Lessee shall deliver an
         insurance certificate to Lessor as of the Effective Date evidencing all
         such insurance coverages.

                14.5 Casualty and Condemnation. The Lessee will furnish to
         Lessor prompt written notice of any casualty or other insured damage to
         any portion of any of Lessor's property or assets or the commencement
         of any action or Proceeding for the taking of any of Lessor's property
         or assets or any part thereof or interest therein under power of
         eminent domain or by condemnation or similar Proceeding (in each case
         with a value in excess of $10,000,000).

                14.6 Books and Records; Inspection and Audit Rights. Lessee and
         WCG each will keep proper books of record and account in which
         materially full, true and correct entries are made of all dealings and
         transactions in relation to its business and activities. Lessee and WCG
         each will permit any representatives designated by the Lessor at the
         expense of Lessor, or, if an Event of Default shall have occurred and
         be continuing, at the expense of the Lessee, upon reasonable prior
         notice, to visit and inspect its properties, to examine and make
         extracts from its books and records, and to discuss its affairs,
         finances and condition with its officers and independent accountants,
         all at such reasonable times and as often as reasonably requested.

                14.7 Compliance with Laws. Lessee and WCG each will comply with
         all laws, rules, regulations and orders of any Governmental Authority
         applicable to it or its property (including, without limitation,
         Environmental Laws and ERISA and the rules and regulations thereunder),
         except where the necessity of compliance therewith is contested in good
         faith by appropriate action and such failure to comply, individually or
         in the aggregate, could not reasonably be expected to result in a
         Material Adverse Effect.


                                       9
<PAGE>

                14.8 Further Assurances. At any time and from time to time,
         Lessee will execute any and all further documents, financing
         statements, agreements and instruments, and take all such further
         actions (including the filing and recording of financing statements,
         fixture filings, mortgages, deeds of trust and other documents), which
         may be required under any applicable law, or which the Lessor may
         reasonably request, to effectuate the transactions contemplated by this
         Lease or to grant, preserve, protect or perfect the Encumbrances
         created or intended to be created in connection with this Lease or any
         of the other documents contemplated herein, required to be in effect or
         the validity or priority of any such Encumbrance, all at the expense of
         Lessee and Lessor. Lessee and Lessor also agree to provide to Lessor,
         from time to time upon request, evidence reasonably satisfactory to
         Lessor as to the perfection and priority of the Encumbrance created or
         intended to be created in connection with this Lease or any of the
         other documents contemplated herein.

                14.9 Pledge or Encumber Assets. Lessee shall not pledge or
         otherwise encumber any of its assets, other than leased equipment used
         in the operation of the Aircraft.

                14.10 Encumbrances. Lessee will not create, incur, assume or
         permit to exist any Encumbrance on any property or asset now owned or
         hereafter acquired by it, or assign or sell any income or revenues or
         rights in respect of any thereof, except for any Permitted Encumbrances
         or Encumbrances created in connection with or specifically contemplated
         by this Lease or permitted by the Credit Agreement.

                14.11 Fundamental Changes. Lessee and WCG each will not merge
         into or consolidate with any other Person, or permit any other Person
         to merge into or consolidate with it, or liquidate or dissolve, except
         that, if at the time thereof and immediately after giving effect
         thereto no Event of Default shall have occurred and be continuing (i)
         any Person may merge into the Lessee in a transaction in which the
         Lessee is the surviving entity, provided that any such merger involving
         a Person that is not a wholly owned by Lessor immediately prior to such
         merger shall not be permitted, and (ii) any person may merge into the
         Lessee in a transaction in which the Lessee is the surviving
         corporation.

                14.12 Other Material Agreements. Lessee shall not (i) enter into
         any other material agreement relating to any portion of the Aircraft,
         or (ii) if entered into with Lessor's consent, thereafter, amend,
         modify, renew, replace or otherwise change the terms of any such
         material agreement without the prior written consent of Lessor.

                14.13 Total Net Debt to Contributed Capital Ratio. The Total Net
         Debt to Contributed Capital ratio shall at no time prior to January 1,
         2002 exceed .65 to 1.00.

                14.14 Minimum EBITDA. The amount equal to (i) EBITDA for the
         period of four (4) fiscal quarters ending during any period set forth
         below plus (ii) ADP Interest Expense for such period minus (iii) gains
         for such period attributable to Dark Fiber and Capacity


                                       10
<PAGE>

         Dispositions plus (iv) Dark Fiber and Capacity Proceeds for such period
         shall not be less than the amount set forth below opposite such period:

<Table>
<Caption>
                            PERIOD                                              AMOUNT
                            ------                                              ------
<S>                                                                          <C>
                January 1,2001-March 31, 2001                                $200,000,000

                 April 1, 2001-June 30, 2001                                 $300,000,000

               July 1, 2001-September 20, 2001                               $350,000,000

              October 1, 2001-December 31, 2001                              $350,000,000
</Table>

                14.15 Total Leverage Ratio. (a) The Total Leverage Ratio during
         any period set forth below shall not exceed the ratio set forth below
         opposite such period:

<Table>
<Caption>
                             PERIOD                                       TOTAL LEVERAGE RATIO
                             ------                                       --------------------
<S>                                                                       <C>
                March 31, 2001-December 30, 2001                               12.50:1.00

              December 31, 2002-December 30, 2003                              9.50:1.00

                December 31, 2003 and thereafter                               4.00:1.00
</Table>

                14.16 Senior Leverage Ratio. The Senior Leverage Ratio during
         any period set forth below shall not exceed the ratio set forth below
         opposite such period:

<Table>
<Caption>

                            PERIOD                                      SENIOR LEVERAGE RATIO
                            ------                                      ---------------------
<S>                                                                     <C>
               March 31, 2002-December 30, 2002                               5.25:1.00

             December 31, 2002-December 30, 2003                              3.25:1.00

               December 31, 2003 and thereafter                               2.50:1.00
</Table>

                14.17 Interest Coverage Ratio. The Interest Coverage Ratio for
         any period of four (4) consecutive fiscal quarters ending during any
         period set forth below shall not be less than the ratio set forth below
         opposite such period:

<Table>
<Caption>
                            PERIOD                                     INTEREST COVERAGE RATIO
                            ------                                     -----------------------
<S>                                                                    <C>
                 June 30, 2002-June 29, 2003                                  1.00:1.00

               June 30, 2003-December 30, 2003                                1.50:1.00

               December 31, 2003 and thereafter                               2.00:1.00
</Table>


                                       11
<PAGE>

                14.18 Organization; Powers. Lessee is duly organized, validly
         existing and in good standing under the laws of the jurisdiction of its
         organization, has all requisite power and authority to carry on its
         business as now conducted and, except where the failure to do so,
         individually or in the aggregate, could not reasonably be expected to
         result in a Material Adverse Effect, is qualified to do business in,
         and is in good standing in, every jurisdiction where such qualification
         is required.

                14.19 Authorization; Enforceability. The execution of and
         performance under this Lease is within Lessee's' entity powers and has
         been duly authorized by all necessary member, corporate and, if
         required, stockholder action as the case may be. This Lease has been
         duly executed and delivered by Lessee and constitutes a legal, valid
         and binding obligation of the Lessee, enforceable in accordance with
         its terms, subject to applicable bankruptcy, insolvency,
         reorganization, moratorium or other laws affecting creditors' rights
         generally and subject to general principles of equity, regardless of
         whether considered in a Proceeding in equity or at law.

                14.20 Governmental Approvals; No Conflicts. The Lease or any of
         the other documents contemplated herein, (a) does not require any
         consent or approval of, registration or filing with, or any other
         action by, any Governmental Authority, except such as have been
         obtained or made and are in full force and effect and except filings
         necessary to perfect Lessor's rights under this Lease, (b) will not
         violate any applicable law or regulation or the charter, by-laws or
         other organizational documents of Lessee or Lessor or any order of any
         Governmental Authority, (c) will not violate or result in a default
         under any indenture, agreement or other instrument binding upon Lessee
         or Lessor or any of their respective assets, or give rise to a right
         thereunder to require any payment to be made by Lessee or Lessor, and
         (d) will not result in the creation or imposition of any Encumbrance on
         any asset of Lessee or Lessor, except any Encumbrance created by or in
         accordance with the Lease.

                14.21 Material Adverse Change. Since December 31, 2000, there
         has been no Material Adverse Change.

                14.22 Properties. Lessee has good title to, or valid leasehold
         interests in, all its real and personal property material to its
         business, except for minor defects in title that do not interfere with
         its ability to conduct its business as currently conducted or to
         utilize such properties for their intended purposes. None of the
         properties and assets of Lessee or Lessor is subject to any Encumbrance
         other than Permitted Encumbrances, and Encumbrances created by or in
         connection with this Lease.

                14.23 Intellectual Property. Lessee owns, or is licensed to use,
         all trademarks, trade names, copyrights, patents and other intellectual
         property material to its business, and the use thereof by Lessee does
         not infringe upon the rights of any other Person, except for any such
         infringements that, individually or in the aggregate, could not
         reasonably be expected to result in a Material Adverse Effect.

                14.24 Litigation and Environmental Matters. There is no action,
         suit or Proceeding by or before any arbitrator or Governmental
         Authority pending against or, to the knowledge


                                       12
<PAGE>

         of Lessee or Lessor, threatened against or affecting Lessee or WCG (i)
         as to which there is a reasonable possibility-bility of an adverse
         determination and that, if adversely determined, could reasonably be
         expected, individually or in the aggregate, to result in a Material
         Adverse Effect or (ii) that involve this Lease or any of the other
         documents contemplated herein.

                           14.24.1 Environmental Compliance. Except with respect
                to other matters that, individually or in the aggregate, could
                not reasonably be expected to result in a Material Adverse
                Effect, Lessee (i) has not failed to comply with any
                Environmental Law or to obtain, maintain or comply with any
                permit, license or other approval required under any
                Environmental Law, (ii) has not become subject to any liability
                with respect to any Environmental Law, (iii) has not received
                written notice of any claim with respect to any Environmental
                Law or (iv) does not know of any basis for any violations of any
                Environmental Law or any release, threatened release or exposure
                to any Hazardous Materials that is likely to form the basis of
                any liability under any Environmental Law.

                14.25 Compliance with Laws and Agreements. Lessee is in
         compliance with all laws, regulations and orders of any Governmental
         Authority applicable to it or its property and all indentures,
         agreements and other instruments binding upon it or its property,
         except where the failure to do so, individually or in the aggregate,
         could not reasonably be expected to result in a Material Adverse
         Effect. No Event of Default has occurred and is continuing.

                14.26 Investment and Holding Company Status. Lessee is not (a)
         an "investment company" as defined in, or subject to regulation under,
         the Investment Company Act of 1940 or (b) a "holding company" as
         defined in, or subject to regulation under, the Public Utility Holding
         Company Act of 1935.

                14.27 Taxes. Lessee or WCG has timely filed or caused to be
         filed all tax returns and reports required to have been filed and has
         paid or caused to be paid all taxes required to have been paid by or
         with respect to it, except (a) taxes that are being contested in good
         faith by an appropriate Proceeding and for which Lessee or Lessor, as
         applicable, has set aside on its books adequate reserves or (b) to the
         extent that the failure to do so could not reasonably be expected to
         result in a Material Adverse Effect.

                14.28 ERISA. No ERISA Event has occurred or is reasonably
         expected to occur that, when taken together with all other such ERISA
         Events for which liability is reasonably expected to occur, could
         reasonably be expected to result in a Material Adverse Effect. The
         present value of all accumulated benefit obligations under each Plan
         (based on the assumptions used for purposes of Statement of Financial
         Accounting Standards No. 87) did not, as of the date of the most recent
         financial statements reflecting such amounts, exceed by more than
         $25,000,000 the fair market value of the assets of such Plan, and the
         present value of all accumulated benefit obligations of all underfunded
         Plans (based on the assumptions used for purposes of Statement of
         Financial Accounting Standards No. 87) did not, as of the date of the
         most recent financial statements reflecting such amounts, exceed by
         more than $25,000,000 the fair market value of the assets of all such
         underfunded Plans.


                                       13
<PAGE>

                14.29 Disclosure. Lessee has disclosed all agreements,
         instruments and corporate or other restrictions to which Lessee is
         subject, and all other matters known to Lessee, that, individually or
         in the aggregate, could reasonably be expected to result in a Material
         Adverse Effect. None of the reports, financial statements, certificates
         or other information furnished by or on behalf of Lessee in connection
         with the negotiation of this Lease or delivered hereunder (as modified
         or supplemented by other information so furnished) contains any
         material misstatement of fact or omits to state any material fact
         necessary to make the statements therein, in the light of the
         circumstances under which they were made, not misleading; provided
         that, with respect to projected financial information, Lessee
         represents only that such information was prepared in good faith based
         upon assumptions believed to be reasonable at the time.

                14.30 Labor Matters. As of the Effective Date, there are no
         strikes, lockouts or slowdowns against Lessee pending or, to the
         knowledge of Lessee, threatened. The hours worked by and payments made
         to employees of Lessee have not been in violation of the Fair Labor
         Standards Act or any other applicable Federal, state, local or foreign
         law dealing with such matters. All payments due from Lessee, or for
         which any claim may be made against Lessee, on account of wages and
         employee health and welfare insurance and other benefits, have been
         paid or accrued as a liability on the books of Lessee. The execution of
         this Lease has not and will not give rise to any right of termination
         or right of renegotiation on the part of any union under any collective
         bargaining agreement by which Lessee is bound.

                14.31 No Burdensome Restrictions. No contract, lease, agreement
         or other instrument to which Lessee is a party or by which any of its
         property is bound or affected, no charge, corporate restriction,
         judgment, decree or order and no provision of applicable law or
         governmental regulation could reasonably be expected to have Material
         Adverse Effect.

                14.32 Representations True and Correct. As of the dates when
         made and as of the Effective Date, each representation and warranty of
         Lessee thereto contained in this Lease or any other documents executed
         in connection herewith, is true and correct.

         15. OFFICER'S CERTIFICATES AND FINANCIAL STATEMENTS. Lessee shall
furnish or cause to be furnished to one another:

                15.1 Fiscal Year Information. (i) within 90 days after the end
         of each fiscal year of WCG, its audited consolidated balance sheets and
         related audited consolidated statements of operations, stockholders' or
         members' equity and cash flows as of the end of and for such fiscal
         year (including segment reporting with respect to each of WCG's
         business segments consistent), setting forth in each case in
         comparative form the figures for the previous fiscal year, all reported
         on by Ernst & Young LLP or other independent public accountants of
         recognized national standing (without a "going concern" or like
         qualification or exception and without any qualification or exception
         as to the scope of such audit) to the effect that such consolidated
         financial statements present fairly in all material respects the
         financial condition and results of operations of WCG on a consolidated
         basis in accordance with GAAP consistently applied, and (ii) within 90
         days after the end of each fiscal year of WCG, supplemental unaudited
         balance sheets and related unaudited statements of operations,


                                       14
<PAGE>

         stockholders' or members' equity and cash flows as of the end of and
         for such fiscal year, setting forth in tabular form in each case the
         figures for the previous year, for WCG and the consolidating
         adjustments with respect thereto.

                15.2 Quarterly Information. (i) within 45 days after the end of
         each of the first 3 fiscal quarters of each fiscal year of WCG,
         unaudited consolidated and consolidating balance sheets and related
         consolidated and consolidating statements of operations, stockholders'
         or members' equity and cash flow of WCG as of the end of and for such
         fiscal quarter and the then elapsed portion of the fiscal year, setting
         forth in each case in comparative form the figures for the
         corresponding period or periods of the previous fiscal year (or in the
         case of the balance sheet, as of the end of the previous fiscal year),
         all certified by an Officer's Certificate as presenting fairly in all
         material respects the financial condition and results of operations of
         WCG on a consolidated basis in accordance with GAAP consistently
         applied, subject to normal year-end audit adjustments and the absence
         of footnotes and (ii) within 45 days after the end of each of the first
         3 fiscal quarters of each fiscal year of WCG, unaudited balance sheets
         and related statements of operations, stockholders' or members' equity
         and cash flow of Lessor as of the end of and for such fiscal quarter
         and the then elapsed portion of the fiscal year, setting forth in each
         case in comparative form the figures for the corresponding period or
         periods of the previous fiscal year (or, in the case of the balance
         sheet, as of the end of the previous fiscal year) all certified by a
         Officer's Certificate as presenting fairly in all material respects the
         financial condition and results of operations of WCG in accordance with
         GAAP consistently applied, subject to normal year-end audit adjustments
         and the absence of footnotes.

                15.3 Officers Certificate. Concurrently with any delivery of
         financial statements in accordance with this Lease, an Officer's
         Certificate of the Lessee (i) certifying as to whether an Event of
         Default has occurred and, if an Event of Default has occurred,
         specifying the details thereof and any action taken or proposed to be
         taken with respect thereto, (ii) setting forth in reasonable detail
         calculations demonstrating compliance with Sections 14.13 through
         14.17, and (iii) stating whether any change in GAAP or in the
         application thereof has occurred since the date referred to in
         paragraph 14.24 and, if any such change has occurred, specifying the
         effect of such change on the financial statements accompanying such
         Officer's Certificate.

                15.4 Accounting Firm Certificate. Concurrently with any delivery
         of financial statements in accordance with this Lease, a certificate of
         the accounting firm that reported on such financial statements stating
         whether they obtained knowledge during the course of their examination
         of such financial statements of any Event of Default (which certificate
         may be limited to the extent required by accounting rules or
         guidelines).

                15.5 Budget. As soon as practicable after approval by the Board
         of Directors of WCG, and in any event not later than 120 days after the
         commencement of each fiscal year of Lessor, a consolidated and
         consolidating budget of WCG for such fiscal year and a consolidated
         budget of WCG for such fiscal year and, promptly when available, any
         significant revisions of any such budget.


                                       15
<PAGE>

                15.6 SEC Filings. Promptly after the same become publicly
         available, copies of all periodic and other reports, proxy statements
         and other materials filed by WCG or any of its Affiliates with the SEC,
         or any Governmental Authority succeeding to any or all of the functions
         of the SEC, or with any national securities exchange, or distributed by
         WCG to its members generally, as the case may be, except to the extent
         any such report, proxy statement or other material is available
         electronically on a publicly-accessible website.

                15.7 Other Information. Promptly following any request therefor,
         such other information regarding the operations, business affairs and
         financial condition of Lessee, or compliance with the terms of this
         Lease or any of the documents contemplated herein.

                15.8 Credit Agreement Information. To the extent not previously
         covered by the provisions of this paragraph, copies of all information
         provided by Lessee or any Affiliates pursuant to the Credit Agreement,
         contemporaneously with its delivery pursuant thereto.

         16. NOTICES OF MATERIAL EVENTS. Upon knowledge thereof, Lessee will
furnish prompt written notice of the following. Each notice delivered under this
paragraph shall be accompanied by a statement of an Officer's Certificate, duly
executed, setting forth the details of the event or development requiring such
notice and any action taken or proposed to be taken with respect thereto.

                16.1 Event of Default. The occurrence of any Event of Default.

                16.2 Action, Suit or Proceeding. The filing or commencement of
         any action, suit or Proceeding by or before any arbitrator or
         Governmental Authority against or affecting Lessee, WCG or any
         Affiliate thereof that could reasonably be expected to result in a
         Material Adverse Effect.

                16.3 ERISA Event. The occurrence of any ERISA Event that, alone
         or together with any other ERISA Events that have occurred, could
         reasonably be expected to result in a Material Adverse Effect.

                16.4 Credit Agreement. Any change or modification to the Credit
         Agreement.

                16.5 Other Matters. Any other development that results in, or
         could reasonably be expected to result in, a Material Adverse Effect.

         17. Indemnity: Lessee agrees that Lessor shall not be liable to Lessee
for, and Lessee shall indemnify and save Lessor, its parent and affiliated
companies harmless from and against any and all liability, loss, damage,
expense, causes of action, suits, claims or judgments arising from or caused
directly or indirectly by (a) Lessee's failure to promptly perform any of its
obligations under the provisions of this Lease, (b) injury to person or property
resulting from or based upon the actual or alleged use, operation, delivery or
transportation of the Aircraft or its location or condition, or (c) inadequacy
of the Aircraft for any purpose or any deficiency or defect therein or the use
or maintenance thereof or any repairs, servicing or adjustments thereto or any
delay in providing or failure to provide any thereof or any interruption or loss
of service or use thereof or any loss of


                                       16
<PAGE>

business; and shall, at its own cost and expense, defend any and all suits which
may be brought against Lessor, either alone or in conjunction with others upon
any such liability or claim or claims and shall satisfy, pay and discharge any
and all judgments and fines that may be recovered against Lessor in any such
action or actions, provided, however, that Lessor shall give Lessee written
notice of any such claim or demand.

         18. Assignments and Notices: Neither this Lease nor Lessee's rights
hereunder shall be assignable except with Lessor's written consent; the
conditions hereof shall bind any permitted successors and assigns of Lessee.
Lessor may assign this Lease without consent of Lessee. Lessee, after receiving
notice of any assignment, shall abide thereby and make payment as may therein be
directed. Following such assignment, solely for the purpose of determining
assignor's rights hereunder, the term "Lessor" shall be deemed to include or
refer to Lessor's assignee. All notices relating hereto shall be delivered in
person to an officer of Lessor or Lessee or shall be mailed to Lessor or Lessee
at its respective address herein shown or at any later address last known to the
sender.

         19. Further Assurances: Lessee shall execute and deliver to Lessor,
upon Lessor's request, such instruments and assurances as Lessor deems necessary
or advisable for the confirmation or perfection of this Lease and Lessor's
rights hereunder, including the filing or recording of this Lease at Lessor's
option.

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

         21. Entire Agreement: There are no oral or written agreements or
representations between the parties hereto affecting this Lease. This Lease
supersedes and cancels any and all previous negotiations, arrangements,
representations, brochures, agreements and understandings, if any, between
Lessor and Lessee.

         22. Governing Law: This Lease is executed and delivered in the State of
Oklahoma, and except insofar as the law of another state or jurisdiction may be
mandatorily applicable, shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the laws of said State.

         23. Truth-in-Leasing Clause: THE AIRCRAFT HAS BEEN MAINTAINED AND
INSPECTED UNDER FEDERAL AVIATION REGULATION PART 91 FOR THE 12 MONTHS PRECEDING
THE DATE OF THIS LEASE. THE AIRCRAFT WILL BE MAINTAINED AND INSPECTED UNDER
FEDERAL AVIATION REGULATION PART 91 FOR OPERATIONS TO BE CONDUCTED UNDER THIS
LEASE. THE LESSEE CERTIFIES THAT IT IS RESPONSIBLE FOR OPERATIONAL CONTROL OF
THE AIRCRAFT AND THAT IT UNDERSTANDS ITS RESPONSIBILITIES FOR COMPLIANCE WITH
APPLICABLE FEDERAL AVIATION REGULATIONS. AN EXPLANATION OF THE FACTORS BEARING
ON OPERATIONAL CONTROL AND THE PERTINENT FEDERAL AVIATION

                                       17
<PAGE>

REGULATIONS CAN BE OBTAINED FROM THE NEAREST FAA FLIGHT STANDARDS DISTRICT
OFFICE.

LESSOR:                                  LESSEE:

WILLIAMS COMMUNICATIONS                  WILLIAMS COMMUNICATIONS, LLC
   AIRCRAFT, LLC



By:    /s/ Mark W. Husband               By:    /s/  Howard S. Kalika
       -----------------------------            --------------------------------

Name:      Mark W. Husband               Name:       Howard S. Kalika
       -----------------------------            --------------------------------

Title:     Assistant Treasurer           Title: Treasurer and Vice President
       -----------------------------            --------------------------------






Signature page to Aircraft Dry Lease (N352WC) by and between Williams
Communications Aircraft, LLC and Williams Communications, LLC dated September
13, 2001


                                       18
<PAGE>

                                  SCHEDULE "A"

                                  RENT -N352WC

                  Rent shall be payable in one hundred and twenty (120) equal
successive monthly rental payments in an amount as would be necessary to
amortize $4,000,000 on a straight-line basis over a period of one hundred and
twenty (120) months plus interest calculated at the Interest Rate as set forth
below:

                  The following definitions shall apply to this SCHEDULE "A":

                  "ABR", when used herein, refers to interest at a rate
determined by reference to the Alternate Base Rate.

                  "Applicable Margin" means, for any day, the applicable rate
per annum set forth below under the caption "Eurodollar Spread" or "ABR Spread",
as the case may be, based upon the Lessee's Bank Facility Rating set by S&P and
Moody's, respectively, applicable on such date plus (ii) the applicable rate per
annum set forth below under the caption "Leverage Premium", unless the Total
Leverage Ratio, as determined by reference to the financial statements delivered
to the Lessor in respect of the most recently ended fiscal quarter of WCG, is
less than 6:00 to 1:00.

                  "Eurodollar", when used herein, refers to interest at a rate
determined by reference to the Adjusted LIBO Rate.

                  "LIBO Rate" means, with respect to any Eurodollar Rate, the
rate appearing on Page 3750 of the Telerate Service (or on any successor or
substitute page of such Service, or any successor to or substitute for such
Service, providing rate quotations comparable to those currently provided on
such page of such Service, as determined by the Lessor from time to time for
purposes of providing quotations of interest rates applicable to dollar deposits
in the London interbank market) at approximately 11:00 a.m., London time, two
(2) Business Days prior to the FIRST DAY of each calendar month, as the rate for
dollar deposits with a maturity of thirty (30) days. In the event that such rate
is not available at such time for any reason, then the "LIBO Rate" shall be the
rate (rounded upwards, if necessary, to the next 1/16 of 1%) at which dollar
deposits of $5,000,000 and for a maturity of thirty (30) days are offered by the
principal London office of the CitiBank, N.A., in immediately available funds in
the London interbank market at approximately 11:00 a.m., London time, two (2)
Business Days prior to the FIRST DAY of each calendar month. IN EITHER CASE, THE
APPLICABLE LIBO RATE SHALL BE EFFECTIVE FOR THE CALENDAR MONTH NEXT SUCCEEDING
THE CALENDAR MONTH COMMENCING IMMEDIATELY AFTER SUCH DETERMINATION.

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

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

                  "WCG" means Williams Communications Group, Inc., a Delaware
corporation, and the parent company of Williams Communications, LLC.


                                       19
<PAGE>

Interest Rate Calculation

At Lessee's option, ABR plus Applicable Margin or LIBO Rate plus Applicable
Margin (the "Rate") as determined from time to time by S&P or by Moody's based
on Lessee's Facilities Rating in accordance with the grid below:

<Table>
<Caption>
                                   Facilities Rating of                                  Eurodollar      Leverage
                                          Lessee                       ABR Spread          Spread         Premium
                                   --------------------                ----------        ----------      --------
<S>                          <C>                                       <C>               <C>             <C>
       Level I                   BBB- and Baa3 or higher                 0.50%             1.50%           .25%
       Level II                        BB+ and Ba1                       0.875%           1.875%           .25%
      Level III                         BB and Ba2                       1.25%             2.25%           .25%
       Level IV                        BB- and Ba3                       1.50%             2.50%           .25%
       Level V               Lower than BB- or lower than Ba3            1.75%             2.75%           .25%
</Table>

         For purposes of the foregoing (i) if neither S&P nor Moody's or any
replacement or successor facility of similar size shall have in effect a rating
for the Facilities, then the Applicable Margin shall be the rate set forth in
Level V, (ii) if either S&P or Moody's, but not bot S&P or Moody's, shall have
in effect a rating for the Facilities, then the Applicable Margin shall be based
on such rating, (iii) if the ratings established by S&P or Moody's for the
Facilities shall fall within different Levels, then the Applicable Margin shall
be based on the lower of the two ratings, (iv) if the ratings established by S&P
or Moody's for the Facilities shall fall within the same Level, then the
Applicable Margin shall be based on that Level and (v) if the ratings
established by S&P or Moody's for the Facilities shall be changed (other than as
a result of a change in the rating system of S&P of Moody's), such change shall
be effective as of the date on which it is first announced by the applicable
rating agency. Each change in the Applicable Margin shall apply during the
period commencing on the effective date of such change and engine on the date
immediately preceding the effective date of the next such change.


                                       20
<PAGE>

                                  SCHEDULE "B"

         Cessna model 560 Citation V aircraft with manufacturer's serial number
560-0194 and United States nationality and registration marks N352WC.

         Pratt & Whitney model JT15D-5D aircraft engines with manufacturer's
serial numbers PCE-108400 and PCE-108397, each of which is capable of producing
750 or more rated takeoff horsepower.

         Such aircraft shall be based at Tulsa International Airport, City of
Tulsa, State of Oklahoma, Country of U.S.A.


                                       21
<PAGE>

                                  SCHEDULE "C"

                                Termination Value

The Termination Value of the Aircraft shall be set forth opposite the applicable
rent payment, plus accrued interest to such date.

CAPITALIZED LESSOR'S COST:                      $4,000,000.00

<Table>
<Caption>
                                                (1)              (2)                (3)               (4)              (2) + (4)
                           Termination        Ten Year                            Monthly       Present Value
   Payment  Monthly        Value as a      Straight-Line     Unamortized        Depreciation   of Depreciation       Termination
   Number   Period          % of Cost       Amotization        Balance            Benefits         Benefits             Value
<S>         <C>            <C>             <C>              <C>                 <C>            <C>                   <C>
      1     10/1/01          133.83%         $33,333.33     $4,000,000.00        $66,666.67      $1,353,143.02       $5,353,143.02
      2     11/1/01          131.55%         $33,333.33     $3,966,666.67        $66,666.67      $1,295,497.31       $5,262,163.97
      3     12/1/01          129.27%         $33,333.33     $3,933,333.33        $66,666.67      $1,237,467.29       $5,170,800.62
      4      1/1/02          126.98%         $33,333.33     $3,900,000.00        $26,666.67      $1,179,050.40       $5,079,050.40
      5      2/1/02          125.67%         $33,333.33     $3,866,666.67        $26,666.67      $1,160,244.07       $5,026,910.74
      6      3/1/02          124.37%         $33,333.33     $3,833,333.33        $26,666.67      $1,141,312.37       $4,974,645.70
      7      4/1/02          123.06%         $33,333.33     $3,800,000.00        $26,666.67      $1,122,254.45       $4,922,254.45
      8      5/1/02          121.74%         $33,333.33     $3,766,666.67        $26,666.67      $1,103,069.48       $4,869,736.15
      9      6/1/02          120.43%         $33,333.33     $3,733,333.33        $26,666.67      $1,083,756.61       $4,817,089.94
     10      7/1/02          119.11%         $33,333.33     $3,700,000.00        $26,666.67      $1,064,314.99       $4,764,314.99
     11      8/1/02          117.79%         $33,333.33     $3,666,666.67        $26,666.67      $1,044,743.75       $4,711,410.42
     12      9/1/02          116.46%         $33,333.33     $3,633,333.33        $26,666.67      $1,025,042.04       $4,658,375.38
     13     10/1/02          115.13%         $33,333.33     $3,600,000.00        $26,666.67      $1,005,208.99       $4,605,208.99
     14     11/1/02          113.80%         $33,333.33     $3,566,666.67        $26,666.67        $985,243.72       $4,551,910.38
     15     12/1/02          112.46%         $33,333.33     $3,533,333.33        $26,666.67        $965,145.34       $4,498,478.68
     16      1/1/03          111.12%         $33,333.33     $3,500,000.00        $16,000.00        $944,912.98       $4,444,912.98
     17      2/1/03          110.05%         $33,333.33     $3,466,666.67        $16,000.00        $935,212.40       $4,401,879.07
     18      3/1/03          108.97%         $33,333.33     $3,433,333.33        $16,000.00        $925,447.15       $4,358,780.48
     19      4/1/03          107.89%         $33,333.33     $3,400,000.00        $16,000.00        $915,616.80       $4,315,616.80
     20      5/1/03          106.81%         $33,333.33     $3,366,666.67        $16,000.00        $905,720.91       $4,272,387.57
     21      6/1/03          105.73%         $33,333.33     $3,333,333.33        $16,000.00        $895,759.05       $4,229,092.38
     22      7/1/03          104.64%         $33,333.33     $3,300,000.00        $16,000.00        $885,730.77       $4,185,730.77
     23      8/1/03          103.56%         $33,333.33     $3,266,666.67        $16,000.00        $875,635.65       $4,142,302.31
     24      9/1/03          102.47%         $33,333.33     $3,233,333.33        $16,000.00        $865,473.22       $4,098,806.55
     25     10/1/03          101.38%         $33,333.33     $3,200,000.00        $16,000.00        $855,243.04       $4,055,243.04
     26     11/1/03          100.29%         $33,333.33     $3,166,666.67        $16,000.00        $844,944.66       $4,011,611.32
     27     12/1/03           99.20%         $33,333.33     $3,133,333.33        $16,000.00        $834,577.62       $3,967,910.96
     28      1/1/04           98.10%         $33,333.33     $3,100,000.00        $50,960.00        $824,141.47       $3,924,141.47
     29      2/1/04           96.13%         $33,333.33     $3,066,666.67        $50,960.00        $778,675.75       $3,845,342.42
     30      3/1/04           94.16%         $33,333.33     $3,033,333.33        $50,960.00        $732,906.92       $3,766,240.25
     31      4/1/04           92.17%         $33,333.33     $3,000,000.00        $50,960.00        $686,832.97       $3,686,832.97
     32      5/1/04           90.18%         $33,333.33     $2,966,666.67        $50,960.00        $640,451.85       $3,607,118.52
     33      6/1/04           88.18%         $33,333.33     $2,933,333.33        $50,960.00        $593,761.53       $3,527,094.87
     34      7/1/04           86.17%         $33,333.33     $2,900,000.00        $50,960.00        $546,759.94       $3,446,759.94
     35      8/1/04           84.15%         $33,333.33     $2,866,666.67        $50,960.00        $499,445.01       $3,366,111.68
     36      9/1/04           82.13%         $33,333.33     $2,833,333.33        $50,960.00        $451,814.64       $3,285,147.98
     37     10/1/04           80.10%         $33,333.33     $2,800,000.00        $50,960.00        $403,866.74       $3,203,866.74
</Table>


                                       22
<PAGE>

The Termination Value of the Aircraft shall be set forth opposite the applicable
rent payment, plus accrued interest to such date.

CAPITALIZED LESSOR'S COST:                      $4,000,000.00

<Table>
<Caption>
                                                (1)              (2)                (3)               (4)              (2) + (4)
                           Termination        Ten Year                            Monthly       Present Value
   Payment  Monthly        Value as a      Straight-Line     Unamortized        Depreciation   of Depreciation       Termination
   Number   Period          % of Cost       Amotization        Balance            Benefits         Benefits             Value
<S>         <C>            <C>             <C>              <C>                 <C>            <C>                   <C>
     38     11/1/04           78.06%         $33,333.33     $2,766,666.67        $50,960.00        $355,599.19       $3,122,265.85
     39     12/1/04           76.01%         $33,333.33     $2,733,333.33        $50,960.00        $307,009.85       $3,040,343.18
     40      1/1/05           73.95%         $33,333.33     $2,700,000.00        $15,360.00        $258,096.58       $2,958,096.58
     41      2/1/05           72.78%         $33,333.33     $2,666,666.67        $15,360.00        $244,457.22       $2,911,123.89
     42      3/1/05           71.60%         $33,333.33     $2,633,333.33        $15,360.00        $230,726.94       $2,864,060.27
     43      4/1/05           70.42%         $33,333.33     $2,600,000.00        $15,360.00        $216,905.12       $2,816,905.12
     44      5/1/05           69.24%         $33,333.33     $2,566,666.67        $15,360.00        $202,991.15       $2,769,657.82
     45      6/1/05           68.06%         $33,333.33     $2,533,333.33        $15,360.00        $188,984.43       $2,722,317.76
     46      7/1/05           66.87%         $33,333.33     $2,500,000.00        $15,360.00        $174,884.32       $2,674,884.32
     47      8/1/05           65.68%         $33,333.33     $2,466,666.67        $15,360.00        $160,690.22       $2,627,356.88
     48      9/1/05           64.49%         $33,333.33     $2,433,333.33        $15,360.00        $146,401.49       $2,579,734.82
     49     10/1/05           63.30%         $33,333.33     $2,400,000.00        $15,360.00        $132,017.50       $2,532,017.50
     50     11/1/05           62.11%         $33,333.33     $2,366,666.67        $15,360.00        $117,537.61       $2,484,204.28
     51     12/1/05           60.91%         $33,333.33     $2,333,333.33        $15,360.00        $102,961.20       $2,436,294.53
     52      1/1/06           59.71%         $33,333.33     $2,300,000.00         $7,680.00         $88,287.60       $2,388,287.60
     53      2/1/06           58.70%         $33,333.33     $2,266,666.67         $7,680.00         $81,196.19       $2,347,862.85
     54      3/1/06           57.68%         $33,333.33     $2,233,333.33         $7,680.00         $74,057.50       $2,307,390.83
     55      4/1/06           56.67%         $33,333.33     $2,200,000.00         $7,680.00         $66,871.21       $2,266,871.21
     56      5/1/06           55.66%         $33,333.33     $2,166,666.67         $7,680.00         $59,637.02       $2,226,303.69
     57      6/1/06           54.64%         $33,333.33     $2,133,333.33         $7,680.00         $52,354.60       $2,185,687.93
     58      7/1/06           53.63%         $33,333.33     $2,100,000.00         $7,680.00         $45,023.63       $2,145,023.63
     59      8/1/06           52.61%         $33,333.33     $2,066,666.67         $7,680.00         $37,643.79       $2,104,310.46
     60      9/1/06           51.59%         $33,333.33     $2,033,333.33         $7,680.00         $30,214.75       $2,063,548.08
     61     10/1/06           50.57%         $33,333.33     $2,000,000.00         $7,680.00         $22,736.18       $2,022,736.18
     62     11/1/06           49.55%         $33,333.33     $1,966,666.67         $7,680.00         $15,207.75       $1,981,874.42
     63     12/1/06           48.52%         $33,333.33     $1,933,333.33         $7,680.00          $7,629.14       $1,940,962.47
     64      1/1/07           47.50%         $33,333.33     $1,900,000.00                                            $1,900,000.00
     65      2/1/07           46.67%         $33,333.33     $1,866,666.67                                            $1,866,666.67
     66      3/1/07           45.83%         $33,333.33     $1,833,333.33                                            $1,833,333.33
     67      4/1/07           45.00%         $33,333.33     $1,800,000.00                                            $1,800,000.00
     68      5/1/07           44.17%         $33,333.33     $1,766,666.67                                            $1,766,666.67
     69      6/1/07           43.33%         $33,333.33     $1,733,333.33                                            $1,733,333.33
     70      7/1/07           42.50%         $33,333.33     $1,700,000.00                                            $1,700,000.00
     71      8/1/07           41.67%         $33,333.33     $1,666,666.67                                            $1,666,666.67
     72      9/1/07           40.83%         $33,333.33     $1,633,333.33                                            $1,633,333.33
     73     10/1/07           40.00%         $33,333.33     $1,600,000.00                                            $1,600,000.00
     74     11/1/07           39.17%         $33,333.33     $1,566,666.67                                            $1,566,666.67
     75     12/1/07           38.33%         $33,333.33     $1,533,333.33                                            $1,533,333.33
     76      1/1/08           37.50%         $33,333.33     $1,500,000.00                                            $1,500,000.00
     77      2/1/08           36.67%         $33,333.33     $1,466,666.67                                            $1,466,666.67
     78      3/1/08           35.83%         $33,333.33     $1,433,333.33                                            $1,433,333.33
     79      4/1/08           35.00%         $33,333.33     $1,400,000.00                                            $1,400,000.00
     80      5/1/08           34.17%         $33,333.33     $1,366,666.67                                            $1,366,666.67
</Table>


                                       23
<PAGE>

The Termination Value of the Aircraft shall be set forth opposite the applicable
rent payment, plus accrued interest to such date.

CAPITALIZED LESSOR'S COST:                      $4,000,000.00

<Table>
<Caption>
                                                (1)              (2)                (3)               (4)              (2) + (4)
                           Termination        Ten Year                            Monthly       Present Value
   Payment  Monthly        Value as a      Straight-Line     Unamortized        Depreciation   of Depreciation       Termination
   Number   Period          % of Cost       Amotization        Balance            Benefits         Benefits             Value
<S>         <C>            <C>             <C>              <C>                 <C>            <C>                   <C>
     81      6/1/08           33.33%         $33,333.33     $1,333,333.33                                            $1,333,333.33
     82      7/1/08           32.50%         $33,333.33     $1,300,000.00                                            $1,300,000.00
     83      8/1/08           31.67%         $33,333.33     $1,266,666.67                                            $1,266,666.67
     84      9/1/08           30.83%         $33,333.33     $1,233,333.33                                            $1,233,333.33
     85     10/1/08           30.00%         $33,333.33     $1,200,000.00                                            $1,200,000.00
     86     11/1/08           29.17%         $33,333.33     $1,166,666.67                                            $1,166,666.67
     87     12/1/08           28.33%         $33,333.33     $1,133,333.33                                            $1,133,333.33
     88      1/1/09           27.50%         $33,333.33     $1,100,000.00                                            $1,100,000.00
     89      2/1/09           26.67%         $33,333.33     $1,066,666.67                                            $1,066,666.67
     90      3/1/09           25.83%         $33,333.33     $1,033,333.33                                            $1,033,333.33
     91      4/1/09           25.00%         $33,333.33     $1,000,000.00                                            $1,000,000.00
     92      5/1/09           24.17%         $33,333.33       $966,666.67                                              $966,666.67
     93      6/1/09           23.33%         $33,333.33       $933,333.33                                              $933,333.33
     94      7/1/09           22.50%         $33,333.33       $900,000.00                                              $900,000.00
     95      8/1/09           21.67%         $33,333.33       $866,666.67                                              $866,666.67
     96      9/1/09           20.83%         $33,333.33       $833,333.33                                              $833,333.33
     97     10/1/09           20.00%         $33,333.33       $800,000.00                                              $800,000.00
     98     11/1/09           19.17%         $33,333.33       $766,666.67                                              $766,666.67
     99     12/1/09           18.33%         $33,333.33       $733,333.33                                              $733,333.33
    100      1/1/10           17.50%         $33,333.33       $700,000.00                                              $700,000.00
    101      2/1/10           16.67%         $33,333.33       $666,666.67                                              $666,666.67
    102      3/1/10           15.83%         $33,333.33       $633,333.33                                              $633,333.33
    103      4/1/10           15.00%         $33,333.33       $600,000.00                                              $600,000.00
    104      5/1/10           14.17%         $33,333.33       $566,666.67                                              $566,666.67
    105      6/1/10           13.33%         $33,333.33       $533,333.33                                              $533,333.33
    106      7/1/10           12.50%         $33,333.33       $500,000.00                                              $500,000.00
    107      8/1/10           11.67%         $33,333.33       $466,666.67                                              $466,666.67
    108      9/1/10           10.83%         $33,333.33       $433,333.33                                              $433,333.33
    109     10/1/10           10.00%         $33,333.33       $400,000.00                                              $400,000.00
    110     11/1/10            9.17%         $33,333.33       $366,666.67                                              $366,666.67
    111     12/1/10            8.33%         $33,333.33       $333,333.33                                              $333,333.33
    112      1/1/11            7.50%         $33,333.33       $300,000.00                                              $300,000.00
    113      2/1/11            6.67%         $33,333.33       $266,666.67                                              $266,666.67
    114      3/1/11            5.83%         $33,333.33       $233,333.33                                              $233,333.33
    115      4/1/11            5.00%         $33,333.33       $200,000.00                                              $200,000.00
    116      5/1/11            4.17%         $33,333.33       $166,666.67                                              $166,666.67
    117      6/1/11            3.33%         $33,333.33       $133,333.33                                              $133,333.33
    118      7/1/11            2.50%         $33,333.33       $100,000.00                                              $100,000.00
    119      8/1/11            1.67%         $33,333.33        $66,666.67                                               $66,666.67
    120      9/1/11            0.83%         $33,333.33        $33,333.33                                               $33,333.33
</Table>


                                       24
<PAGE>

                                                                       EXHIBIT I

================================================================================

                                 $1,500,000,000

                      AMENDED AND RESTATED CREDIT AGREEMENT

                                   dated as of

                                SEPTEMBER 8, 1999

                                      among

                          WILLIAMS COMMUNICATIONS, LLC,
                                   as Borrower

                      WILLIAMS COMMUNICATIONS GROUP, INC.,
                                  as Guarantor

                            THE LENDERS PARTY HERETO,

                             BANK OF AMERICA, N.A.,
                            as Administrative Agent,

                                       and

                            THE CHASE MANHATTAN BANK,
                              as Syndication Agent

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

                            SALOMON SMITH BARNEY INC.

                                       and

                             LEHMAN BROTHERS, INC.,
                  as Joint Lead Arrangers and Joint Bookrunners
           with respect to the Incremental Facility referred to herein

                           SALOMON SMITH BARNEY INC.,

                             LEHMAN BROTHERS, INC.,

                                       and

                            MERRILL LYNCH & CO., INC.

                           as Co-Documentation Agents

================================================================================

<PAGE>


<Table>
<S>            <C>                                                                                      <C>
                              ARTICLE 1 DEFINITIONS


SECTION 1.01.  Defined Terms.............................................................................1
SECTION 1.02.  Classification of Loans and Borrowings...................................................36
SECTION 1.03.  Terms Generally..........................................................................36
SECTION 1.04.  Accounting Terms; GAAP...................................................................36

                              ARTICLE 2 THE CREDITS


SECTION 2.01.  Commitments..............................................................................38
SECTION 2.02.  Loans and Borrowings.....................................................................38
SECTION 2.03.  Requests for Borrowings..................................................................39
SECTION 2.04.  Swingline Loans..........................................................................40
SECTION 2.05.  Letters of Credit........................................................................42
SECTION 2.06.  Funding of Borrowings....................................................................46
SECTION 2.07.  Interest Elections.......................................................................47
SECTION 2.08.  Termination and Reduction of Commitments.................................................48
SECTION 2.09.  Repayment of Loans; Evidence of Debt.....................................................51
SECTION 2.10.  Amortization of Term Loans and Incremental Term Loans....................................52
SECTION 2.11.  Prepayment of Loans......................................................................55
SECTION 2.12.  Fees.....................................................................................57
SECTION 2.13.  Interest.................................................................................58
SECTION 2.14.  Alternate Rate of Interest...............................................................59
SECTION 2.15.  Increased Costs..........................................................................60
SECTION 2.16.  Break Funding Payments...................................................................61
SECTION 2.17.  Taxes....................................................................................62
SECTION 2.18.  Payments Generally; Pro Rata Treatment; Sharing of Set-offs..............................63
SECTION 2.19.  Mitigation Obligations; Replacement of Lenders...........................................65
SECTION 2.20.  Additional Incremental Facilities and Commitments........................................66

                    ARTICLE 3 REPRESENTATIONS AND WARRANTIES


SECTION 3.01.  Organization; Powers.....................................................................67
SECTION 3.02.  Authorization; Enforceability............................................................67
SECTION 3.03.  Governmental Approvals; No Conflicts.....................................................68
SECTION 3.04.  Financial Condition; No Material Adverse Change..........................................68
SECTION 3.05.  Properties...............................................................................68
SECTION 3.06.  Litigation and Environmental Matters.....................................................70
SECTION 3.07.  Compliance with Laws and Agreements......................................................70
SECTION 3.08.  Investment and Holding Company Status....................................................70
</Table>


                                       i
<PAGE>

<Table>
<S>            <C>                                                                                     <C>
SECTION 3.09.  Taxes....................................................................................70
SECTION 3.10.  ERISA....................................................................................70
SECTION 3.11.  Disclosure...............................................................................71
SECTION 3.12.  Subsidiaries.............................................................................71
SECTION 3.13.  Insurance................................................................................71
SECTION 3.14.  Labor Matters............................................................................71
SECTION 3.15.  Solvency.................................................................................72
SECTION 3.16.  No Burdensome Restrictions...............................................................72
SECTION 3.17.  Representations in Loan Documents True and Correct.......................................72

                              ARTICLE 4 CONDITIONS


SECTION 4.01.  Effective Date...........................................................................72
SECTION 4.02.  Each Credit Event........................................................................72
SECTION 4.03.  First Incremental Borrowing Date with Respect to the Incremental Facility................73

                         ARTICLE 5 AFFIRMATIVE COVENANTS


SECTION 5.01.  Financial Statements and Other Information...............................................73
SECTION 5.02.  Notices of Material Events...............................................................76
SECTION 5.03.  Existence; Conduct of Business...........................................................76
SECTION 5.04.  Payment of Obligations...................................................................77
SECTION 5.05.  Maintenance of Properties................................................................77
SECTION 5.06.  Insurance................................................................................77
SECTION 5.07.  Casualty and Condemnation................................................................77
SECTION 5.08.  Books and Records; Inspection and Audit Rights...........................................77
SECTION 5.09.  Compliance with Laws.....................................................................78
SECTION 5.10.  Use of Proceeds and Letters of Credit....................................................78
SECTION 5.11A. Initial Collateral Date..................................................................78
SECTION 5.11B. Collateral Event.........................................................................79
SECTION 5.12.  Information Regarding Collateral.........................................................81
SECTION 5.13.  Additional Subsidiaries..................................................................82
SECTION 5.14.  Further Assurances.......................................................................83
SECTION 5.15.  Concentration Accounts...................................................................84
SECTION 5.16.  Dissolution of CNG.......................................................................84
SECTION 5.17.  Sale of Solutions and ATL................................................................84
SECTION 5.18.  Qualifying Issuances.....................................................................84

                          ARTICLE 6 NEGATIVE COVENANTS


SECTION 6.01.  Indebtedness; Certain Equity Securities..................................................85
SECTION 6.02.  Liens....................................................................................87
</Table>


                                       ii
<PAGE>

<Table>
<S>            <C>                                                                                     <C>
SECTION 6.03.  Fundamental Changes......................................................................89
SECTION 6.04.  Investments, Loans, Advances, Guarantees and Acquisitions................................89
SECTION 6.05.  Asset Sales..............................................................................92
SECTION 6.06.  Sale and Leaseback Transactions..........................................................93
SECTION 6.07.  Restricted Payments; Certain Payments of Indebtedness....................................94
SECTION 6.08.  Limitation on Capital Expenditures.......................................................95
SECTION 6.09.  Transactions with Affiliates.............................................................96
SECTION 6.10.  Restrictive Agreements...................................................................96
SECTION 6.11.  Fiscal Year..............................................................................97
SECTION 6.12.  Change in Business.......................................................................97
SECTION 6.13.  Amendment of Material Documents..........................................................97
SECTION 6.14.  Designation of Unrestricted Subsidiaries.................................................97
SECTION 6.15.  Total Net Debt to Contributed Capital Ratio..............................................98
SECTION 6.16.  Minimum EBITDA...........................................................................98
SECTION 6.17.  Total Leverage Ratio.....................................................................98
SECTION 6.18.  Senior Leverage Ratio....................................................................99
SECTION 6.19.  Interest Coverage Ratio..................................................................99
SECTION 6.20.  Financial Covenant Non-Compliance Cure...................................................99

                           ARTICLE 7 EVENTS OF DEFAULT


SECTION 7.01.  Events of Default.......................................................................100

                              ARTICLE 8 THE AGENTS


SECTION 8.01.  Appointment, Powers, Immunities.........................................................103
SECTION 8.02.  Reliance by Agents......................................................................104
SECTION 8.03.  Delegation to Sub-Agents................................................................104
SECTION 8.04.  Resignation of Agents...................................................................104
SECTION 8.05.  Non-reliance on Agents or other Lenders.................................................105
SECTION 8.06.  Syndication Agent, Incremental Facility Arrangers and Co-Documentation Agents...........105

                          ARTICLE 9 HOLDINGS GUARANTEE


SECTION 9.01.  The Guarantee...........................................................................105
SECTION 9.02.  Guarantee Unconditional.................................................................106
SECTION 9.03.  Discharge Only Upon Payment in Full; Reinstatement in Certain Circumstances.............106
SECTION 9.04.  Waiver..................................................................................107
SECTION 9.05.  Subrogation.............................................................................107
</Table>


                                      iii
<PAGE>

<Table>
<S>            <C>                                                                                     <C>
SECTION 9.06.  Stay of Acceleration....................................................................107
SECTION 9.07.  Successors and Assigns..................................................................107

                            ARTICLE 10 MISCELLANEOUS


SECTION 10.01.  Notices................................................................................108
SECTION 10.02.  Waivers; Amendments....................................................................108
SECTION 10.03.  Expenses; Indemnity; Damage Waiver.....................................................110
SECTION 10.04.  Successors and Assigns.................................................................111
SECTION 10.05.  Survival...............................................................................115
SECTION 10.06.  Counterparts; Integration; Effectiveness...............................................115
SECTION 10.07.  Severability...........................................................................116
SECTION 10.08.  Right of Setoff........................................................................116
SECTION 10.09.  Governing Law; Jurisdiction; Consent to Service of Process.............................116
SECTION 10.10.  WAIVER OF JURY TRIAL...................................................................117
SECTION 10.11.  Headings...............................................................................117
SECTION 10.12.  Confidentiality........................................................................117
SECTION 10.13.  Interest Rate Limitation...............................................................118
</Table>


                                       iv
<PAGE>



<Table>
<S>                  <C>
SCHEDULE 2.01  -     COMMITMENTS
SCHEDULE 3.05  -     REAL PROPERTY
SCHEDULE 3.06  -     DISCLOSED MATTERS
SCHEDULE 3.12  -     SUBSIDIARIES
SCHEDULE 3.13  -     INSURANCE
SCHEDULE 6.01  -     EXISTING INDEBTEDNESS
SCHEDULE 6.02  -     EXISTING LIENS
SCHEDULE 6.04  -     EXISTING INVESTMENTS
SCHEDULE 6.09  -     EXISTING AFFILIATE AGREEMENTS
SCHEDULE 6.10  -     EXISTING RESTRICTIVE AGREEMENTS



EXHIBIT A      -     FORM OF ASSIGNMENT AND ACCEPTANCE
EXHIBIT B      -     FORM OF BORROWING REQUEST
EXHIBIT C-1    -     FORM OF OPINION OF SPECIAL COUNSEL TO HOLDINGS, THE
                        BORROWER AND THE SUBSIDIARY LOAN PARTIES
EXHIBIT C-2    -     FORM OF OPINION OF THE GENERAL COUNSEL OF HOLDINGS
EXHIBIT D      -     FORM OF SUBSIDIARY GUARANTEE
EXHIBIT E      -     FORM OF REVOLVING NOTE
EXHIBIT F      -     FORM OF TERM NOTE
EXHIBIT G      -     FORM OF INTERCOMPANY NOTE
EXHIBIT H      -     FORM OF INTERCREDITOR AGREEMENT
EXHIBIT I      -     [INTENTIONALLY DELETED]
EXHIBIT J      -     FORM OF PROMISSORY NOTE
EXHIBIT K      -     FORM OF SECURITY AGREEMENT
EXHIBIT L      -     FORM OF INCREMENTAL TERM NOTE
</Table>


                                       v
<PAGE>


         AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") dated as of
September 8, 1999 among Williams Communications, LLC, a Delaware limited
liability company, Williams Communications Group, Inc., a Delaware corporation,
the LENDERS party hereto, BANK OF AMERICA, N.A., as Administrative Agent, THE
CHASE MANHATTAN BANK, as Syndication Agent, and SALOMON SMITH BARNEY INC. and
LEHMAN BROTHERS, INC., as Joint Lead Arrangers with respect to the Incremental
Facility referred to herein.

         WHEREAS, Holdings, the Borrower, the lenders party thereto, Bank of
America, N.A., as Administrative Agent, The Chase Manhattan Bank, as Syndication
Agent and Salomon Smith Barney Inc. and Lehman Brothers, Inc., as Joint Lead
Arrangers with respect to the Incremental Facility referred to herein, have
entered into an Amendment No. 5 dated as of April 12, 2001 ("Amendment No. 5")
pursuant to which such parties have agreed to amend and restate the Existing
Agreement referred to therein as set forth herein;

         NOW, THEREFORE, the parties hereto agree as follows:



                                    ARTICLE 1

                                   DEFINITIONS

         SECTION 1.1. Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:

         "ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.

         "Additional Capital" means the sum of:

                  (a) $850 million;

                  (b) the aggregate Net Proceeds received by the Borrower from
         the issuance or sale of any Qualifying Equity Interests of Holdings,
         subsequent to the Amendment No. 4 Effective Date; and

                  (c) the aggregate Net Proceeds from the issuance or sale of
         Qualifying Holdings Debt subsequent to the Amendment No. 4 Effective
         Date convertible or exchangeable into Qualifying Equity Interests of
         Holdings, in each case upon conversion or exchange thereof into
         Qualifying Equity Interests of Holdings subsequent to the Amendment No.
         4 Effective Date;


                                       1
<PAGE>

provided, however, that the Net Proceeds from the issuance or sale of Equity
Interests or Debt described in clause (b) or (c) shall be excluded from any
computation of Additional Capital to the extent (1) utilized to make a
Restricted Payment or (2) such Equity Interests or Debt shall have been issued
or sold to the Borrower, a Subsidiary of the Borrower or a Plan.

         "Additional Incremental Commitment" has the meaning assigned to such
term in Section 2.20.

         "Additional Incremental Facility" has the meaning assigned to such term
in Section 2.20.

         "Additional Incremental Facility Agreement" has the meaning assigned to
such term in Section 2.20.

         "Additional Incremental Lender" has the meaning assigned to such term
in Section 2.20.

         "Additional Incremental Loan" means an Additional Incremental Revolving
Loan or an Additional Incremental Term Loan.

         "Additional Incremental Revolving Commitment" has the meaning assigned
to such term in Section 2.20.

         "Additional Incremental Revolving Loan" has the meaning assigned to
such term in Section 2.20.

         "Additional Incremental Term Commitment" has the meaning assigned to
such term in Section 2.20.

         "Additional Incremental Term Loan" has the meaning assigned to such
term in Section 2.20.

         "Adjusted EBITDA" means, for any period of four consecutive fiscal
quarters:

                  (i) if such period is a period ending on or after June 30,
         1999 and on or before September 30, 2001,

                           (A) an amount equal to (x)(1) EBITDA for the last
                           fiscal quarter in such period plus (2) ADP Interest
                           Expense for such fiscal quarter minus (3) gain for
                           such fiscal quarter attributable to Dark Fiber and
                           Capacity Dispositions multiplied by (y) four, plus

                           (B) Dark Fiber and Capacity Proceeds for such period;
                           and


                                       2
<PAGE>

                 (ii) if such period is any other period,

                           (A) EBITDA for such period plus (y) ADP Interest
                           Expense for such period minus (z) gain for such
                           period attributable to Dark Fiber and Capacity
                           Dispositions plus

                           (B) Dark Fiber and Capacity Proceeds for such period.

         "Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.

         "Administrative Agent" means Bank of America, in its capacity as
administrative agent for the Lenders hereunder, and any successor in such
capacity.

         "Administrative Questionnaire" means an Administrative Questionnaire in
a form supplied by the Administrative Agent.

         "ADP" means the program set forth in the Operative Documents.

         "ADP Event of Default" has the meaning assigned to such term in the
Intercreditor Agreement.

         "ADP Interest Expense" means, for any period, the amount that would be
accrued for such period in respect of the Borrower's obligations under the ADP
that would constitute "interest expense" for such period if such obligations
were treated as Capital Lease Obligations.

         "ADP Obligations" means all obligations of Holdings or any Subsidiary
under the ADP.

         "ADP Outstandings" means, at any time, the amount of the Borrower's
obligations at such time in respect of the ADP that would be considered
"principal" if such obligations were treated as Capital Lease Obligations.

         "ADP Property" has the meaning assigned to the term "Property" in the
Participation Agreement.

         "Affiliate" means, with respect to a specified Person, (i) another
Person that directly, or indirectly through one or more intermediaries, Controls
(a "controlling Person"), is Controlled by or is under common Control with the
specified Person, (ii) any Person that holds, directly or indirectly, 10% or
more of the Equity Interests of the specified Person and (iii) any Person 10% or
more of the Equity Interests of which are held directly or indirectly by the
specified Person or a controlling Person.


                                       3
<PAGE>

         "Agents" means, collectively, the Administrative Agent, the Syndication
Agent and each Co-Documentation Agent.

         "Alternate Base Rate" means, for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.

         "Amendment No. 4 Effective Date" means March 19, 2001.

         "Amendment No. 5" has the meaning set forth in the preamble.

         "Amendment No. 5 Effective Date" means the date of effectiveness of
Amendment No. 5.

         "Applicable Margin" means, for any day, (a) with respect to any Term
Loan or Revolving Loan, (i) the applicable rate per annum set forth below under
the caption "Eurodollar Spread" or "ABR Spread", as the case may be, based upon
the ratings by S&P and Moody's, respectively, applicable on such date to the
Facilities plus (ii) the applicable rate per annum set forth below under the
caption "Leverage Premium", unless the Total Leverage Ratio, as determined by
reference to the financial statements delivered to the Administrative Agent in
respect of the most recently ended fiscal quarter of the Borrower, is less than
6:00 to 1:00:

         (b) with respect to any Incremental Tranche A Loan, (i) the applicable
rate per annum set forth below under the caption "Eurodollar Spread" or "ABR
Spread", as the case may be, based upon the ratings by S&P and Moody's,
respectively, applicable on such date to the Facilities plus (ii) the applicable
rate per annum set forth below under the caption "Leverage Premium", unless the
Total Leverage Ratio, as determined by reference to the financial statements
delivered to the Administrative Agent in respect of the most recently ended
fiscal quarter of the Borrower, is less than 6:00 to 1:00:

<Table>
<Caption>

                   FACILITIES           EURODOLLAR               ABR               LEVERAGE
                     RATING               SPREAD               SPREAD               PREMIUM
                   ----------           ----------             ------              --------
<S>             <C>                     <C>                    <C>                 <C>
LEVEL I         BBB- and Baa3 or           1.50%                0.50%                0.25%
                     higher

LEVEL II           BB+ and Ba1            1.875%               0.875%                0.25%

LEVEL III          BB and Ba2              2.25%                1.25%                0.25%

LEVEL IV           BB- and Ba3             2.50%                1.50%                0.25%

LEVEL V          Lower than BB-
                or lower than Ba3          2.75%                1.75%                0.25%
</Table>


                                       4
<PAGE>

         and

         (c) with respect to any Additional Incremental Loan, the Applicable
Margin in respect thereof set forth in the applicable Additional Incremental
Facility Agreement.

         For purposes of the foregoing clauses (a) and (b), (i) if neither S&P
nor Moody's shall have in effect a rating for the Facilities (other than by
reason of the circumstances referred to in the last sentence of this
definition), then the Applicable Margin shall be the rate set forth in Level V,
(ii) if either S&P or Moody's, but not both S&P and Moody's, shall have in
effect a rating for the Facilities, then the Applicable Margin shall be based on
such rating, (iii) if the ratings established by S&P and Moody's for the
Facilities shall fall within different Levels, then the Applicable Margin shall
be based on the lower of the two ratings, (iv) if the ratings established by S&P
and Moody's for the Facilities shall fall within the same Level, then the
Applicable Margin shall be based on that Level and (v) if the ratings
established by S&P and Moody's for the Facilities shall be changed (other than
as a result of a change in the rating system of S&P or Moody's), such change
shall be effective as of the date on which it is first announced by the
applicable rating agency. Each change in the Applicable Margin shall apply
(other than with respect to the Leverage Premium or as described in the
immediately succeeding sentence or the immediately succeeding paragraph) during
the period commencing on the effective date of such change and ending on the
date immediately preceding the effective date of the next such change. If the
rating system of S&P or Moody's shall change, or if either such rating agency
shall cease to be in the business of rating corporate debt obligations, the
Borrower and the Lenders shall negotiate in good faith to amend this definition
to reflect such changed rating system or the unavailability of ratings from such
rating agency and, pending the effectiveness of any such amendment, the
Applicable Margin shall be determined by reference to the rating most recently
in effect prior to such change or cessation. Any such amendment shall be subject
to the provisions of Section 10.02(b).

         If the Borrower shall enter into any Additional Incremental Facility
Agreement, the Borrower, the Incremental Facility Arrangers and the
Administrative Agent, on behalf of the then current Lenders, shall evaluate in
good faith at such time whether to amend this definition of Applicable Margin
with respect to the Term Loans, the Revolving Loans and the Incremental Tranche
A Term Loans. Any such amendment shall be subject to the provisions of Section
10.02(b).

         "Applicable Percentage" means, with respect to any Revolving Lender,
the percentage of the total Revolving Commitments represented by such Lender's
Revolving Commitment. If the Revolving Commitments have terminated or expired,
the Applicable Percentages shall be determined based upon the Revolving
Commitments most recently in effect, giving effect to any assignments.


                                       5
<PAGE>

         "Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 10.04), and accepted by the Administrative Agent, in the
form of Exhibit A or any other form approved by the Administrative Agent.

         "ATL" means ATL-Algar Telecom Leste S.A., a Brazilian corporation.

         "Attributable Debt" means, on any date, in respect of any lease of
Holdings or any Restricted Subsidiary entered into as part of a Sale and
Leaseback Transaction subject to Section 6.06(ii), (i) if such lease is a
Capital Lease Obligation, the capitalized amount thereof that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP,
and (ii) if such lease is not a Capital Lease Obligation, the capitalized amount
of the remaining lease payments under such lease that would appear on a balance
sheet of such Person prepared as of such date in accordance with GAAP if such
lease were accounted for as a Capital Lease Obligation.

         "Bank of America" means Bank of America, N.A.

         "Board" means the Board of Governors of the Federal Reserve System of
the United States of America.

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

         "Borrowing" means (a) Loans of the same Class and Type, made, converted
or continued on the same date and, in the case of Eurodollar Loans, as to which
a single Interest Period is in effect, or (b) a Swingline Loan.

         "Borrowing Request" means a request by the Borrower for a Borrowing in
accordance with Section 2.03.

         "Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York, New York or Dallas, Texas are
authorized or required by law to remain closed; provided that, when used in
connection with a Eurodollar Loan, the term "Business Day" shall also exclude
any day on which banks are not open for dealings in dollar deposits in the
London interbank market.

         "Capital Expenditures" means, for any period, the additions to
property, plant and equipment and other capital expenditures of Holdings and the
Restricted Subsidiaries that are (or would be) set forth in a consolidated
statement of cash flows of Holdings and the Restricted Subsidiaries for such
period prepared in accordance with GAAP, other than any such capital
expenditures that constitute Investments permitted under Section 6.04 (other
than Section 6.04(i)); provided that any use during such period of the proceeds
of any such Investment made by the recipient thereof for additions to property,
plant and equipment and other capital expenditures, as described in this
definition, shall (unless


                                       6
<PAGE>

such use shall, itself, constitute an Investment permitted under Section 6.04
(other than Section 6.04(i)) constitute "Capital Expenditures".

         "Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.

         "Cash Equivalent Investments" means:

                   (1) Government Securities maturing, or subject to tender at
         the option of the holder thereof, within two years after the date of
         acquisition thereof;

                   (2) time deposits and certificates of deposit of (a) any
         commercial bank organized in the United States having capital and
         surplus in excess of $500,000,000 or (b) any branch located in the
         United States of any commercial bank organized under the law of any
         other country that is a member of the Organization for Economic
         Cooperation and Development having total assets in excess of
         $500,000,000, or its foreign currency equivalent at the time, in either
         case with a maturity date not more than one year from the date of
         acquisition;

                   (3) repurchase obligations with a term of not more than 30
         days for underlying securities of the types described in clause (1)
         above entered into with (a) any bank meeting the qualifications
         specified in clause (2) above or (b) any primary government securities
         dealer reporting to the Market Reports Division of the Federal Reserve
         Bank of New York;

                   (4) direct obligations issued by any state of the United
         States or any political subdivision of any such state or any public
         instrumentality thereof maturing, or subject to tender at the option of
         the holder of such obligation, within one year after the date of
         acquisition thereof; provided that, at the time of acquisition, the
         long-term debt of such state, political subdivision or public
         instrumentality has a rating of A, or higher, from S&P or A-2 or higher
         from Moody's or, if at any time neither S&P nor Moody's shaft be rating
         such obligations, then an equivalent rating from such other nationally
         recognized rating service as is acceptable to the Administrative Agent;

                   (5) commercial paper issued by the parent corporation of (a)
         any commercial bank organized in the United States having capital and
         surplus in excess of $500,000,000 or (b) any branch located in the
         United States of any commercial bank organized under the laws of any
         other country that is a member of the Organization for Economic
         Cooperation and Development having total


                                       7
<PAGE>

         assets in excess of $500,000,000, or its foreign currency equivalent at
         the time, and money market instruments and commercial paper issued by
         others having one of the three highest ratings obtainable from either
         S&P or Moody's, or, if at any time neither S&P nor Moody's shall be
         rating such obligations, then from such other nationally recognized
         rating service as is acceptable to the Administrative Agent and in each
         case maturing within one year after the date of acquisition;

                   (6) overnight bank deposits and bankers' acceptances at (a)
         any commercial bank organized in the United States having capital and
         surplus in excess of $500,000,000 or (b) any branch located in the
         United States of any commercial bank organized under the laws of any
         other country that is a member of the Organization for Economic
         Cooperation and Development having total assets in excess of
         $500,000,000 or its foreign currency equivalent at the time;

                   (7) deposits available for withdrawal on demand with (a) a
         commercial bank organized in the United States having capital and
         surplus in excess of $500,000,000 or (b) any branch located in the
         United States of any commercial bank organized under the laws of any
         other country that is a member of the Organization for Economic
         Cooperation and Development having total assets in excess of
         $500,000,000 or its foreign currency equivalent at the time; and

                   (8) investments in money market funds substantially all of
         whose assets comprise securities of the types described in clauses (1)
         through (7).

         "Change in Control" means:

         (a) the acquisition of ownership, directly or indirectly, beneficially
or of record, by any Person other than Holdings of any shares of capital stock
of the Borrower;

         (b) the acquisition of ownership, directly or indirectly, beneficially
or of record, by any Person or group (within the meaning of Section 13(d) or
14(d) of the Exchange Act and the rules of the Commission thereunder as in
effect on the date hereof) other than the Parent and its subsidiaries, of shares
representing more than 35% of either (i) the aggregate ordinary voting power
represented by the issued and outstanding Voting Stock of Holdings or (ii) the
issued and outstanding capital stock of Holdings;

         (c) other than as a result of the consummation of the Spin-Off, the
failure of the Parent and its subsidiaries to own, directly or indirectly, (i)
more than 75% (or, if (x) the Facilities are rated at least BBB- by S&P and Baa3
by Moody's and (y) the Parent shall have been released from its obligations
under the Parent Guarantee, 35%) of the aggregate ordinary voting power
represented by the issued and outstanding Voting Stock of Holdings or (ii) more
than 65% (or, if (x) the Facilities are rated at least BBB- by S&P and Baa3 by
Moody's and (y) the Parent shall have been released from its obligations under
the Parent Guarantee, 35%) of the issued and outstanding capital stock of
Holdings;


                                       8
<PAGE>

         (d) occupation of a majority of the seats (other than vacant seats) on
the board of directors of Holdings by Persons who were neither (i) nominated by
the board of directors of Holdings nor (ii) appointed by directors so nominated;
or

         (e) the acquisition of direct or indirect Control of Holdings by any
Person or group (other than, prior to the consummation of the Spin-Off, the
Parent).

         "Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender, any Swingline
Lender or any Issuing Bank (or, for purposes of Section 2.15(b), by any lending
office of such Lender, Swingline Lender or Issuing Bank or by such Lender's,
Swingline Lender's or Issuing Bank's holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.

         "Chase" means The Chase Manhattan Bank.

         "Class" means, when used in reference to any Loan or Borrowing, to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans,
Term Loans, Swingline Loans, Incremental Term Loans or Additional Incremental
Loans and, when used in reference to any Commitment or Facility, refers to
whether such Commitment or Facility is a Revolving Commitment or Facility, a
Term Commitment or Facility, an Incremental Commitment or Facility or an
Additional Incremental Commitment or Facility. The Additional Incremental Loans,
Borrowings thereof and Additional Incremental Commitments under each Additional
Incremental Facility shall constitute a separate Class from the Additional
Incremental Loans, Borrowings thereof and Additional Incremental Commitments
under each other Additional Incremental Facility, and if an Additional
Incremental Facility includes Additional Incremental Revolving Commitments and
Additional Incremental Term Commitments, such Additional Incremental Revolving
Commitments and Additional Incremental Term Commitments and the Additional
Incremental Revolving Loans and Borrowings thereof and the Additional
Incremental Term Loans and Borrowings thereof, respectively, thereunder shall
constitute separate Classes.

         "CNG" means CNG Computer Networking Group, Inc., a Delaware
corporation, and its successors and assigns.

         "Co-Documentation Agent" means each of Salomon Smith Barney Inc.,
Lehman Brothers, Inc. and Merrill Lynch & Co., Inc., in each case in its
capacity as a co-documentation agent hereunder.


                                       9
<PAGE>

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

         "Collateral" means any and all "Collateral", as defined in any
applicable Collateral Document.

         "Collateral Documents" means the Security Agreement and all security
agreements, pledge agreements, mortgages and other security agreements or
instruments or documents executed and delivered pursuant to Section 5.11B, 5.13
or 5.14.

         "Collateral Establishment Date" has the meaning assigned to such term
in Section 5.11B.

         "Collateral Event" means the failure of the Facilities to be rated at
least (i) BB- by S&P and (ii) Ba3 by Moody's.

         "Collateral Notice has the meaning assigned to such term in Section
5.11B.

         "Collateral Release Event" means the occurrence, after the occurrence
of a Collateral Event, of the earlier to occur of (i) the termination of the
Commitments, the payment in full of all obligations under the Loan Documents and
the expiration or termination of all Letters of Credit and (ii) the rating of
the Facilities by S&P of BB+ or greater and by Moody's of Ba1 or greater, in
each case after giving effect to the release of all Collateral.

         "Commission" means the United States Securities and Exchange
Commission.

         "Commitment" means a Revolving Commitment, a Term Commitment, an
Incremental Commitment, an Additional Incremental Commitment or any combination
thereof (as the context requires).

         "Commitment Fee Rate" means, (a) with respect to the Revolving
Commitments and the Term Commitments, a rate per annum equal to (x) 1.00% for
each day on which Usage is less than 33.3%, (y) 0.75% for each day on which
Usage is equal to or greater than 33.3% but less than 66.6% and (z) 0.50% for
each day on which Usage is equal to or greater than 66.6% and (b) with respect
to the Incremental Tranche A Commitments, 0.75% for each day. For purposes of
the foregoing, "Usage" means, on any date, the percentage obtained by dividing
(i) in the case of Revolving Commitments, (a) the aggregate Revolving Exposure
on such date less the aggregate principal amount of all Swingline Loans
outstanding on such date by (b) the aggregate outstanding Revolving Commitments
on such date and (ii) in the case of Term Commitments, (a) the aggregate
principal amount of all Term Loans outstanding on such date by (b) the sum of
the aggregate principal amount of all Term Loans outstanding on such date and
the aggregate unused Term Commitments on such date.

         "Commitment Fees" has the meaning assigned to such term in Section
2.12.


                                       10
<PAGE>

         "Consolidated Net Income" means, for any period, the net income or loss
of Holdings and the Restricted Subsidiaries (exclusive of the portion of net
income allocable to Persons that are not Restricted Subsidiaries, except to the
extent such amounts are received in cash by the Borrower or a Restricted
Subsidiary) for such period.

         "Consolidated Assets" means, at any date, the consolidated assets of
Holdings and the Restricted Subsidiaries.

         "Contributed Capital" means, at any date, (i) Total Net Debt at such
date plus (ii) without duplication, all cash proceeds received by Holdings on or
prior to such date from contributions to the capital, or purchases of common
equity securities, of Holdings, including, without limitation, the proceeds of
the Equity Issuance, and all other capital contributions made by the Parent and
its subsidiaries (other than Holdings and its Subsidiaries) to Holdings, but
only to the extent that proceeds of any of the foregoing are contributed by
Holdings to the Borrower.

         "Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have correlative meanings.

         "Dark Fiber and Capacity Proceeds" means, for any period, cash proceeds
received by Holdings and the Restricted Subsidiaries in respect of Dark Fiber
and Capacity Dispositions during such period.

         "Dark Fiber and Capacity Disposition" means a lease, sale, conveyance
or other disposition of fiber optic cable or capacity for a period constituting
all or substantially all of the expected useful life of either the fiber optic
cable (in the case of Dark Fiber Disposition) or optronic equipment generating
the capacity (in the case of Capacity Disposition) thereof.

         "Deemed Subsidiary Investment" has the meaning assigned to such term in
Section 6.14.

         "Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.

         "Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.

         "Disqualified Stock" of any Person means any Equity Interest of such
Person which, by its terms, or by the terms of any security into which it is
convertible or for which it is exchangeable, or upon the happening of any event,
matures or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the


                                       11
<PAGE>

option of the holder thereof, in whole or in part, on or prior to the first
anniversary of the Term Maturity Date.

         "dollars" or "$" refers to lawful money of the United States of
America.

         "EBITDA" means, for any period,

                  (i Consolidated Net Income for such period,

         plus,

                  (ii to the extent deducted in determining Consolidated Net
         Income, the sum, without duplication, of (w) interest expense, (x)
         income tax expense, (y) depreciation and amortization expense and (z)
         non-cash extraordinary or non-recurring charges (if any), in each case
         recognized in such period;

         minus,

                  (iii to the extent included in Consolidated Net Income for
         such period, extraordinary or non-recurring gains (if any), in each
         case recognized in such period.

         "Effective Date" means September 8, 1999.

         "Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material, the health effects of Hazardous Materials or safety matters.

         "Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of Holdings or any Restricted Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.

         "Equity Interests" means shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person.


                                       12
<PAGE>

         "Equity Issuance" means the issuance and sale by Holdings of its common
stock (x) in an initial public offering or (y) to certain strategic investors
other than the Parent or any of its subsidiaries or Affiliates.

         "Equity Issuance Registration Statement" means Amendment No. 7 to the
Registration Statement on Form S-1 with respect to the Equity Issuance filed by
Holdings with the Commission on September 2, 1999.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

         "ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.

         "ERISA Event" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.

         "Eurodollar", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.

         "Event of Default" has the meaning assigned to such term in Article 7.

         "Excess Cash Flow" means, for any fiscal period, the sum (without
duplication) of:


                                       13
<PAGE>

                  (a) the Consolidated Net Income (or loss) of Holdings and the
         Restricted Subsidiaries for such period, adjusted to exclude any gains
         or losses attributable to Prepayment Events; plus

                  (b) depreciation, amortization, non-cash interest expense and
         other non-cash charges or losses deducted in determining Consolidated
         Net Income (or loss) for such period; plus

                  (c) the sum of (i) the amount, if any, by which Net Working
         Capital decreased during such period plus (ii) the amount, if any, by
         which the consolidated deferred revenues of Holdings and the Restricted
         Subsidiaries increased during such period plus (iii) the aggregate
         principal amount of Capital Lease Obligations and other Indebtedness
         incurred during such period to finance Capital Expenditures, to the
         extent that mandatory principal payments in respect of such
         Indebtedness would not be excluded from clause (f) below when made;
         minus

                  (d) the sum of (i) any non-cash gains included in determining
         Consolidated Net Income (or loss) for such period plus (ii) the amount,
         if any, by which Net Working Capital increased during such period plus
         (iii) the amount, if any, by which the consolidated deferred revenues
         of Holdings and the Restricted Subsidiaries decreased during such
         period; minus

                  (e) Capital Expenditures for such period; minus

                  (f) the aggregate principal amount of long-term Indebtedness
         (including pursuant to Capital Lease Obligations) repaid or prepaid by
         Holdings and the Restricted Subsidiaries during such period, excluding
         (i) Indebtedness in respect of Revolving Loans, Incremental Revolving
         Loans, Additional Incremental Revolving Loans and Letters of Credit,
         (ii) Term Loans, Incremental Term Loans and Additional Incremental Term
         Loans prepaid pursuant to Section 2.11(b) or (c), (iii) repayments or
         prepayments of Indebtedness financed by incurring other Indebtedness,
         to the extent that mandatory principal payments in respect of such
         other Indebtedness would not be excluded from this clause (f) when made
         and (iv) Indebtedness referred to in Sections 6.01(d), 6.01(f),
         6.01(g), 6.01(i), 6.01(j), 6.01(k) and 6.01(o).

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "Excluded Taxes" means, with respect to the Administrative Agent, any
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is a
resident or is organized or in which its principal


                                       14
<PAGE>

office is located or, in the case of any Lender, in which its applicable lending
office is located, (b) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction described in clause
(a) above and (c) in the case of a Foreign Lender (other than an assignee
pursuant to a request by the Borrower under Section 2.19(b)) or any Participant
that would be a Foreign Lender if it were a Lender, any withholding tax that (i)
is imposed on or with respect to amounts payable to such Foreign Lender or
Participant at the time such Foreign Lender becomes a party to this Agreement
(or designates a new lending office) or such Participant become a Participant,
except to the extent that such Foreign Lender (or its assignor, if any) or
Participant was entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts from the Borrower with respect to
such withholding tax pursuant to Section 2.17(a) or (ii) is attributable to such
Foreign Lender or Participant's failure to comply with Section 2.17(e).

         "Existing International Joint Ventures" means ATL, PowerTel Limited and
Telefonica Manquehue, S.A.

         "Facilities" means the Term Facility, the Revolving Facility, the
Incremental Facility and each Additional Incremental Facility.

         "Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.

         "Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of Holdings or the Borrower, as the
case may be.

         "First Incremental Borrowing Date" means the date on which the first
Borrowing under the Incremental Facility is made in accordance with Section
4.03.

         "Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.

         "Foreign Subsidiary" means any Subsidiary that is organized under the
laws of a jurisdiction other than the United States of America or any State
thereof or the District of Columbia, other than a Subsidiary that is (whether as
a matter of law, pursuant to an election by such Subsidiary or otherwise)
treated as a partnership in which any Subsidiary


                                       15
<PAGE>

that is not a Foreign Subsidiary is a partner or as a branch of any Subsidiary
that is not a Foreign Subsidiary for United States income tax purposes.

         "GAAP" means generally accepted accounting principles in the United
States of America.

         "Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.

         "Government Securities" means direct obligations of, or obligations
fully and unconditionally guaranteed or insured by, the United States of America
or any agency or instrumentality thereof for the payment of which obligations or
guarantee the full faith and credit of the United States is pledged and which
are not callable or redeemable at the issuer's option; provided that, for
purposes of the definition of "Cash Equivalents Investments" only, such
obligations shall not constitute Government Securities if they are redeemable or
callable at a price less than the purchase price paid by the Borrower or the
applicable other Restricted Subsidiary, together with all accrued and unpaid
interest, if any, on such Government Securities.

         "Granting Lender" has the meaning set forth in Section 10.04(b)(2).

         "Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.

         "Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of


                                       16
<PAGE>

any nature regulated pursuant to any Environmental Law as hazardous, toxic, a
pollutant or a contaminant.

         "Hedge Counterparty" means each Lender that is, and each affiliate of
any Lender that is, a counterparty under a Hedging Agreement entered into with
the Borrower or any other Restricted Subsidiary.

         "Hedging Agreement" means any interest rate protection agreement,
commodity price protection agreement or other interest or currency exchange rate
or commodity price hedging arrangement.

         "High Yield Notes" means the notes issued by Holdings (i) the terms of
which either (A) are substantially similar to the terms set forth in the Notes
Offering Registration Statement or (B) are otherwise approved by the
Administrative Agent and the Syndication Agent after consultation with the
Required Banks and (ii) no part of the principal of which is required to be paid
(upon maturity or by mandatory sinking fund, mandatory redemption, mandatory
prepayment or otherwise) prior to the date that is one year after the Term
Maturity Date.

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

         "Incremental Commitments" means the Incremental Tranche A Commitments.

         "Incremental Facility" means the Incremental Tranche A Facility.

         "Incremental Facility Arrangers" means Salomon Smith Barney Inc. and
Lehman Brothers, Inc., in their respective capacities as joint lead arrangers of
the Incremental Facility.

         "Incremental Lenders" means the Incremental Tranche A Lenders.

         "Incremental Term Loans" means the Incremental Tranche A Term Loans.

         "Incremental Tranche A Amortization Date" means December 31, 2002.

         "Incremental Tranche A Commitments" means with respect to each
Incremental Tranche A Lender, the commitment, if any, of such Lender to make
Incremental Tranche A Term Loans hereunder during the Incremental Tranche A Term
Loan Availability Period, expressed as an amount representing the maximum
principal amount of the Incremental Tranche A Term Loans to be made by such
Lender hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 10.04. The initial
amount of each Lender's Incremental Tranche A Term Commitment is set forth on
Schedule 2.01(b), or in the Assignment and Acceptance


                                       17
<PAGE>

pursuant to which such Lender shall have assumed its Incremental Tranche A Term
Commitment, as applicable. The initial aggregate amount of the Incremental
Tranche A Lenders' Incremental Tranche A Term Commitments is $450,000,000.

         "Incremental Tranche A Commitment Termination Date" means the date that
is the earlier of (i) 180 days after the Amendment No. 5 Effective Date and (ii)
the date of termination of the Incremental Tranche A Commitments.

         "Incremental Tranche A Facility" means the Incremental Tranche A
Commitments and the Incremental Tranche A Term Loans hereunder.

         "Incremental Tranche A Lenders" means a Lender with an Incremental
Tranche A Commitment or an outstanding Incremental Tranche A Term Loan.

         "Incremental Tranche A Maturity Date" means September 8, 2006.

         "Incremental Tranche A Term Loan" means a Loan made pursuant to Section
2.01(b)(i).

         "Incremental Tranche A Term Loan Availability Period" means the period
from and including the First Incremental Borrowing Date to but excluding the
earlier of (i) the Incremental Tranche A Commitment Termination Date and (ii)
the date of termination of the Incremental Tranche A Commitments.

         "Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
under conditional sale or other title retention agreements relating to property
acquired by such Person, (d) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding (i) current accounts
payable incurred in the ordinary course of business and (ii) payment obligations
of such Person to the owner of assets used in a Telecommunications Business for
the use thereof pursuant to a lease or other similar arrangement with respect to
such assets or a portion thereof entered into in the ordinary course of
business), (e) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on property owned or acquired by such Person, whether or not the
Indebtedness secured thereby has been assumed, (f) all Guarantees by such Person
of Indebtedness of others, (g) all (x) Capital Lease Obligations of such Person
(provided that Capital Lease Obligations in respect of fiber optic cable
capacity arising in connection with exchanges of such capacity shall constitute
Indebtedness only to the extent of the amount of such Person's liability in
respect thereof net (but not less than zero) of such Person's right to receive
payments obtained in exchange therefor) and (y) ADP Outstandings, if any, of
such Person, (h) all obligations, contingent or otherwise, of such Person as an
account party in respect of letters of credit and letters of guaranty, (i) all
obligations, contingent or otherwise, of such


                                       18
<PAGE>

Person in respect of bankers' acceptances, (j) any Disqualified Stock and (k)
all obligations under any Hedging Agreements or Permitted Specified Security
Hedging Transactions. The Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result
of such Person's ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such Person is
not liable therefor. Indebtedness of the Borrower and the other Subsidiaries
shall exclude any Indebtedness of Holdings that would otherwise constitute
Indebtedness of the Borrower or any such Subsidiary only under clause (e) above
and solely by virtue of a Lien created under the Loan Documents in accordance
with Section 5.11B(d), and Indebtedness of Holdings and the Subsidiaries shall
exclude any Indebtedness of the Parent that would otherwise constitute
Indebtedness of Holdings or any Subsidiary only under clause (e) above and
solely by virtue of a Lien created under the Loan Documents in accordance with
Section 5.11B(d).

         "Indemnified Taxes" means Taxes other than Excluded Taxes.

         "Information Memorandum" means the Confidential Information Memorandum
dated August 1999 relating to the Parent, Holdings, the Borrower and the
Transactions.

         "Initial Collateral Date" means the first date on which the Parent
ceases to own at least a majority of the outstanding securities having ordinary
voting power of Holdings, whether as a result of the consummation of the
Spin-Off or otherwise.

         "Intercreditor Agreement" means the Intercreditor Agreement,
substantially in the form of Exhibit H hereto, among the Lenders, the Parent,
Holdings and the Borrower.

         "Interest Coverage Ratio" means, at any date, the ratio of (i) the
amount equal to (A) EBITDA plus (B) ADP Interest Expense minus (C) gains
attributable to Dark Fiber and Capacity Dispositions plus (D) Dark Fiber and
Capacity Proceeds to (ii) Interest Expense, in each case for the period of four
consecutive fiscal quarters most recently ended on or prior to such date.

         "Interest Election Request" means a request by the Borrower to convert
or continue a Revolving Borrowing or Term Borrowing in accordance with Section
2.07.

         "Interest Expense" means, for any period, the cash interest expense of
Holdings and the Restricted Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP plus ADP Interest Expense for such
period, net of interest income for such period.

         "Interest Payment Date" means (a) with respect to any ABR Loan (other
than a Swingline Loan), the last day of each March, June, September and
December, (b) with respect to any Eurodollar Loan, the last day of the Interest
Period applicable to the Borrowing of which such Loan is a part and, in the case
of a Eurodollar Borrowing with


                                       19
<PAGE>

an Interest Period of more than three months' duration, each day prior to the
last day of such Interest Period that occurs at intervals of three months'
duration after the first day of such Interest Period, and (c) with respect to
any Swingline Loan, the day that such Loan is required to be repaid.

         "Interest Period" means with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three, or six months
(or if corresponding funding is available to each Lender of the applicable
Class, twelve months) thereafter, as the Borrower may elect; provided, that (i)
if any Interest Period would end on a day other than a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day and
(ii) any Interest Period that commences on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
last calendar month of such Interest Period) shall end on the last Business Day
of the last calendar month of such Interest Period. For purposes hereof, the
date of a Borrowing initially shall be the date on which such Borrowing is made
and thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.

         "Issuing Bank" means each of Bank of America and Chase, each in its
capacity as an issuer of Letters of Credit hereunder, and its successors in such
capacity as provided in Section 2.05(i). Each Issuing Bank may, in its
discretion, arrange for one or more Letters of Credit to be issued by affiliates
of the Issuing Bank, in which case the term "Issuing Bank" shall include any
such affiliate with respect to Letters of Credit issued by such affiliate.

         "Investment" has the meaning assigned to such term in Section 6.04.

         "LC Disbursement" means a payment made by an Issuing Bank pursuant to a
Letter of Credit.

         "LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Revolving Lender at any
time shall be its Applicable Percentage of the total LC Exposure at such time.

         "Lenders" means the Persons listed on Schedule 2.01, any Additional
Incremental Lender that shall become a Lender pursuant to Section 2.20 and any
other Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance. Unless the context otherwise requires, the term
"Lenders" includes the Swingline Lenders and the Additional Incremental Lenders.


                                       20
<PAGE>

         "Leverage Target Date" means the first date on or after March 31, 2002
on which the Total Leverage Ratio for the fiscal quarter (or fiscal year, as the
case may be) most recently ended and with respect to which Holdings and the
Borrower shall have delivered the financial statements required to be delivered
by them with respect to such fiscal quarter (or fiscal year, as the case may be)
pursuant to Section 5.01(a) or 5.01(b) does not exceed 3.5:1.0.

         "Letter of Credit" means any letter of credit issued pursuant to this
Agreement.

         "LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate (rounded
upwards, if necessary, to the next 1/16 of 1%) at which dollar deposits of
$5,000,000 and for a maturity comparable to such Interest Period are offered by
the principal London office of the Administrative Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.

         "Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.

         "Loan Documents" means this Agreement, the Parent Guarantee, the
Subsidiary Guarantee, the Intercreditor Agreement, any Additional Incremental
Facility Agreement and the Collateral Documents (if any).

         "Loan Parties" means Holdings, the Borrower and the Subsidiary Loan
Parties.

         "Loan Party Guarantees" means the Subsidiary Guarantee.

         "Loans" means the loans made by the Lenders to the Borrower pursuant to
this Agreement.


                                       21
<PAGE>

         "Mark-to-Market Valuation" means, at any date with respect to any
Hedging Agreement or Permitted Specified Security Hedging Transaction, all net
obligations under such Hedging Agreement or Permitted Specified Security Hedging
Transaction in an amount equal to (i) if such Hedging Agreement or Permitted
Specified Security Hedging Transaction has been closed out, the termination
value thereof or (ii) if such Hedging Agreement or Permitted Specified Security
Hedging Transaction has not been closed out, the mark-to-market value thereof
determined on the basis of readily available quotations provided by any
recognized dealer in Hedging Agreements or other transactions similar to such
Hedging Agreement or Permitted Specified Security Hedging Transaction."

         "Material Adverse Change" means any event, development or circumstance
that has had or could reasonably be expected to have a Material Adverse Effect.

         "Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
Holdings and its Subsidiaries taken as a whole, (b) the ability of any Loan
Party to perform any of its obligations under any Loan Document or (c) the
rights of or benefits available to the Lenders under any Loan Document.

         "Material Indebtedness" means Indebtedness (other than the Loans and
Letters of Credit) of any one or more of Holdings and the Restricted
Subsidiaries in an aggregate principal amount exceeding $25,000,000. For
purposes of determining Material Indebtedness, the "principal amount" of the
obligations of Holdings or any Restricted Subsidiary in respect of any Hedging
Agreement or Permitted Specified Security Hedging Transaction at any time shall
be the maximum aggregate amount (giving effect to any netting agreements) that
Holdings or such Restricted Subsidiary would be required to pay if such Hedging
Agreement or Permitted Specified Security Hedging Transaction were terminated at
such time.

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

         "Mortgage" means a mortgage, deed of trust, assignment of leases and
rents, leasehold mortgage or other security document granting a Lien on any
Mortgaged Property to secure the Obligations.

         "Mortgage Establishment Date" has the meaning assigned to such term in
Section 5.11B(b).

         "Mortgaged Property" means each parcel of real property and the
improvements thereto owned by a Loan Party with respect to which a Mortgage is
granted pursuant to Section 5.11B(b).

         "Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.


                                       22
<PAGE>

         "Net Proceeds" means, with respect to any event (a) the cash proceeds
received in respect of such event including (i) any cash received in respect of
any non-cash proceeds, but only as and when received, (ii) in the case of a
casualty, insurance proceeds, and (iii) in the case of a condemnation or similar
event, condemnation awards and similar payments, net of (b) the sum of (i) all
reasonable fees and out-of-pocket expenses paid by Holdings and the Restricted
Subsidiaries to third parties (other than Affiliates) in connection with such
event, (ii) in the case of a sale or other disposition of an asset (including
pursuant to a casualty or condemnation), the amount of all payments required to
be made by Holdings and the Restricted Subsidiaries as a result of such event to
repay Indebtedness (other than Loans) secured by such asset or otherwise subject
to mandatory prepayment as a result of such event, and (iii) the amount of all
taxes paid (or reasonably estimated to be payable) by Holdings and the
Restricted Subsidiaries, and the amount of any reserves established by Holdings
and the Restricted Subsidiaries to fund contingent liabilities reasonably
estimated to be payable, in each case during the year that such event occurred
or the next succeeding year and that are directly attributable to such event (as
determined reasonably and in good faith by the chief financial officer of
Holdings).

         "Net Working Capital" means, at any date, (a) the consolidated current
assets of Holdings and the Restricted Subsidiaries as of such date (excluding
cash and Cash Equivalent Investments) minus (b) the consolidated current
liabilities of Holdings and the Restricted Subsidiaries as of such date
(excluding current liabilities in respect of Indebtedness). Net Working Capital
at any date may be a positive or negative number. Net Working Capital increases
when it becomes more positive or less negative and decreases when it becomes
less positive or more negative.

         "Notes Offering" means the public offering and sale of the High Yield
Notes.

         "Notes Offering Registration Statement" means Amendment No. 6 to the
Registration Statement on Form S-1 with respect to the Notes Offering filed by
Holdings with the Commission on September 2, 1999.

         "Obligations" means (i) obligations under the Loan Documents, including
(x) all principal of and interest (including, without limitation, Post-Petition
Interest) on any Loan under, or any Note issued pursuant to, or any
reimbursement obligation under any Letter of Credit under, the Credit Agreement
and (y) all other amounts payable under the Loan Documents and (ii) obligations
of any Loan Party under any Hedging Agreement with any Lender or any affiliate
of any Lender, including, without limitation, a conditional obligation to make a
future payment under an outstanding Hedging Agreement.

         "Operative Documents" has the meaning set forth in the Participation
Agreement.

         "Other Financing Documents" means all agreements, instruments and other
documents entered into or related to the Equity Issuance and the Notes Offering.


                                       23
<PAGE>

         "Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.

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

         "Parent Indemnity" means the Indemnification Agreement dated as of
September 1, 1999 between the Parent and Holdings.

         "Participation Agreement" means the Amended and Restated Participation
Agreement dated as of September 2, 1998, as amended from time to time, among the
Borrower, State Street Bank and Trust Company of Connecticut, National
Association, as trustee, the Noteholders and Certificate Holders named therein,
State Street Bank and Trust Company, as collateral agent, and Citibank, N.A., as
agent, and the other agents, arrangers and managing agents party thereto.

         "PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.

         "Permitted Encumbrances" means:

         (a)      Liens imposed by law for taxes that are not yet due or are
                  being contested in compliance with Section 5.04;

         (b)      carriers', warehousemen's, mechanics', materialmen's,
                  repairmen's and other like Liens imposed by law, arising in
                  the ordinary course of business and securing obligations that
                  are not overdue by more than 45 days or are being contested in
                  compliance with Section 5.04;

         (c)      pledges and deposits made in the ordinary course of business
                  in compliance with workers' compensation, unemployment
                  insurance and other social security laws or regulations;

         (d)      deposits to secure the performance of bids, trade contracts,
                  leases, statutory obligations, surety and appeal bonds,
                  performance bonds and other obligations of a like nature, in
                  each case in the ordinary course of business;

         (e)      judgment liens in respect of judgments that do not constitute
                  an Event of Default under clause (k) of Section 7.01; and

         (f)      easements, zoning restrictions, rights-of-way and similar
                  encumbrances on real property imposed by law or arising in the
                  ordinary course of business that do not secure any monetary
                  obligations and do not materially detract


                                       24
<PAGE>

                  from the value of the affected property or interfere with the
                  ordinary conduct of business of Holdings or any Restricted
                  Subsidiary;

provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.

         "Permitted Receivables Disposition" means any transfer (by way of sale,
pledge or otherwise) by the Borrower or any Restricted Subsidiary to any other
Person (including a Receivables Subsidiary) of accounts receivable and other
rights to payment (whether constituting accounts, chattel paper, instruments,
general intangibles or otherwise and including the right to payment of interest
or finance charges) and related contract and other rights and property
(including all general intangibles, collections and other proceeds relating
thereto, all security therefor (and the property subject thereto), all
guarantees and other agreements or arrangements of whatsoever character from
time to time supporting such right to payment, and all other rights, title and
interest in goods relating to a sale which gave rise to such right of payment)
in connection with a Permitted Receivables Financing.

         "Permitted Receivables Financing" means any receivables securitization
program or other type of accounts receivable financing transaction by the
Borrower or any of its Restricted Subsidiaries in an aggregate amount not to
exceed $250,000,000 on terms reasonably satisfactory to all the Incremental
Facility Arrangers (if any) and the Administrative Agent.

         "Permitted Specified Security Hedging Transactions" means options,
collars, forwards and other similar transactions (including, without limitation,
prepaid forward transactions, collar/loan transactions and other similar
transactions) with respect to any Specified Security entered into by the
Borrower or any of its Subsidiaries to monetize the value of and/or hedge
against changes in the market price of such Specified Security."

         "Permitted Telecommunications Asset Disposition"means the transfer,
conveyance, sale, lease or other disposition of an interest in or capacity on
(1) optical fiber and/or conduit and any related equipment, technology or
software used in a Segment of the Borrower's and the Restricted Subsidiaries'
communications network, other than in the ordinary course of business; provided
that after giving effect to such disposition, the Borrower and the Restricted
Subsidiaries would retain the right to use at least the minimum retained
capacity set forth below:

         (i)      with respect to any Segment constructed by, for or on behalf
                  of the Borrower or any Subsidiary or Affiliate, (x) 24 optical
                  fibers per route mile on such Segment as deployed at the time
                  of such Permitted Telecommunications Asset Disposition or (y)
                  12 optical fibers and one empty conduit per route mile on such
                  Segment as deployed at the time of such Permitted
                  Telecommunications Asset Disposition; and


                                       25
<PAGE>

         (ii)     with respect to any Segment purchased or leased from third
                  parties, the lesser of (x) 50% of the optical fibers per route
                  mile originally purchased or leased on such Segment, (y) 24
                  optical fibers per route mile on such Segment as deployed at
                  the time of such Permitted Telecommunications Asset
                  Disposition or (z) 12 optical fibers and one empty conduit per
                  route mile on such Segment as deployed at the time of such
                  Permitted Telecommunications Asset Disposition; or

(2) single strand fiber used in a Segment of the Borrower's and the Restricted
Subsidiaries' communications network, other than in the ordinary course of
business; provided that after giving effect to such disposition, the Borrower
and the Restricted Subsidiaries would not eliminate all capacity between the
endpoint cities connected by any fiber of the Borrower or its Restricted
Subsidiaries.

         "Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.

         "Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.

         "Post-Petition Interest" means any interest that accrues after the
commencement of any case, proceeding or action relating to the bankruptcy,
reorganization or insolvency of the Borrower (or would accrue but for the
operation of applicable bankruptcy, reorganization or insolvency laws), whether
or not such interest is allowed or allowable as a claim in any such case,
proceeding or other action.

         "Prepayment Event" means:

         (a)      any sale, transfer or other disposition (including pursuant to
                  a Sale and Leaseback Transaction) of any property or asset of
                  Holdings or any Restricted Subsidiary, other than Dark Fiber
                  and Capacity Dispositions and dispositions permitted under
                  clauses (a) through (d) and (f) through (i) of Section 6.05
                  and except as contemplated by Sections 5.17 and 5.18; or

         (b)      any casualty or other insured damage to, or any taking under
                  power of eminent domain or by condemnation or similar
                  proceeding of, any property or asset of Holdings or any
                  Subsidiary, but only to the extent that the Net Proceeds
                  therefrom have not been applied to repair, restore or replace
                  such property or asset or purchase similar property or assets
                  within 360 days after such event; or


                                       26
<PAGE>

         (c)      the incurrence by Holdings, the Borrower or any Subsidiary of
                  any Indebtedness, other than Indebtedness permitted under
                  Section 6.01.

         "Prepayment Portion" means in respect of any prepayment to be made
pursuant to Section 2.11(b) or 2.11(c), a fraction, the numerator of which is
the aggregate principal amount of Term Loans, Additional Incremental Term Loans
and Incremental Term Loans of any Class subject to prepayment under such Section
on account of Excess Cash Flow or the applicable type of Prepayment Event, as
the case may be (whether or not such Loans are actually to be prepaid on account
of such Prepayment Event or Excess Cash Flow), and the denominator of which is
the sum of such aggregate principal amount and the aggregate Revolving
Commitments and Additional Incremental Revolving Commitments of any Class
subject to reduction pursuant to Section 2.08(f) or (g) on account of Excess
Cash Flow or the applicable type of Prepayment Event, as the case may be
(whether or not such Commitments are actually to be reduced on account of such
Prepayment Event or Excess Cash Flow).

         "Prime Rate" means the rate of interest per annum publicly announced
from time to time by the Administrative Agent as its prime rate in effect at its
principal office in Dallas, Texas; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.

         "Projections" has the meaning set forth in Section 3.04(d).

         "Qualifying Borrower Indebtedness" means, unsecured Indebtedness of the
Borrower to Holdings that (i) does not require the payment of any principal or
cash interest prior to the first anniversary of the Term Maturity Date, (ii) is
not redeemable by, or convertible or exchangeable for securities of the Borrower
or any of its Subsidiaries that are redeemable by, the holder thereof, and not
subject to any required sinking fund or other similar payment, prior to the
first anniversary of the Term Maturity Date, (iii) is subordinated to the
Obligations pursuant to subordination provisions at least as favorable to the
holders of the Obligations as the provisions set forth in Exhibit J hereto and
(iv) includes no covenants, events of default or acceleration provisions other
than a customary bankruptcy default and acceleration provision.

         "Qualifying Equity Interest" means, with respect to Holdings or the
Borrower, Equity Interests of Holdings or the Borrower, as the case may be, that
(i) are not mandatorily redeemable or redeemable at the option of the holder
thereof, (ii) are not convertible into or exchangeable for debt securities of
Holdings or any Restricted Subsidiary, Equity Interests in any Restricted
Subsidiary or Equity Interests that are not Qualifying Equity Interests of
Holdings, (iii) are not required to be repurchased or redeemed by Holdings or
any Restricted Subsidiary and (iv) do not require the payment of cash dividends,
in each of the foregoing cases, prior to the date that is one year after the
Term Maturity Date.


                                       27
<PAGE>

         "Qualifying Holdings Debt" means unsecured debt of Holdings (other than
the High Yield Notes) (i) no part of the principal of which is required to be
paid (upon maturity or by mandatory sinking fund, mandatory redemption,
mandatory prepayment or otherwise) prior to the date that is one year after the
Term Maturity Date, (ii) the payment of the principal of and interest on which
and other payment obligations of Holdings in respect of which are subordinated
to the prior payment in full in cash of the principal of and interest (including
Post-Petition Interest) on the Loans and all other obligations under the Loan
Documents and (iii) the terms and conditions of which are reasonably
satisfactory to the Required Lenders.

         "Qualifying Issuances" means (i) any issuance of Qualifying Equity
Interests of Holdings, (ii) any issuance of unsecured Indebtedness described in
clauses (a) or (b) of the definition thereof of Holdings or the Borrower, and
(iii) any Sale and Leaseback Transaction by the Borrower or a Restricted
Subsidiary the subject property of which is the building under construction as
of the Amendment No. 4 Effective Date and adjacent to One Williams Center,
together with the parking garage adjacent thereto, or any one or more of three
corporate jets identified by the Borrower to the Lenders prior to the Amendment
No. 4 Effective Date, so long as the terms and conditions of any such
Indebtedness or Sale and Leaseback Transaction shall have been approved by all
the Incremental Facility Arrangers (if any) and the Administrative Agent prior
to the issuance thereof.

         "Receivables Subsidiary" means any wholly-owned Unrestricted Subsidiary
(regardless of the form thereof) of the Borrower formed solely for the purpose
of, and which engages in no other activities except those necessary for,
effecting Permitted Receivables Financings.

         "Reduction Portion" means, in respect of any reduction of Revolving
Commitments or Additional Incremental Revolving Commitments to be made pursuant
to Section 2.08(f) or (g), a fraction, the numerator of which is the aggregate
Revolving Commitments and Additional Incremental Revolving Commitments of any
Class subject to reduction under such Section on account of Excess Cash Flow or
the applicable type of Prepayment Event, as the case may be (whether or not such
Commitments are actually to be reduced on account of such Prepayment Event or
Excess Cash Flow), and the denominator of which is the sum of such aggregate
Commitments and the aggregate principal amount of Term Loans, Additional
Incremental Term Loans and Incremental Term Loans of any Class subject to
prepayment under Section 2.11(b) or 2.11(c) on account of Excess Cash Flow or
the applicable type of Prepayment Event, as the case may be (whether or not such
Loans are actually to be prepaid on account of such Prepayment Event or Excess
Cash Flow).

         "Register" has the meaning set forth in Section 10.04.


                                       28
<PAGE>

         "Related Parties" means, with respect to any specified Person, such
Person's affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's affiliates.

         "Reorganization" means the contribution to the Borrower by the Parent
and its subsidiaries (other than Holdings and the Subsidiaries) of its material
subsidiaries that hold interests in international communications projects (other
than Algar Telecom S.A. (formerly known as Lightel S.A.) and by Holdings of all
of its material subsidiaries (other than the Borrower and its subsidiaries), in
each case not previously held, directly or indirectly, by the Borrower.

         "Required Lenders" means, at any time, Lenders having outstanding
Revolving Exposures, Additional Incremental Revolving Loans, Term Loans,
Incremental Term Loans, Additional Incremental Term Loans and unused Commitments
representing more than 50% of the sum of the total outstanding Revolving
Exposures, Additional Incremental Revolving Loans, Term Loans, Incremental Term
Loans, Additional Incremental Term Loans and unused Commitments at such time.

         "Restricted Payment" means any dividend or other distribution (whether
in cash, securities or other property) with respect to any shares of any class
of capital stock of Holdings, the Borrower or any Subsidiary, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such shares of capital stock of
Holdings, the Borrower or any Subsidiary or any option, warrant or other right
to acquire any such shares of capital stock of Holdings, the Borrower or any
Subsidiary.

         "Restricted Subsidiary" means the Borrower and each other Subsidiary
(other than any Foreign Subsidiary) of Holdings that has not been designated as
an Unrestricted Subsidiary pursuant to and in compliance with Section 6.14. On
the Effective Date, all Subsidiaries (other than (i) each Structured Note Trust
and (ii) any Foreign Subsidiary) of Holdings are Restricted Subsidiaries.

         "Revolving Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Revolving Maturity Date and
the date of termination of the Revolving Commitments.

         "Revolving Commitment" means, with respect to each Lender, the
commitment, if any, of such Lender to make Revolving Loans and to acquire
participations in Letters of Credit and Swingline Loans hereunder, expressed as
an amount representing the maximum aggregate amount of such Lender's Revolving
Exposure hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 10.04. The amount of
each Lender's Revolving Commitment as of


                                       29
<PAGE>

the Amendment No. 5 Effective Date is set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Revolving Commitment, as applicable. The initial aggregate amount of the
Lenders' Revolving Commitments is $525,000,000.

         "Revolving Commitment Reduction Date" means September 30, 2002.

         "Revolving Exposure" means, with respect to any Lender at any time, the
sum of the outstanding principal amount of such Lender's Revolving Loans and its
LC Exposure and Swingline Exposure at such time.

         "Revolving Facility" means the Revolving Commitments and the Revolving
Loans hereunder.

         "Revolving Lender" means a Lender with a Revolving Commitment or, if
the Revolving Commitments have terminated or expired, a Lender with Revolving
Exposure.

         "Revolving Loan" means a Loan made pursuant to clause (b) of Section
2.01.

         "Revolving Maturity Date" means the sixth anniversary of the Effective
Date.

         "Sale and Leaseback Transaction" has the meaning set forth in Section
6.06.

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

         "Security Agreement" means the security agreement substantially in the
form of Exhibit K hereto among the Borrower, each Restricted Subsidiary and the
Administrative Agent entered into as of the Initial Collateral Date, as amended
from time to time.

         "Segment" means (i) with respect to the Borrower's and the other
Restricted Subsidiaries' intercity network, the through-portion of such network
between two local networks and (ii) with respect to a local network of the
Borrower and the other Restricted Subsidiaries, the entire through-portion of
such network, excluding the spurs which branch off the through-portion.

         "Senior Debt" means, at any date, without duplication, all Indebtedness
(other than Qualifying Borrower Indebtedness permitted under Section 6.01(p)) of
the Borrower and the other Restricted Subsidiaries that are subsidiaries of the
Borrower, determined on a consolidated basis at such date and the ADP
Outstandings at such date; provided that, for purposes of this definition, (i)
Indebtedness in respect of Hedging Agreements shall be equal to (A) the
aggregate net Mark-to-Market Valuation of all Hedging Agreements of the Borrower
and the Restricted Subsidiaries that are subsidiaries of the Borrower then
outstanding, to the extent that such aggregate net Mark-to-Market Valuation
constitutes a net obligation of the Borrower and such Restricted Subsidiaries
and (B) zero, if such


                                       30
<PAGE>

aggregate net Mark-to-Market Valuation does not constitute such a net obligation
and (ii) Indebtedness in respect of Permitted Specified Security Hedging
Transactions shall be equal to (A) an amount equal to the Mark-to-Market
Valuation of such Permitted Specified Security Hedging Transaction less the fair
market value of the Specified Securities and related contract rights securing
such Permitted Specified Security Hedging Transaction, if such amount is greater
than zero and (B) zero, if such amount is not greater than zero."

         "Senior Leverage Ratio" means, at any date, the ratio of (i) Senior Net
Debt at such date, to (ii) Adjusted EBITDA, for the period of four fiscal
quarters most recently ended on or prior to such date.

         "Senior Net Debt" means, at any date, Senior Debt at such date minus
the aggregate amount of all cash and Cash Equivalent Investments of the Borrower
and the other Restricted Subsidiaries that are subsidiaries of the Borrower
(excluding any cash and Cash Equivalent Investments that are blocked or
restricted so that they may not be used for general corporate purposes at such
date) in excess of $10,000,000 at such date.

         "Solutions" means Williams Communications Solutions, LLC, a Delaware
corporation, and its successors and assigns.

         "SPC" has the meaning set forth in Section 10.04(b)(2).

         "Specified Hedging Agreement" has the meaning set forth in Section
9.01.

         "Specified Indebtedness" has the meaning set forth in Section 6.07(b).

         "Specified Security" means publicly traded equity securities of actual
or prospective customers or vendors of the Borrower and its subsidiaries
acquired by the Borrower and its subsidiaries in connection with (or pursuant to
warrants, options or rights acquired in connection with) actual or prospective
commercial agreements with such customers or vendors; provided that securities
of the Borrower or any of its subsidiaries or Affiliates shall not constitute
Specified Securities.

         "Spin-Off" means the distribution by Parent to its shareholders of all
or substantially all of the capital stock of Holdings held by Parent
substantially on the terms described by the Borrower to the Lenders prior to the
Amendment No. 4 Effective Date.

         "Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such


                                       31
<PAGE>

Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency
funding and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under such Regulation D or any comparable regulation. The
Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.

         "Structured Note Bridge Indebtedness" means the Indebtedness permitted
to be incurred by Holdings pursuant to Section 6.01(t).

         "Structured Note Financing" means the issuance by the Structured Note
Trust of notes for cash Net Proceeds of up to $1,500,000,000 substantially on
the terms and conditions described by the Borrower in the "Term Sheet for
Structured Note" included as an attachment to the Borrower's Amendment Request
distributed to the Lenders on or prior to March 7, 2001 or otherwise approved by
all the Incremental Facility Arrangers (if any) and the Administrative Agent
prior to the issuance thereof.

         "Structured Note Trust" means WCG Note Trust and WCG Note Corp., Inc.,
each of which is an Unrestricted Subsidiary created for the purpose of
consummating the Structured Note Financing and conducting no activities other
than the consummation of the Structured Note Financing and activities incidental
thereto.

         "subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.

         "Subsidiary" means any subsidiary of Holdings. For purposes of the
representations and warranties made herein on the Effective Date, the term
"Subsidiary" includes each of the Borrower and the other Restricted
Subsidiaries.

         "Subsidiary Designation" has the meaning set forth in Section 6.14.

         "Subsidiary Guarantee" means the Subsidiary Guarantee, substantially in
the form of Exhibit D, made by the Subsidiary Loan Parties in favor of the
Administrative Agent for the benefit of the Lenders, and any Supplements
thereto.


                                       32
<PAGE>

         "Subsidiary Loan Party" means any Restricted Subsidiary (other than the
Borrower) that is not a Foreign Subsidiary; provided that no Receivables
Subsidiary shall be a Subsidiary Loan Party for any purpose under the Loan
Documents.

         "Swingline Exposure" means, at any time, the aggregate principal amount
of all Swingline Loans outstanding at such time. The Swingline Exposure of any
Lender at any time shall be its Applicable Percentage of the total Swingline
Exposure at such time.

         "Swingline Lenders" means Bank of America and Chase, each in its
capacity as lender of Swingline Loans hereunder.

         "Swingline Loan" means a Loan made pursuant to Section 2.04.

         "Syndication Agent" means Chase, in its capacity as syndication agent
hereunder.

         "Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.

         "Telecommunications Assets" means:

         (a)      any property (other than cash or Cash Equivalent Investments)
                  to be owned or used by the Borrower or any other Restricted
                  Subsidiary and used in the Telecommunications Business; and

         (b)      Equity Interests of a Person that becomes a Restricted
                  Subsidiary as a result of the acquisition of such Equity
                  Interests by the Borrower or any other Restricted Subsidiary
                  from any Person other than an Affiliate of Holdings or the
                  Borrower; provided that such Person is primarily engaged in
                  the Telecommunications Business.

         "Telecommunications Business" means the business of:

         (a)      transmitting, or providing services relating to the
                  transmission of, voice, video or data through owned or leased
                  transmission facilities or the right to use such facilities;

         (b)      constructing, acquiring, creating, developing, operating,
                  managing or marketing communications networks, related network
                  transmission equipment, software and other devices for use in
                  a communications business;

         (c)      computer outsourcing, data center management, computer systems
                  integration, reengineering of computer software for any
                  purpose, including, without limitation, for the purposes of
                  porting computer software from one


                                       33
<PAGE>

                  operating environment or computer platform to another or to
                  address issues commonly referred to as "Year 2000 issues";

         (d)      constructing, managing or operating fiber optic
                  telecommunications networks and leasing capacity on those
                  networks to third parties;

         (e)      the sale, resale, installation or maintenance of
                  communications systems or equipment; or

         (f)      evaluating, participating in or pursuing any other activity or
                  opportunity that is primarily related to those identified in
                  (a), (b), (c), (d) or (e) above;

provided that the determination of what constitutes a Telecommunications
Business shall be made in good faith by the Board of Directors of Holdings.

         "Term Amortization Date" means September 30, 2002.

         "Term Commitment" means, with respect to each Lender, the commitment,
if any, of such Lender to make Term Loans hereunder during the Term Loan
Availability Period, expressed as an amount representing the maximum principal
amount of the Term Loans to be made by such Lender hereunder, as such commitment
may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 10.04. The amount of each Lender's Term Commitment as of the
Amendment No. 5 Effective Date is set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Term Commitment, as applicable. The initial aggregate amount of the Lenders'
Term Commitments is $525,000,000.

         "Term Commitment Termination Date" means September 8, 2000.

         "Term Facility" means the Term Commitments and the Term Loans
hereunder.

         "Term Lender" means a Lender with a Term Commitment or an outstanding
Term Loan.

         "Term Loan" means a Loan made pursuant to Section 2.01(a)(i).

         "Term Loan Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Term Commitment Termination
Date and the date of termination of the Term Commitments.

         "Term Maturity Date" means September 30, 2006.

         "Total Debt" means, at any date, without duplication, the sum of all
Indebtedness of Holdings and the Restricted Subsidiaries, determined on a
consolidated basis at such


                                       34
<PAGE>

date, and the ADP Outstandings at such date, provided that, for purposes of this
definition, (i) Indebtedness in respect of Hedging Agreements shall be equal to
(A) the aggregate net Mark-to-Market Valuation of all Hedging Agreements of
Holdings and the Restricted Subsidiaries then outstanding, to the extent that
such aggregate net Mark-to-Market Valuation constitutes a net obligation of the
Borrower and such Restricted Subsidiaries and (B) zero, if such aggregate net
Mark-to-Market Valuation does not constitute such a net obligation and (ii)
Indebtedness in respect of Permitted Specified Security Hedging Transactions
shall be equal to (A) an amount equal to the Market-to-Market Valuation of such
Permitted Specified Security Hedging Transaction less the fair market value of
the Specified Securities and related contract rights securing such Permitted
Specified Security Hedging Transaction, if such amount is greater than zero and
(B) zero, if such amount is not greater than zero.

         "Total Leverage Ratio" means, at any date, the ratio of (i) Total Net
Debt at such date to (ii) Adjusted EBITDA for the period of four fiscal quarters
most recently ended on or prior to such date.

         "Total Net Debt" means, at any date, Total Debt at such date, minus the
aggregate amount of all cash and Cash Equivalent Investments of Holdings and the
Restricted Subsidiaries (excluding any cash and Cash Equivalent Investments that
are blocked or restricted so that they may not be used for general corporate
purposes at such date) in excess of $10,000,000 at such date.

         "Total Net Debt to Contributed Capital Ratio" means, at any date, the
ratio of (i) Total Net Debt at such date to (ii) Contributed Capital at such
date.

         "Trading Subsidiary" has the meaning assigned to such term in Section
6.03(c).

         "Transactions" means the execution, delivery and performance by each
Loan Party of the Loan Documents to which it is to be a party, the borrowing of
Loans, the use of the proceeds thereof and the issuance of Letters of Credit
hereunder.

         "Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to an Adjusted LIBO Rate or the Alternate
Base Rate.

         "Unrestricted Subsidiary" means (i) any Subsidiary (other than the
Borrower) that is designated by the Board of Directors of Holdings as an
Unrestricted Subsidiary in accordance with Section 6.14, and (ii) each
Structured Note Trust.

         "Voting Stock" means, with respect to any Person, capital stock issued
by such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, whether or not the right so to
vote has been suspended by the happening of such a contingency.


                                       35
<PAGE>

         "Weighted Average Life to Maturity" means, on any date and with respect
to the Revolving Commitments, the Term Loans, any Additional Incremental
Revolving Commitments of any Class, any Incremental Term Loans, any Additional
Incremental Term Loans of any Class or any other Indebtedness or commitments to
provide financing, an amount equal to (i) the sum, for each scheduled repayment
of Term Loans, Additional Incremental Term Loans or Incremental Term Loans of
such Class or of such Indebtedness, as the case may be, to be made after such
date, or each scheduled reduction of Revolving Commitments or Additional
Incremental Revolving Commitments of such Class or other commitments to provide
financing, as the case may be, to be made after such date, of the amount of such
scheduled repayment or reduction multiplied by the number of days from such date
to the date of such scheduled prepayment or reduction divided by (ii) the
aggregate principal amount of such Term Loans, Additional Incremental Term Loans
or Incremental Term Loans or of such Indebtedness, as the case may be, or such
Revolving Commitments or Additional Incremental Revolving Commitments or other
commitments to provide financing, as the case may be.

         "Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.

         SECTION 1.2. Classification of Loans and Borrowings. For purposes of
this Agreement, Loans may be classified and referred to by Class (e.g., a
"Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type
(e.g., a "Eurodollar Revolving Loan"). Borrowings also may be classified and
referred to by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a
"Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving
Borrowing").

         SECTION 1.3. Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same


                                       36
<PAGE>

meaning and effect and to refer to any and all tangible and intangible assets
and properties, including cash, securities, accounts and contract rights.

         SECTION 1.4. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.


                                       37
<PAGE>

                                    ARTICLE 2

                                   THE CREDITS

         SECTION 2.1. Commitments. Subject to the terms and conditions set forth
herein, (a) each Lender agrees (i) to make Term Loans to the Borrower from time
to time during the Term Loan Availability Period in a principal amount not
exceeding its Term Commitment, if any, (ii) to make Revolving Loans to the
Borrower from time to time during the Revolving Availability Period in an
aggregate principal amount that will not result in such Lender's Revolving
Exposure exceeding such Lender's Revolving Commitment, if any, (iii) to make
Additional Incremental Term Loans to the Borrower under any Additional
Incremental Facility during the period or on the date set forth in the
applicable Additional Incremental Facility Agreement in a principal amount not
exceeding its Additional Incremental Commitment in respect of such Additional
Incremental Facility, if any, and (iv) to make Additional Incremental Revolving
Loans to the Borrower under any Additional Incremental Facility during the
period set forth in the applicable Additional Incremental Facility Agreement in
a principal amount not exceeding at any time its Additional Incremental
Revolving Commitment in respect of such Additional Incremental Facility, if any,
(b) each Incremental Tranche A Lender agrees to make Incremental Tranche A Term
Loans to the Borrower from time to time during the Incremental Tranche A Term
Loan Availability Period in a principal amount not exceeding its Incremental
Tranche A Commitment, provided that the initial Borrowing under the Incremental
Tranche A Facility shall be in an aggregate amount not less than $225,000,000
and shall occur on the First Incremental Borrowing Date. Within the foregoing
limits and subject to the terms and conditions set forth herein, the Borrower
may borrow, prepay and reborrow Revolving Loans and Additional Incremental
Revolving Loans. Amounts repaid in respect of Term Loans, Incremental Term Loans
or Additional Incremental Term Loans may not be reborrowed.

         SECTION 2.2. Loans and Borrowings. (a) Each Loan (other than a
Swingline Loan) shall be made as part of a Borrowing consisting of Loans of the
same Class and Type made by the Lenders ratably in accordance with their
respective Commitments of the applicable Class. The failure of any Lender to
make any Loan required to be made by it shall not relieve any other Lender of
its obligations hereunder; provided that the Commitments of the Lenders are
several and no Lender shall be responsible for any other Lender's failure to
make Loans as required.

          (b) Subject to Section 2.14, each Revolving Borrowing, Term Borrowing,
Additional Incremental Revolving Borrowing, Additional Incremental Term
Borrowing and Incremental Term Borrowing shall be comprised entirely of ABR
Loans or Eurodollar Loans as the Borrower may request in accordance herewith.
Each Swingline Loan shall be an ABR Loan. Each Lender at its option may make any
Eurodollar Loan by causing any domestic or foreign branch or affiliate of such
Lender to make such Loan; provided that any exercise of such option shall not
affect the obligation of the Borrower to repay such Loan in accordance with the
terms of this Agreement.

          (c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing (w) if a Revolving Borrowing shall be in an aggregate
amount that is an


                                       38
<PAGE>

integral multiple of $1,000,000 and not less than $10,000,000, (x) if a Term
Borrowing shall be in an aggregate amount that is an integral multiple of
$1,000,000 and not less than $50,000,000 (y) if an Incremental Term Borrowing
shall be in an aggregate amount that is an integral multiple of $1,000,000 and
not less than $10,000,000 or (z) if an Additional Incremental Term Borrowing or
an Additional Incremental Revolving Borrowing shall be in aggregate amounts that
are permitted under the applicable Incremental Facility Agreement. At the time
that each ABR Borrowing is made, such Borrowing (w) if a Revolving Borrowing
shall be in an aggregate amount that is an integral multiple of $1,000,000 and
not less than $5,000,000, (x) if a Term Borrowing shall be in an aggregate
amount that is an integral multiple of $1,000,000 and not less than $50,000,000
(y) if an Incremental Term Borrowing shall be in an aggregate amount that is an
integral multiple of $1,000,000 and not less than $10,000,000 or (z) if an
Additional Incremental Term Borrowing or an Additional Incremental Revolving
Borrowing shall be in aggregate amounts that are permitted under the applicable
Incremental Facility Agreement; provided that (i) an ABR Revolving Borrowing or
ABR Additional Incremental Revolving Borrowing may be in an aggregate amount
that is equal to the entire unused balance of the total Revolving Commitments or
Additional Incremental Revolving Commitments of the applicable Class, as the
case may be, (ii) an ABR Revolving Borrowing may be in an aggregate amount that
is required to finance the reimbursement of an LC Disbursement as contemplated
by Section 2.05(e) and (iii) an ABR Term Borrowing, ABR Incremental Term
Borrowing or ABR Additional Incremental Term Borrowing may be in an aggregate
amount that is equal to the entire unused balance of the total Term Commitments,
Incremental Term Commitments, Additional Incremental Term Commitments of the
applicable Class, as the case may be. Each Swingline Loan shall be in an amount
that is an integral multiple of $1,000,000 and not less than $5,000,000.
Borrowings of more than one Type and Class may be outstanding at the same time;
provided that there shall not at any time be more than a total of 10 Eurodollar
Borrowings outstanding.

          (d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end
after the Revolving Maturity Date, the Term Maturity Date, the Incremental
Tranche A Maturity Date or the maturity date set forth in the applicable
Additional Incremental Facility Agreement, as applicable.

         SECTION 2.3. Requests for Borrowings. To request a Borrowing (other
than a Swingline Borrowing), the Borrower shall notify the Administrative Agent
of such request by telephone (a) in the case of a Eurodollar Borrowing, not
later than 11:00 a.m., Dallas, Texas time, three Business Days before the date
of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than
11:00 a.m., Dallas, Texas time, one Business Day before the date of the proposed
Borrowing; provided that any such notice of an ABR Revolving Borrowing to
finance the reimbursement of an LC Disbursement as contemplated by Section
2.05(e) may be given not later than 10:00 a.m., Dallas, Texas time, on the date
of the proposed Borrowing. Each such telephonic Borrowing Request


                                       39
<PAGE>

shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Borrowing Request
substantially in the form of Exhibit B hereto and signed by the Borrower. Each
such telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.02:

                  (i) whether the requested Borrowing is to be a Revolving
         Borrowing, Term Borrowing, Incremental Tranche A Term Borrowing,
         Additional Incremental Revolving Borrowing or Additional Incremental
         Term Borrowing and, in the case of Additional Incremental Revolving
         Borrowings and Additional Incremental Term Borrowings, the Additional
         Incremental Facility under which such Borrowing is to be made;

                  (ii) the aggregate amount of such Borrowing;

                  (iii) the date of such Borrowing, which shall be a Business
         Day;

                  (iv) whether such Borrowing is to be an ABR Borrowing or a
         Eurodollar Borrowing;

                  (v) in the case of a Eurodollar Borrowing, the initial
         Interest Period to be applicable thereto, which shall be a period
         contemplated by the definition of the term "Interest Period"; and

                  (vi) the location and number of the Borrower's account to
         which funds are to be disbursed, which shall comply with the
         requirements of Section 2.06.

         If no election as to the Type of Borrowing is specified, then the
requested Borrowing shall be an ABR Borrowing. If no Interest Period is
specified with respect to any requested Eurodollar Borrowing, then the Borrower
shall be deemed to have selected an Interest Period of one month's duration.
Promptly following receipt of a Borrowing Request in accordance with this
Section, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender's Loan to be made as part of the
requested Borrowing.

         SECTION 2.4. Swingline Loans. (a) Subject to the terms and conditions
set forth herein, the Swingline Lenders each agree to make Swingline Loans to
the Borrower from time to time during the Revolving Availability Period, in an
aggregate principal amount at any time outstanding that will not result in (i)
the aggregate principal amount of outstanding Swingline Loans of either
Swingline Lender exceeding $25,000,000 or (ii) the sum of the total Revolving
Exposures exceeding the total Revolving Commitments; provided that neither
Swingline Lender shall be required to make a Swingline Loan to refinance an
outstanding Swingline Loan. Within the foregoing limits and subject to the terms
and conditions set forth herein, the Borrower may borrow, prepay and reborrow
Swingline Loans.


                                       40
<PAGE>

          (b) To request a Swingline Loan, the Borrower shall notify the
Administrative Agent of such request by telephone (confirmed by telecopy), not
later than 12:00 noon, Dallas, Texas time, on the day of a proposed Swingline
Loan and shall advise the Administrative Agent as to which Swingline Lender the
Borrower desires to provide such Swingline Loan. Each such notice shall be
irrevocable and shall specify the requested date (which shall be a Business Day)
and amount of the requested Swingline Loan. The Administrative Agent will
promptly advise the Swingline Lender indicated by the Borrower in such notice of
any such notice received from the Borrower. The applicable Swingline Lender
shall make such Swingline Loan available to the Borrower by means of a credit to
the general deposit account of the Borrower with such Swingline Lender (or, in
the case of a Swingline Loan made to finance the reimbursement of an LC
Disbursement as provided in Section 2.05(e), by remittance to the applicable
Issuing Bank) by 3:00 p.m., Dallas, Texas time, on the requested date of such
Swingline Loan.

          (c) The applicable Swingline Lender may by written notice given to the
Administrative Agent not later than 10:00 a.m., Dallas, Texas time, on any
Business Day require the Revolving Lenders to acquire participations on such
Business Day in all or a portion of its Swingline Loans outstanding. Such notice
shall specify the aggregate amount of Swingline Loans in which Revolving Lenders
will participate. Promptly upon receipt of such notice, the Administrative Agent
will give notice thereof to each Revolving Lender, specifying in such notice
such Lender's Applicable Percentage of such Swingline Loan or Loans. Each
Revolving Lender hereby absolutely and unconditionally agrees, upon receipt of
notice as provided above, to pay to the Administrative Agent, for the account of
the applicable Swingline Lender, such Lender's Applicable Percentage of such
Swingline Loan or Loans. Each Revolving Lender acknowledges and agrees that its
obligation to acquire participations in Swingline Loans pursuant to this
paragraph is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or reduction or termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever. Each
Revolving Lender shall comply with its obligation under this paragraph by wire
transfer of immediately available funds, in the same manner as provided in
Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall
apply, mutatis mutandis, to the payment obligations of the Revolving Lenders),
and the Administrative Agent shall promptly pay to the applicable Swingline
Lender the amounts so received by it from the Revolving Lenders. The
Administrative Agent shall notify the Borrower of any participations in any
Swingline Loan acquired pursuant to this paragraph, and thereafter payments in
respect of such Swingline Loan shall be made to the Administrative Agent and not
to the applicable Swingline Lender. Any amounts received by a Swingline Lender
from the Borrower (or other party on behalf of the Borrower) in respect of a
Swingline Loan made by such Swingline Lender after receipt by such Swingline
Lender of the proceeds of a sale of participations therein shall be promptly
remitted to the Administrative Agent; any such amounts received by the
Administrative Agent shall be promptly remitted by the Administrative Agent to
the Revolving Lenders that shall have made their payments


                                       41
<PAGE>

pursuant to this paragraph and to the applicable Swingline Lender, as their
interests may appear. The purchase of participations in a Swingline Loan
pursuant to this paragraph shall not relieve the Borrower of any default in the
payment thereof.

         SECTION 2.5. Letters of Credit. (a) General. Subject to the terms and
conditions set forth herein, the Borrower may request the issuance of Letters of
Credit for its own account, in a form reasonably acceptable to the
Administrative Agent and the applicable Issuing Bank, at any time and from time
to time during the Revolving Availability Period. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Borrower to, or entered into by the Borrower with, the Issuing
Bank relating to any Letter of Credit, the terms and conditions of this
Agreement shall control.

          (b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing
Bank from whom the Borrower is requesting such Letter of Credit and to the
Administrative Agent (reasonably in advance of the requested date of issuance,
amendment, renewal or extension) a notice requesting the issuance of a Letter of
Credit, or identifying the Letter of Credit to be amended, renewed or extended,
and specifying the date of issuance, amendment, renewal or extension (which
shall be a Business Day), the date on which such Letter of Credit is to expire
(which shall comply with Section 2.05(c)), the amount of such Letter of Credit,
the name and address of the beneficiary thereof and such other information as
shall be necessary to prepare, amend, renew or extend such Letter of Credit. If
requested by the applicable Issuing Bank, the Borrower also shall submit a
letter of credit application on such Issuing Bank's standard form in connection
with any request for a Letter of Credit. A Letter of Credit shall be issued,
amended, renewed or extended only if (and upon issuance, amendment, renewal or
extension of each Letter of Credit the Borrower shall be deemed to represent and
warrant that), after giving effect to such issuance, amendment, renewal or
extension (i) the LC Exposure shall not exceed $350,000,000 and (ii) the total
Revolving Exposures shall not exceed the total Revolving Commitments.

          (c) Expiration Date. Each Letter of Credit shall expire at or prior to
the close of business on the earlier of (i) the date one year after the date of
the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension), provided that a
Letter of Credit may include customary "evergreen" provisions and (ii) the date
that is five Business Days prior to the Revolving Maturity Date.

          (d) Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the applicable Issuing Bank or the Lenders, the
applicable Issuing Bank hereby grants


                                       42
<PAGE>

to each Revolving Lender, and each Revolving Lender hereby acquires from such
Issuing Bank, a participation in such Letter of Credit equal to such Lender's
Applicable Percentage of the aggregate amount available to be drawn under such
Letter of Credit. In consideration and in furtherance of the foregoing, each
Revolving Lender hereby absolutely and unconditionally agrees to pay to the
Administrative Agent, for the account of such Issuing Bank, such Lender's
Applicable Percentage of each LC Disbursement made by such Issuing Bank and not
reimbursed by the Borrower on the date due as provided in paragraph Section
2.05(e), or of any reimbursement payment required to be refunded to the Borrower
for any reason. Each Lender acknowledges and agrees that its obligation to
acquire participations pursuant to this paragraph in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.

          (e) Reimbursement. If an Issuing Bank shall make any LC Disbursement
in respect of a Letter of Credit, the Borrower shall reimburse such LC
Disbursement by paying to the Administrative Agent an amount equal to such LC
Disbursement not later than 1:00 p.m., Dallas, Texas time, on the date that such
LC Disbursement is made, if the Borrower shall have received notice of such LC
Disbursement prior to 9:30 a.m., Dallas, Texas time, on such date, or, if such
notice has not been received by the Borrower prior to such time on such date,
then not later than 1:00 p.m., Dallas, Texas time, on (i) the Business Day that
the Borrower receives such notice, if such notice is received prior to 9:30
a.m., Dallas, Texas time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt; provided that,
if such LC Disbursement is not less than $5,000,000, the Borrower may, subject
to the conditions to borrowing set forth herein, request in accordance with
Section 2.03 or 2.04 that such payment be financed with an ABR Revolving
Borrowing or Swingline Loan in an equivalent amount and, to the extent so
financed, the Borrower's obligation to make such payment shall be discharged and
replaced by the resulting ABR Revolving Borrowing or Swingline Loan. If the
Borrower fails to make such payment when due, the Administrative Agent shall
notify each Revolving Lender of the applicable LC Disbursement, the payment then
due from the Borrower in respect thereof and such Lender's Applicable Percentage
thereof. Promptly following receipt of such notice, each Revolving Lender shall
pay to the Administrative Agent its Applicable Percentage of the payment then
due from the Borrower, in the same manner as provided in Section 2.06 with
respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis
mutandis, to the payment obligations of the Revolving Lenders), and the
Administrative Agent shall promptly pay to the applicable Issuing Bank the
amounts so received by it from the Revolving Lenders. Promptly following receipt
by the Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the
applicable Issuing Bank or, to the extent that Revolving Lenders have


                                       43
<PAGE>

made payments pursuant to this paragraph to reimburse the Issuing Bank, then to
such Lenders and the applicable Issuing Bank as their interests may appear. Any
payment made by a Revolving Lender pursuant to this paragraph to reimburse the
applicable Issuing Bank for any LC Disbursement (other than the funding of ABR
Revolving Loans or a Swingline Loan as contemplated above) shall not constitute
a Loan and shall not relieve the Borrower of its obligation to reimburse such LC
Disbursement.

          (f) Obligations Absolute. The Borrower's obligation to reimburse LC
Disbursements as provided in paragraph Section 2.05(e) shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by an Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower's obligations hereunder. Neither
the Administrative Agent, the Lenders nor either Issuing Bank, nor any of their
Related Parties, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank; provided that the foregoing shall not be construed to excuse an
Issuing Bank from liability to the Borrower to the extent of any direct damages
(as opposed to consequential damages, claims in respect of which are hereby
waived by the Borrower to the extent permitted by applicable law) suffered by
the Borrower that are caused by the Issuing Bank's failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or wilful misconduct on the part of an
Issuing Bank (as finally determined by a court of competent jurisdiction), each
Issuing Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented which appear on their
face to be in substantial compliance with the terms of a Letter of Credit, the
Issuing Bank may, in its sole discretion, either accept and make payment upon
such documents without responsibility for further investigation, regardless of
any notice or information to the contrary, or refuse to accept and make payment
upon such documents if such documents are not in strict compliance with the
terms of such Letter of Credit.


                                       44
<PAGE>

          (g) Disbursement Procedures. The applicable Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit. The applicable Issuing
Bank shall promptly notify the Administrative Agent and the Borrower by
telephone (confirmed by telecopy) of such demand for payment and whether the
Issuing Bank has made or will make an LC Disbursement thereunder; provided that
any failure to give or delay in giving such notice shall not relieve the
Borrower of its obligation to reimburse such Issuing Bank and the Revolving
Lenders with respect to any such LC Disbursement.

          (h) Interim Interest. If an Issuing Bank shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans;
provided that, if the Borrower fails to reimburse such LC Disbursement when due
pursuant to Section 2.05(e), then Section 2.13(c) shall apply. Interest accrued
pursuant to this paragraph shall be for the account of the applicable Issuing
Bank, except that interest accrued on and after the date of payment by any
Revolving Lender pursuant to Section 2.05(e) to reimburse the applicable Issuing
Bank shall be for the account of such Lender to the extent of such payment.

          (i) Replacement of the Issuing Bank. An Issuing Bank may be replaced
at any time by written agreement among the Borrower, the Administrative Agent,
the replaced Issuing Bank and the successor Issuing Bank. The Administrative
Agent shall notify the Lenders of any such replacement of an Issuing Bank. At
the time any such replacement shall become effective, the Borrower shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
Section 2.12(b). From and after the effective date of any such replacement, (i)
the successor Issuing Bank shall have all the rights and obligations of an
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed
to refer to such successor, to any other Issuing Bank or to any previous Issuing
Bank, or to such successor, all other Issuing Banks and all previous Issuing
Banks, as the context shall require. After the replacement of an Issuing Bank
hereunder, the replaced Issuing Bank shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Bank under this
Agreement with respect to Letters of Credit issued by it prior to such
replacement, but shall not be required to issue additional Letters of Credit.

          (j) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Lenders with LC Exposure representing greater
than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, the Borrower shall deposit in an account with the
Administrative Agent, in the name of


                                       45
<PAGE>

the Administrative Agent and for the benefit of the Lenders, an amount in cash
equal to 105% of the LC Exposure as of such date plus any accrued and unpaid
interest thereon; provided that the obligation to deposit such cash collateral
shall become effective immediately, and such deposit shall become immediately
due and payable, without demand or other notice of any kind, upon the occurrence
of any Event of Default with respect to the Borrower described in Section
7.01(h) or 7.01(i). Each such deposit shall be held by the Administrative Agent
as collateral for the payment and performance of the obligations of the Borrower
under this Agreement. The Administrative Agent shall have exclusive dominion and
control, including the exclusive right of withdrawal, over such account. Other
than any interest earned on the investment of such deposits, which investments
shall be made at the option and sole discretion of the Administrative Agent and
at the Borrower's risk and expense, such deposits shall not bear interest.
Interest or profits, if any, on such investments shall accumulate in such
account. Moneys in such account shall be applied by the Administrative Agent to
reimburse the applicable Issuing Bank for LC Disbursements for which it has not
been reimbursed and, to the extent not so applied, shall be held for the
satisfaction of the reimbursement obligations of the Borrower for the LC
Exposure at such time or, if the maturity of the Loans has been accelerated (but
subject to the consent of Revolving Lenders with LC Exposure representing
greater than 50% of the total LC Exposure), be applied to satisfy other
obligations of the Borrower under this Agreement. If the Borrower is required to
provide an amount of cash collateral hereunder as a result of the occurrence of
an Event of Default, such amount (to the extent not applied as aforesaid) shall
be returned to the Borrower within three Business Days after all Events of
Default have been cured or waived.

         SECTION 2.6. Funding of Borrowings. (a) Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 1:00 p.m., Dallas, Texas time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders; provided that Swingline Loans shall be made as provided
in Section 2.04. The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower maintained with the Administrative Agent in Dallas,
Texas and designated by the Borrower in the applicable Borrowing Request;
provided that ABR Revolving Loans made to finance the reimbursement of an LC
Disbursement as provided in Section 2.05(e) shall be remitted by the
Administrative Agent to the applicable Issuing Bank.

          (b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with Section 2.06(a) and may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount. In such event, if a Lender has not in fact made its share of the
applicable Borrowing available to the Administrative Agent,


                                       46
<PAGE>

then the applicable Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount with interest
thereon, for each day from and including the date such amount is made available
to the Borrower to but excluding the date of payment to the Administrative
Agent, at (i) in the case of such Lender, the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation or (ii) in the case of the
Borrower, the interest rate applicable to ABR Loans. If such Lender pays such
amount to the Administrative Agent, then such amount shall constitute such
Lender's Loan included in such Borrowing.

         SECTION 2.7. Interest Elections. (a) Each Revolving Borrowing,
Additional Incremental Revolving Borrowing, Term Borrowing, Incremental Term
Borrowing and Additional Incremental Term Borrowing initially shall be of the
Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing
to a different Type or to continue such Borrowing and, in the case of a
Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section. The Borrower may elect different options with respect to different
portions of a Borrowing, in which case each such portion shall be allocated
ratably among the Lenders holding the Loans comprising such Borrowing, and the
Loans comprising each such portion shall be considered a separate Borrowing.
This Section shall not apply to Swingline Borrowings, which may not be converted
or continued.

          (b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
Borrower.

          (c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02 and Section
2.07(f):

                  (i) the Borrowing to which such Interest Election Request
         applies and, if different options are being elected with respect to
         different portions thereof, the portions thereof to be allocated to
         each resulting Borrowing (in which case the information to be specified
         pursuant to clauses (iii) and (iv) below shall be specified for each
         resulting Borrowing);

                  (ii) the effective date of the election made pursuant to such
         Interest Election Request, which shall be a Business Day;


                                       47
<PAGE>

                  (iii) whether the resulting Borrowing is to be an ABR
         Borrowing or a Eurodollar Borrowing; and

                  (iv) if the resulting Borrowing is a Eurodollar Borrowing, the
         Interest Period to be applicable thereto after giving effect to such
         election, which shall be a period contemplated by the definition of the
         term "Interest Period".

         If any such Interest Election Request requests a Eurodollar Borrowing
but does not specify an Interest Period, then the Borrower shall be deemed to
have selected an Interest Period of one month's duration.

         (d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each applicable Lender of the details thereof
and of such Lender's portion of each resulting Borrowing.

         (e) If the Borrower fails to deliver a timely Interest Election Request
with respect to a Eurodollar Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing, then, so long as an Event of Default is
continuing (i) no outstanding Borrowing may be converted to or continued as a
Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be
converted to an ABR Borrowing at the end of the Interest Period applicable
thereto.

         (f) A Borrowing of any Class may not be converted to or continued as a
Eurodollar Borrowing if after giving effect thereto (i) the Interest Period
therefor would commence before and end after a date on which any principal of
the Loans of such Class is scheduled to be repaid and (ii) the sum of the
aggregate principal amount of outstanding Eurodollar Borrowings of such Class
with Interest Periods ending on or prior to such scheduled repayment date plus
the aggregate principal amount of outstanding ABR Borrowings of such Class would
be less than the aggregate principal amount of Loans of such Class required to
be repaid on such scheduled repayment date.

         SECTION 2.8. Termination and Reduction of Commitments. (a) Unless
previously terminated, (i) the Term Commitments shall terminate on the Term
Commitment Termination Date, (ii) the Revolving Commitments shall terminate on
the Revolving Maturity Date, (iii) the Incremental Tranche A Commitments shall
terminate on the Incremental Tranche A Commitment Termination Date and (iv) the
Additional Incremental Commitments of any Class shall terminate on the date set
forth in the applicable Additional Incremental Facility Agreement.

         (b) Subject to adjustment pursuant to Section 2.08(h), the Revolving
Commitments outstanding on the Revolving Commitment Reduction Date shall be



                                       48
<PAGE>

automatically and permanently reduced in 12 consecutive installments on the last
day of each fiscal quarter (except with respect to the final reduction, which
shall be on the Revolving Maturity Date) set forth below in the percentage
amounts (expressed as a percentage of the aggregate amount of Revolving
Commitments outstanding on the Revolving Commitment Reduction Date) set forth
opposite such quarterly scheduled reduction date (or the Revolving Maturity
Date) below; provided that the final installment shall reduce the remaining
outstanding Revolving Commitments to zero on the Revolving Maturity Date and the
payment made in respect thereof shall equal the sum of (x) the then aggregate
unpaid principal amount of all Revolving Loans plus (y) all other unpaid amounts
owing in respect of Revolving Loans, which payment shall be due and payable not
later than the Revolving Maturity Date:

<Table>
<Caption>
            Scheduled Reduction Date                            Commitment Reduction
            ------------------------                            --------------------
<S>                                                             <C>
                4th Quarter 2002                                       5.00%
                1st Quarter 2003                                       5.00%
                2nd Quarter 2003                                       5.00%
                3rd Quarter 2003                                       5.00%

                4th Quarter 2003                                       7.50%
                1st Quarter 2004                                       7.50%
                2nd Quarter 2004                                       7.50%
                3rd Quarter 2004                                       7.50%

                4th Quarter 2004                                      12.50%
                1st Quarter 2005                                      12.50%
                2nd Quarter 2005                                      12.50%
             Revolving Maturity Date                                  12.50%
</Table>

         (c) Subject to adjustment pursuant to Section 2.08(h), the Additional
Incremental Revolving Commitments of any Class shall be automatically and
permanently reduced on the scheduled dates, and in the scheduled amounts, if
any, set forth in the applicable Additional Incremental Facility Agreement.

         (d) The Borrower may at any time terminate, or from time to time
reduce, the Commitments of any Class; provided that (i) each reduction of the
Commitments of any Class shall be in an amount that is an integral multiple of
$1,000,000 and not less than $10,000,000, (ii) the Borrower shall not terminate
or reduce the Revolving Commitments if, after giving effect to any concurrent
prepayment of the Revolving Loans in accordance with Section 2.11, the sum of
the Revolving Exposures would exceed the total Revolving Commitments and (iii)
the Borrower shall not terminate or reduce the Additional Incremental Revolving
Commitments of any Class if, after giving effect to any concurrent prepayment of
Additional Incremental Revolving Loans of such Class in accordance with


                                       49
<PAGE>

Section 2.11, the aggregate principal amount of outstanding Additional
Incremental Revolving Loans of such Class would exceed the total Additional
Incremental Revolving Commitments of such Class.

         (e) The Borrower shall notify the Administrative Agent of any election
to terminate or reduce the Commitments under Section 2.08(d) at least three
Business Days prior to the effective date of such termination or reduction,
specifying such election and the effective date thereof. Promptly following
receipt of any notice, the Administrative Agent shall advise the Lenders of the
contents thereof. Each notice delivered by the Borrower pursuant to this Section
shall be irrevocable; provided that a notice of termination of the Revolving
Commitments or the Additional Incremental Revolving Commitments of any Class
delivered by the Borrower may state that such notice is conditioned upon the
effectiveness of other credit facilities, in which case such notice may be
revoked by the Borrower (by notice to the Administrative Agent on or prior to
the specified effective date) if such condition is not satisfied. Any
termination or reduction of the Commitments of any Class shall be permanent.
Each reduction of the Commitments of any Class shall be made ratably among the
Lenders in accordance with their respective Commitments of such Class.

         (f) In the event and on each occasion that any Net Proceeds in excess
of $5,000,000 are received by or on behalf of Holdings or any Subsidiary in
respect of any Prepayment Event, there shall be a pro rata reduction of
Revolving Commitments, Term Borrowings, Incremental Tranche A Borrowings and, if
provided for in the applicable Additional Incremental Facility Agreement,
Additional Incremental Revolving Commitments and Additional Incremental Term
Borrowings as provided in this Section 2.08(f) and in Section 2.11(b). In such
event, the Revolving Commitments and, if provided for in the applicable
Additional Incremental Facility Agreement, Additional Incremental Revolving
Commitments shall, on the third Business Day after such Net Proceeds are
received, be automatically and permanently reduced in an aggregate amount equal
to the product of 100% (or, in the case of any Prepayment Event referred to in
clause (c) of the definition of Prepayment Event, if, on the date on which any
reduction would otherwise be made in respect of such Prepayment Event either (i)
the Facilities shall be rated not lower than BBB- by S&P and Baa3 by Moody's or
(ii) the Total Leverage Ratio as of such date is less than 3.5 to 1.0, 50%) of
such Net Proceeds and the Reduction Portion in respect of such Prepayment Event;
provided that, in the case of any event described in clause (a) or (c) of the
definition of Prepayment Event, if the Borrower shall deliver to the
Administrative Agent a certificate of a Financial Officer to the effect that the
Borrower intends to apply the Net Proceeds from such event (or a portion thereof
specified in such certificate) to invest in the Telecommunications Business of
the Borrower and the other Restricted Subsidiaries within 360 days of the
receipt thereof and certifying that no Default has occurred and is continuing,
then no reduction shall be required pursuant to this paragraph in respect of the
Net Proceeds in respect of such event (or the portion of such Net Proceeds
specified in such certificate, if applicable) except to the extent of any such
Net Proceeds therefrom that have not been so


                                       50
<PAGE>

applied by the end of such period, at which time a reduction shall be required
in accordance with this paragraph (f).

          (g) Following the end of each fiscal year of the Borrower, commencing
with the fiscal year ending December 31, 2002, the Revolving Commitments and, if
provided for in the applicable Additional Incremental Facility Agreement,
Additional Incremental Revolving Commitments shall be automatically and
permanently reduced in an aggregate amount equal to the product of 50% of Excess
Cash Flow for such fiscal year and the Reduction Portion in respect of such
Excess Cash Flow; provided that if, on the date on which any reduction would
otherwise be made pursuant to this Section 2.08(g), either (i) the Facilities
shall be rated not lower than BBB- by S&P and Baa3 by Moody's or (ii) the Total
Leverage Ratio as of such date is less than 3.5 to 1.0, no such reduction shall
be required pursuant to this Section 2.08(g). Each reduction pursuant to this
paragraph shall be made on the date on which financial statements are delivered
pursuant to Section 5.01 with respect to the fiscal year for which Excess Cash
Flow is being calculated (and in any event within 90 days after the end of such
fiscal year).

          (h) Any reduction of the Revolving Commitments, other than a reduction
pursuant to Section 2.08(a) or 2.08(b) above, shall be applied to reduce the
subsequent scheduled reductions of Revolving Commitments to be made pursuant to
Section 2.08(a) or 2.08(b) above in reverse chronological order. Any reduction
of the Additional Incremental Revolving Commitments of any Class, other than a
reduction pursuant to Section 2.08(a) or 2.08(c) above, shall be applied to
reduce the subsequent scheduled reductions of Additional Incremental Revolving
Commitments of such Class to be made pursuant to Section 2.08(a) or 2.08(c) as
set forth in the applicable Additional Incremental Facility Agreement.

         SECTION 2.9. Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay (i) to the Administrative Agent for the
account of each applicable Lender the then unpaid principal amount of each
Revolving Loan of such Lender on the Revolving Maturity Date, (ii) to the
Administrative Agent for the account of each applicable Lender the then unpaid
principal amount of each Term Loan of such Lender as provided in Section 2.10,
(iii) to the Administrative Agent for the account of each applicable Incremental
Lender the then unpaid principal amount of each Incremental Tranche A Term Loan
of such Incremental Lender as set forth in Section 2.10, (iv) to the
Administrative Agent for the account of each applicable Lender the then unpaid
principal amount of each Additional Incremental Loan of any Class of such Lender
as set forth in the applicable Additional Incremental Facility Agreement and (v)
to each Swingline Lender the then unpaid principal amount of each Swingline Loan
made by it on the earlier of the Revolving Maturity Date and the first date
after such Swingline Loan is made that is the 15th or last day of a calendar
month and is at least two Business Days after such Swingline Loan is made.


                                       51
<PAGE>

          (b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.

          (c) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Class and Type thereof
and the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender's share thereof.

          (d) The entries made in the accounts maintained pursuant to Section
2.09(b) and 2.09(c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.

          (e) No promissory notes evidencing Loans hereunder will be issued
unless a Lender requests that a promissory note be issued to it to evidence its
Loans of any Class. In such event, the Borrower shall prepare, execute and
deliver to such Lender a promissory note payable to the order of such Lender
(or, if requested by such Lender, to such Lender and its registered assigns) and
in a form approved by the Administrative Agent. Thereafter, the Loans evidenced
by such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 10.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).

         SECTION 2.10. Amortization of Term Loans and Incremental Term Loans.
(a) Subject to adjustment pursuant to Section 2.10(e), the Borrower shall repay
Term Borrowings outstanding on the Term Amortization Date in 16 consecutive
installments of principal, each of which will be due and payable on the last day
of each fiscal quarter (except with respect to the final installment, which
shall be on the Term Maturity Date) set forth below in the percentage amounts
(expressed as a percentage of the aggregate amount of Term Loans outstanding on
the Term Commitment Termination Date) set forth opposite such quarterly
installment date (or the Term Maturity Date) below; provided that the final
installment shall equal the sum of (x) the then aggregate unpaid principal
amount of all Term Loans plus (y) all other unpaid amounts owing in respect of
Term Loans and shall be due and payable not later than the Term Maturity Date:


                                       52
<PAGE>

<Table>
<Caption>
                  Payment Date                                         Amount
                  ------------                                         ------
<S>                                                                    <C>
                4th Quarter 2002                                       3.75%
                1st Quarter 2003                                       3.75%
                2nd Quarter 2003                                       3.75%
                3rd Quarter 2003                                       3.75%

                4th Quarter 2003                                       6.25%
                1st Quarter 2004                                       6.25%
                2nd Quarter 2004                                       6.25%
                3rd Quarter 2004                                       6.25%

                4th Quarter 2004                                       7.50%
                1st Quarter 2005                                       7.50%
                2nd Quarter 2005                                       7.50%
                3rd Quarter 2005                                       7.50%

                4th Quarter 2005                                       7.50%
                1st Quarter 2006                                       7.50%
                2nd Quarter 2006                                       7.50%
               Term Maturity Date                                      7.50%
</Table>

          (b) Subject to adjustment pursuant to Section 2.10(e), the Borrower
shall repay Incremental Tranche A Borrowings outstanding on the Incremental
Tranche A Amortization Date in 16 consecutive installments of principal, each of
which will be due and payable on the last day of each fiscal quarter (except
with respect to the final installment, which shall be on the Incremental Tranche
A Maturity Date) set forth below in the percentage amounts (expressed as a
percentage of the aggregate amount of Incremental Tranche A Term Loans
outstanding on the Incremental Tranche A Commitment Termination Date) set forth
opposite such quarterly installment date (or the Incremental Tranche A Maturity
Date) below; provided that the final installment shall equal the sum of (x) the
then aggregate unpaid principal amount of all Incremental Tranche A Term Loans
plus (y) all other unpaid amounts owing in respect of the Incremental Tranche A
Term Loans, and shall be due and payable not later than the Incremental Tranche
A Maturity Date:

<Table>
<Caption>
                  Payment Date                                         Amount
                  ------------                                         ------
<S>                                                                    <C>
                4th Quarter 2002                                       3.75%
                1st Quarter 2003                                       3.75%
                2nd Quarter 2003                                       3.75%
                3rd Quarter 2003                                       3.75%

                4th Quarter 2003                                       6.25%
                1st Quarter 2004                                       6.25%
</Table>


                                       53
<PAGE>

<Table>
<Caption>
                  Payment Date                                         Amount
                  ------------                                         ------
<S>                                                                    <C>
                2nd Quarter 2004                                       6.25%
                3rd Quarter 2004                                       6.25%

                4th Quarter 2004                                       7.50%
                1st Quarter 2005                                       7.50%
                2nd Quarter 2005                                       7.50%
                3rd Quarter 2005                                       7.50%

                4th Quarter 2005                                       7.50%
                1st Quarter 2006                                       7.50%
                2nd Quarter 2006                                       7.50%
               Incremental Tranche
                 A Maturity Date                                       7.50%
</Table>

          (c) Subject to adjustment pursuant to Section 2.10(e), the Borrower
shall repay Additional Incremental Term Borrowings of any Class on the scheduled
dates, and in the scheduled amounts, if any, set forth in the applicable
Additional Incremental Facility Agreement.

          (d) To the extent not previously paid, all Term Loans shall be due and
payable on the Term Maturity Date, all Revolving Loans shall be due and payable
on the Revolving Maturity Date, all Incremental Tranche A Term Loans shall be
due and payable on the Incremental Tranche A Maturity Date and all Additional
Incremental Loans of any Class shall be due and payable on the final maturity
date set forth in the applicable Additional Incremental Facility Agreement.

          (e) Any prepayment of a Term Borrowing or an Incremental Term
Borrowing shall be applied to reduce the subsequent scheduled repayments of Term
Borrowings or Incremental Term Borrowings, respectively to be made pursuant to
this Section in reverse chronological order. Any prepayment of an Additional
Incremental Term Borrowing of any Class shall be applied to reduce the
subsequent scheduled repayment of Additional Incremental Term Borrowings of such
Class to be made pursuant to this Section as set forth in the applicable
Additional Incremental Facility Agreement.

          (f) Prior to any repayment of any Term Borrowings or Incremental Term
Borrowings hereunder or any Additional Incremental Term Borrowings of any Class,
the Borrower shall select the Borrowing or Borrowings of such Class to be repaid
and shall notify the Administrative Agent by telephone (confirmed by telecopy)
of such selection not later than 11:00 a.m., Dallas, Texas time, three Business
Days before the scheduled date of such repayment; provided that each repayment
of Term Borrowings or Incremental Term Borrowings or any Additional Incremental
Term Borrowings of any Class shall be applied to repay any outstanding ABR Term
Borrowings or ABR


                                       54
<PAGE>

Incremental Term Borrowings or ABR Additional Incremental Term Borrowings of
such Class before any other Borrowings of such Class. Each repayment of a
Borrowing shall be applied ratably to the Loans included in the repaid
Borrowing. Repayments of Term Borrowings, Incremental Term Borrowings and
Additional Incremental Term Borrowings shall be accompanied by accrued interest
on the amount repaid.

         SECTION 2.11. Prepayment of Loans. (a) The Borrower shall have the
right at any time and from time to time to prepay any Borrowing in whole or in
part, subject to the requirements of this Section. All prepayments shall be made
without premium or penalty other than, to the extent applicable, amounts payable
under Section 2.16.

          (b) In the event and on each occasion that any Net Proceeds in excess
of $5,000,000 are received by or on behalf of Holdings or any Subsidiary in
respect of any Prepayment Event, there shall be a pro rata reduction of
Revolving Commitments, Term Borrowings, Incremental Tranche A Borrowings, and if
provided for in the applicable Additional Incremental Facility Agreement,
Additional Incremental Revolving Commitments and Additional Incremental Term
Borrowings as provided in this Section 2.11(b) and in Section 2.08(f). In such
event, the Borrower shall, within three Business Days after such Net Proceeds
are received, prepay Term Borrowings, Incremental Tranche A Borrowings and, if
provided for in the applicable Additional Incremental Facility Agreement,
Additional Incremental Term Borrowings in an aggregate amount equal to the
product of 100% (or, in the case of any Prepayment Event referred to in clause
(c) of the definition of Prepayment Event, if, on the date on which any
prepayment would otherwise be made in respect of such Prepayment Event either
(i) the Facilities shall be rated not lower than BBB- by S&P and Baa3 by Moody's
or (ii) the Total Leverage Ratio as of such date is less than 3.5 to 1.0, 50%)
of such Net Proceeds and the Prepayment Portion in respect of such Prepayment
Event (such product, the "Prepayment Amount"); provided that, in the case of any
event described in clause (a) or (c) of the definition of Prepayment Event, if
the Borrower shall deliver to the Administrative Agent a certificate of a
Financial Officer to the effect that the Borrower intends to apply the Net
Proceeds from such event (or a portion thereof specified in such certificate) to
invest in the Telecommunications Business of the Borrower and the other
Restricted Subsidiaries within 360 days of the receipt thereof and certifying
that no Default has occurred and is continuing, then no prepayment shall be
required pursuant to this paragraph in respect of the Net Proceeds in respect of
such event (or the portion of such Net Proceeds specified in such certificate,
if applicable) except to the extent of any such Net Proceeds therefrom that have
not been so applied by the end of such period, at which time a prepayment shall
be required in accordance with this paragraph (b).

          (c) Following the end of each fiscal year of the Borrower, commencing
with the fiscal year ending December 31, 2002, the Borrower shall prepay Term
Borrowings, Incremental Tranche A Borrowings and, if provided for in the
applicable Additional Incremental Facility Agreement, Additional Incremental
Term Borrowings in an aggregate amount equal to the product of (i) 50% of Excess
Cash Flow for such fiscal


                                       55
<PAGE>

year and (ii) the Prepayment Portion in respect of such Excess Cash Flow (such
product, the "Excess Cash Flow Prepayment Amount"); provided that if, on the
date on which any prepayment would otherwise be made pursuant to this Section
2.11(c), either (i) the Facilities shall be rated not lower than BBB- by S&P and
Baa3 by Moody's or (ii) the Total Leverage Ratio as of such date is less than
3.5 to 1.0, no such prepayment shall be required pursuant to this Section
2.11(c). Each prepayment pursuant to this paragraph shall be made on or before
the date on which financial statements are delivered pursuant to Section 5.01
with respect to the fiscal year for which Excess Cash Flow is being calculated
(and in any event within 90 days after the end of such fiscal year).

          (d) If, on any date, the aggregate Revolving Exposures of all Lenders
exceeds the aggregate Revolving Commitments of all Lenders, or the aggregate
principal amount of the Additional Incremental Revolving Loans of any Class of
all Lenders exceeds the aggregate Additional Incremental Revolving Commitments
of such Class of all Lenders, the Borrower shall immediately prepay Revolving
Loans or Additional Incremental Revolving Loans of such Class, as the case may
be (and, to the extent that any such excess remains after all Revolving Loans
have been prepaid, deposit cash collateral with the Administrative Agent to
secure outstanding LC Exposure), in an amount equal to such excess.

          (e) Prior to any optional or mandatory prepayment of Borrowings
hereunder, the Borrower shall select the Borrowing or Borrowings to be prepaid
and shall specify such selection in the notice of such prepayment pursuant to
Section 2.11(f); provided that each prepayment of Borrowings of any Class shall
be applied to prepay ABR Borrowings of such Class before any other Borrowings of
such Class.

          (f) The Borrower shall notify the Administrative Agent (and, in the
case of prepayment of a Swingline Loan, the applicable Swingline Lender) by
telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., Dallas, Texas
time, three Business Days before the date of prepayment, (ii) in the case of
prepayment of an ABR Borrowing, not later than 11:00 a.m., Dallas, Texas time,
one Business Day before the date of prepayment or (iii) in the case of
prepayment of a Swingline Loan, not later than 12:00 noon, Dallas, Texas time,
on the date of prepayment. Each such notice shall be irrevocable and shall
specify the prepayment date, the principal amount of each Borrowing or portion
thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably
detailed calculation of the amount of such prepayment; provided that, if a
notice of optional prepayment is given in connection with a conditional notice
of termination of the Revolving Commitments or any Additional Incremental
Revolving Commitments as contemplated by Section 2.08, then such notice of
prepayment may be revoked if such notice of termination is revoked in accordance
with Section 2.08. Promptly following receipt of any such notice (other than a
notice relating solely to Swingline Loans), the Administrative Agent shall
advise the Lenders of the contents thereof. Each partial prepayment of any
Borrowing shall be in an amount that would be


                                       56
<PAGE>

permitted in the case of an advance of a Borrowing of the same Type as provided
in Section 2.02, except as necessary to apply fully the required amount of a
mandatory prepayment. Each prepayment of a Borrowing shall be applied ratably to
the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by
accrued interest to the extent required by Section 2.13.

         SECTION 2.12. Fees. (a) The Borrower agrees to pay to the
Administrative Agent (i) in the case of Revolving Commitments and Term
Commitments for the account of each Lender fees for each day during the period
from and including the Effective Date to but excluding the date on which such
Commitment terminates at a rate equal to the applicable Commitment Fee Rate for
such day, (ii) in the case of Incremental Tranche A Commitments for the account
of each Incremental Tranche A Lender fees for each day during the period from
and including the Amendment No. 5 Effective Date but excluding the Incremental
Tranche A Commitment Termination Date at a rate equal to the applicable
Commitment Fee Rate for such day and (iii) in the case of any Additional
Incremental Facility Commitment, the rate set forth in the applicable Additional
Incremental Facility Agreement for such day, in each case on the unused amount
of each Commitment of such Lender on such day (collectively, the "COMMITMENT
FEES"). Accrued Commitment Fees shall be payable in arrears on the last day of
March, June, September and December of each year and on the date on which the
applicable Commitments terminate, commencing on the first such date to occur
after the date hereof. All Commitment Fees shall be computed on the basis of a
year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). For purposes of computing
commitment fees with respect to Revolving Commitments, a Revolving Commitment of
a Lender shall be deemed to be used to the extent of the outstanding Revolving
Loans and LC Exposure of such Lender (and the Swingline Exposure of such Lender
shall be disregarded for such purpose).

          (b) The Borrower agrees to pay (i) to the Administrative Agent for the
account of each Revolving Lender a participation fee with respect to its
participations in Letters of Credit for each day during the period from and
including the Effective Date to but excluding the later of the date on which
such Lender's Revolving Commitment terminates and the date on which such Lender
ceases to have any LC Exposure, which fee shall accrue at a rate equal to the
Applicable Margin on Eurodollar Revolving Loans for such day on the amount of
such Lender's LC Exposure on such day (excluding any portion thereof
attributable to unreimbursed LC Disbursements) and (ii) to the applicable
Issuing Bank a fronting fee in respect of Letters of Credit issued by such
Issuing Bank for each day during the period from and including the Effective
Date to but excluding the later of the date of termination of the Revolving
Commitments and the date on which there ceases to be any LC Exposure in respect
of Letters of Credit issued by such Issuing Bank, which shall accrue at the rate
or rates per annum separately agreed upon between the Borrower and such Issuing
Bank on the amount of the LC Exposure on such day (excluding any portion thereof
attributable to unreimbursed LC Disbursements) in respect of Letters of Credit
issued by such Issuing Bank, as well as the Issuing Bank's standard


                                       57
<PAGE>

fees with respect to the issuance, amendment, renewal or extension of any Letter
of Credit or processing of drawings thereunder. Participation fees and fronting
fees accrued through and including the last day of March, June, September and
December of each year shall be payable on the third Business Day following such
last day, commencing on the first such date to occur after the Effective Date;
provided that all such fees shall be payable on the date on which the Revolving
Commitments terminate and any such fees accruing after the date on which the
Revolving Commitments terminate shall be payable on demand. Any other fees
payable to an Issuing Bank pursuant to this paragraph shall be payable within 10
days after demand. All participation fees and fronting fees shall be computed on
the basis of a year of 360 days and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day).

          (c) The Borrower agrees to pay to the Administrative Agent, for its
own account, fees in the amounts and at the times separately agreed upon between
the Borrower and the Administrative Agent.

          (d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the applicable
Issuing Bank, in the case of fees payable to it) for distribution, in the case
of Commitment Fees and participation fees, to the Lenders entitled thereto. Fees
paid shall not be refundable under any circumstances.

         SECTION 2.13. Interest. (a) The Loans comprising each ABR Borrowing
shall bear interest at the Alternate Base Rate plus (i) in the case of any ABR
Borrowing under the Revolving Facility, the Term Facility or the Incremental
Facility (including each Swingline Loan), the ABR Spread and, if applicable to
any loan (other than an Incremental Term Loan), the Leverage Premium (each as
set forth in "Applicable Margin") and (ii) in the case of any ABR Borrowing
under any Additional Incremental Facility, the Applicable Margin for ABR
Borrowings set forth in the applicable Additional Incremental Facility
Agreement.

          (b) The Loans comprising each Eurodollar Borrowing shall bear interest
at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
plus (i) in the case of any Eurodollar Borrowing under the Revolving Facility,
the Term Facility or the Incremental Facility, the Eurodollar Spread and, if
applicable to any loan (other than an Incremental Term Loan), the Leverage
Premium (each as set forth in "Applicable Margin") and (ii) in the case of any
Eurodollar Borrowing under any Additional Incremental Facility, the Applicable
Margin for Eurodollar Borrowings set forth in the applicable Additional
Incremental Facility Agreement.

          (c) Notwithstanding the foregoing, if any principal of or interest on
any Loan or any fee or other amount payable by the Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case


                                       58
<PAGE>

of overdue principal of any ABR Loan under the Revolving Facility, the Term
Facility or the Incremental Facility, 2% plus the highest Applicable Margin for
ABR Loans plus the ABR, (ii) in the case of overdue principal of any Eurodollar
Loan under the Revolving Facility, the Term Facility or the Incremental
Facility, the higher of (x) 2% plus the highest Applicable Margin for Eurodollar
Loans plus the Adjusted LIBO Rate applicable to such Eurodollar Loan on the day
before payment was due and (y) the sum of 2% plus the highest Applicable Margin
for ABR Loans plus the ABR, (iii) in the case of overdue principal of or overdue
interest on any Additional Incremental Loan of any Class, the rate set forth in
the applicable Additional Incremental Facility Agreement and (iv) in the case of
any other amount, 2% plus the rate applicable to ABR Revolving Loans as provided
in Section 2.13(a).

         (d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and, in the case of Revolving Loans, upon
termination of the Revolving Commitments; provided that (i) interest accrued
pursuant to Section 2.13(c) shall be payable on demand, (ii) in the event of any
repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving
Loan prior to the end of the Revolving Availability Period), accrued interest on
the principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.

         (e) All interest hereunder shall be computed on the basis of a year of
360 days, except that interest computed by reference to the Alternate Base Rate
at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate or
Adjusted LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.

         SECTION 2.14. Alternate Rate of Interest. If prior to the commencement
of any Interest Period for a Eurodollar Borrowing:

         (a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or

         (b) the Administrative Agent is advised by the Required Lenders that
the Adjusted LIBO Rate for such Interest Period will not adequately and fairly
reflect the cost to such Lenders (or Lender) of making or maintaining their
Loans (or its Loan) included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the


                                       59
<PAGE>

Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.

         SECTION 2.15. Increased Costs.

         (a) If any Change in Law shall:

                  (i) impose, modify or deem applicable any reserve, special
         deposit or similar requirement against assets of, deposits with or for
         the account of, or credit extended by, any Lender (except any such
         reserve requirement reflected in the Adjusted LIBO Rate), Swingline
         Lender or Issuing Bank; or

                  (ii) impose on any Lender, Swingline Lender or Issuing Bank or
         the London interbank market any other condition affecting this
         Agreement or Eurodollar Loans made by such Lender or any Letter of
         Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost (other than
Taxes) to such Lender of making or maintaining any Eurodollar Loan (or of
maintaining its obligation to make any such Loan) or to increase the cost to
such Lender, Swingline Lender or Issuing Bank of participating in, issuing or
maintaining any Letter of Credit or to reduce the amount of any sum received or
receivable by such Lender, Swingline Lender or Issuing Bank hereunder (whether
of principal, interest or otherwise), then the Borrower will pay to such Lender,
Swingline Lender or Issuing Bank, as the case may be, such additional amount or
amounts as will compensate such Lender, Swingline Lender or Issuing Bank, as the
case may be, for such additional costs incurred or reduction suffered.

         (b) If any Lender, Swingline Lender or Issuing Bank determines that any
Change in Law regarding capital requirements has or would have the effect of
reducing the rate of return on such Lender's, Swingline Lender's or Issuing
Bank's capital or on the capital of such Lender's, Swingline Lender's or Issuing
Bank's holding company, if any, as a consequence of this Agreement or the Loans
made by, or participations in Letters of Credit held by, such Lender or
Swingline Lender, or the Letters of Credit issued by such Issuing Bank, to a
level below that which such Lender, Swingline Lender or Issuing Bank or such
Lender's, Swingline Lender's or Issuing Bank's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's,
Swingline Lender's or Issuing Bank's policies and the policies of such Lender's,
Swingline Lender's or Issuing Bank's holding company with respect to capital
adequacy), then from time to time the Borrower will pay to such Lender,
Swingline Lender or Issuing Bank, as the case may be, such additional amount or
amounts as will compensate such Lender, Swingline Lender or Issuing Bank or such
Lender's, Swingline Lender's or Issuing Bank's holding company for any such
reduction suffered.


                                       60
<PAGE>

         (c) A certificate of a Lender, Swingline Lender or Issuing Bank setting
forth the amount or amounts necessary to compensate such Lender, Swingline
Lender or Issuing Bank or its holding company, as the case may be, as specified
in Section 2.15(a) or 2.15(b) shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender or such
Issuing Bank, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.

         (d) Failure or delay on the part of any Lender, Swingline Lender or
Issuing Bank to demand compensation pursuant to this Section shall not
constitute a waiver of such Lender's, Swingline Lender's or Issuing Bank's right
to demand such compensation; provided that the Borrower shall not be required to
compensate a Lender, Swingline Lender or Issuing Bank pursuant to this Section
for any increased costs or reductions incurred more than 120 days prior to the
date that such Lender, Swingline Lender or Issuing Bank, as the case may be,
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender's, Swingline Lender's or Issuing Bank's
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 120-day period referred to above shall be extended to include the period of
retroactive effect thereof.

         SECTION 2.16. Break Funding Payments. In the event of (a) the payment
of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under Section
2.11(f) and is revoked in accordance therewith), or (d) the assignment of any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by the Borrower pursuant to Section 2.19, then,
in any such event, the Borrower shall compensate each Lender for the loss, cost
and expense attributable to such event. In the case of a Eurodollar Loan, such
loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the rate that would have been applicable to such Loan,
for the period from the date of such event to the last day of the then current
Interest Period therefor (or, in the case of a failure to borrow, convert or
continue, for the period that would have been the Interest Period for such
Loan), over (ii) the amount of interest which would accrue on such principal
amount for such period at the interest rate which such Lender would bid were it
to bid, at the commencement of such period, for dollar deposits of a comparable
amount and period from other banks in the eurodollar market. A certificate of
any Lender setting forth any amount or amounts that such Lender is entitled to
receive pursuant to this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender the amount
shown as due on any such certificate within 10 days after receipt thereof.


                                       61
<PAGE>

         SECTION 2.17. Taxes. (a) Any and all payments by or on account of any
obligation of the Borrower hereunder or under any other Loan Document shall be
made free and clear of and without deduction for any Indemnified Taxes or Other
Taxes; provided that if the Borrower shall be required to deduct any Indemnified
Taxes or Other Taxes from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) the
Administrative Agent, Lender or Issuing Bank (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower shall pay
the full amount deducted to the relevant Governmental Authority in accordance
with applicable law.

         (b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

         (c) The Borrower shall indemnify the Administrative Agent, each Lender
and Issuing Bank, within 15 days after the date of receipt of a written demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by
the Administrative Agent, such Lender or such Issuing Bank, as the case may be,
on or with respect to any payment by or on account of any obligation of the
Borrower hereunder or under any other Loan Document (including Indemnified Taxes
or Other Taxes imposed or asserted on or attributable to amounts payable under
this Section) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrower by a Lender or Issuing Bank, or by the
Administrative Agent on its own behalf or on behalf of a Lender or Issuing Bank,
shall be conclusive absent manifest error.

         (d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.

         (e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), on or prior to the first payment by the
Borrower under this Agreement to such Foreign Lender or Participant and from
time to time thereafter as prescribed by applicable law, such properly completed
and executed documentation prescribed by applicable law or


                                       62
<PAGE>

reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate.

         (f) If any Lender determines, in its sole discretion, that it has
received a refund of any Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 2.17, it shall pay over such refund
to the Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower under this Section 2.17 with respect to
the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Lender without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund); provided, however,
that the Borrower, upon request of such Lender, agrees to repay the amount paid
over to the Borrower (plus any penalties, interest or other charges imposed by
the relevant Governmental Authority) to the Lender in the event such Lender is
required to repay such refund to such Governmental Authority. Nothing contained
in this Section 2.17(f) shall require any Lender to make available its tax
returns (or any other information relating to its taxes which it deems
confidential) to the Borrower or any other Person.

         (g) Notwithstanding anything expressed or implied to the contrary in
this Agreement or any other Loan Document (including any schedule or exhibit to
any of the foregoing), this Section 2.17 (and Section 10.04 insofar as it
relates to this Section 2.17) shall constitute the complete and exclusive
understanding of the parties in respect of all matters relating to any Taxes
(including interest thereon, additions thereto and penalties in connection
therewith).

         SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs. (a) The Borrower shall make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal, interest, fees
or reimbursement of LC Disbursements, or of amounts payable under Section 2.15,
2.16 or 2.17, or otherwise) prior to 1:00 p.m., Dallas, Texas time, on the date
when due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at Dallas, Texas,
except that payments pursuant to Sections 2.15, 2.16, 2.17 and 10.03 shall be
made directly to the Persons entitled thereto and payments pursuant to other
Loan Documents shall be made to the Persons specified therein. The
Administrative Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment under any Loan Document shall be due on a day
that is not a Business Day, the date for payment shall be extended to the next
succeeding Business Day (unless, in the case of payments in respect of
Eurodollar Loans, such next succeeding Business Day would fall in the next
calendar month, in which case such payment shall be due on the next preceding
Business Day), and, in the case of any payment accruing interest, interest
thereon shall be payable for the


                                       63
<PAGE>

period of such extension. All payments under each Loan Document shall be made in
dollars.

          (b) If at any time insufficient funds are received by and available to
the Administrative Agent to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (ii) second, towards payment of principal
and unreimbursed LC Disbursements then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties.

          (c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans (other than Swingline Loans) or participations in
LC Disbursements or Swingline Loans resulting in such Lender receiving payment
of a greater proportion of the aggregate amount of its Loans (other than
Swingline Loans) and participations in LC Disbursements and Swingline Loans and
accrued interest thereon than the proportion received by any other Lender, then
the Lender receiving such greater proportion shall purchase (for cash at face
value) participations in the Loans (other than Swingline Loans) and
participations in LC Disbursements and Swingline Loans of other Lenders to the
extent necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans (other than Swingline Loans) and
participations in LC Disbursements and Swingline Loans; provided that (i) if any
such participations are purchased and all or any portion of the payment giving
rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement (including without limitation pursuant to Section 2.11)
or any payment obtained by a Lender as consideration for the assignment of or
sale of a participation in any of its Loans or participations in LC
Disbursements to any assignee or participant, other than to the Borrower or any
Subsidiary or Affiliate thereof (as to which the provisions of this paragraph
shall apply). The Borrower consents to the foregoing and agrees, to the extent
it may effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.

          (d) Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or an Issuing Bank hereunder that the
Borrower will not make such payment, the Administrative Agent may assume that
the Borrower has made such


                                       64
<PAGE>

payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders or the applicable Issuing Bank or Banks,
as the case may be, the amount due. In such event, if the Borrower has not in
fact made such payment, then each of the Lenders or Issuing Banks, as the case
may be, severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender or Issuing Bank with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent, at the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation.

         (e) If any Lender shall fail to make any payment required to be made by
it pursuant to Section 2.04(c), 2.05(d) or 2.05(e), 2.06(b), 2.18(d) or
10.03(c), then the Administrative Agent may, in its discretion (notwithstanding
any contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender's
obligations under such Sections until all such unsatisfied obligations are fully
paid.

         SECTION 2.19. Mitigation Obligations; Replacement of Lenders. (a) If
any Lender requests compensation under Section 2.15, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.17, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.

         (b) If any Lender requests compensation under Section 2.15, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 10.04), all its interests, rights and obligations under this Agreement
to an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Borrower
shall have received the prior written consent of the Administrative Agent (and,
if a Revolving Commitment is being assigned, the Issuing Bank and Swingline
Lender), which consent shall not unreasonably be withheld, (ii) such Lender
shall have received payment of an amount equal to the outstanding principal of
its Loans and participations in LC Disbursements


                                       65
<PAGE>

and Swingline Loans, accrued interest thereon, accrued fees and all other
amounts payable to it hereunder, from the assignee (to the extent of such
outstanding principal and accrued interest and fees) or the Borrower (in the
case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.15 or payments required
to be made pursuant to Section 2.17, such assignment will result in a reduction
in such compensation or payments. A Lender shall not be required to make any
such assignment and delegation if, prior thereto, (i) as a result of a waiver by
such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply or (ii) such Lender elects to
withdraw its request.

         SECTION 2.20. Additional Incremental Facilities and Commitments. (a) At
any time prior to December 31, 2002, and so long as no Default or Event of
Default shall have occurred and be continuing or would result therefrom, the
Borrower may request, on one or more occasions, by notice to the Administrative
Agent and the Incremental Facility Arrangers, that one or more Lenders (and/or
one or more other Persons which shall become Lenders as provided in Section
2.20(d) below) provide one or more additional facilities (each, an "Additional
Incremental Facility"), each of which shall provide for commitments (the
"Additional Incremental Commitments") in an aggregate amount of not less than
$100,000,000 and all of which Additional Incremental Facilities shall provide
for Additional Incremental Commitments in an aggregate amount not in excess of
$500,000,000; provided that no Lender shall have any obligation to provide any
Additional Incremental Commitment and any Lender (or any other Person which
becomes a Lender pursuant to Section 2.20(d) below) may provide Additional
Incremental Commitments without the consent of any other Lender.

         (b) The maturity date, scheduled amortization and commitment
reductions, mandatory prepayments and commitment reductions, interest rate,
minimum borrowings and prepayments, commitment fees and other amounts payable in
respect of any Additional Incremental Facility, and certain agent
determinations, shall be as set forth in an agreement (an "Additional
Incremental Facility Agreement") among the Loan Parties, the Administrative
Agent, each Incremental Facility Arranger (but only if it is acting in the
capacity of joint lead arranger with respect to such Additional Incremental
Facility) and the Lenders and other Persons agreeing to provide Additional
Incremental Commitments thereunder; provided that any term Incremental Loans
(the "Additional Incremental Term Loans") shall have a Weighted Average Life to
Maturity of no less than the Weighted Average Life to Maturity of the Term Loans
then outstanding and any revolving Incremental Commitment (the "Additional
Incremental Revolving Commitments" and any loans made pursuant thereto, the
"Additional Incremental Revolving Loans") shall have a Weighted Average Life to
Maturity of not less than the Weighted Average Life to Maturity of the Revolving
Commitments then outstanding.

         (c) [Intentionally deleted]


                                       66
<PAGE>

         (d) The effectiveness of any Additional Incremental Facility to be
created under this Section 2.20, and the obligation of any Lender or other
Person providing any Additional Incremental Commitment thereunder to make any
Additional Incremental Loans pursuant thereto, is subject to, in addition to the
conditions set forth in Article 4, the satisfaction of each of the following
conditions: each Loan Party, the Administrative Agent, each Incremental Facility
Arranger (but only if it is acting in the capacity of joint lead arranger with
respect to such Additional Incremental Facility) and each Lender or other Person
providing Additional Incremental Commitments thereunder (each, an "Additional
Incremental Lender") shall have executed and delivered to the Administrative
Agent an Additional Incremental Facility Agreement with respect to such
Additional Incremental Facility, (x) the Administrative Agent shall have
received, and (y) the Administrative Agent shall have received for the
respective accounts of any other agents and the Additional Incremental Lenders,
all fees and other amounts payable by the Borrower in respect of such Additional
Incremental Facility on or prior to such date of effectiveness and the
Administrative Agent (or its counsel) shall have received such documents and
certificates, and such legal opinions, as the Administrative Agent and the
Incremental Facility Arrangers or their counsel shall reasonably request,
including documents, certificates and legal opinions relating to the
organization, existence and good standing of each Loan Party, the authorization
of such Additional Incremental Facility and other legal matters relating to the
Loan Parties or the Loan Documents (including the applicable Additional
Incremental Facility Agreement). The Administrative Agent shall notify each
Lender as to the effectiveness of each Additional Incremental Facility
hereunder.



                                    ARTICLE 3

                         REPRESENTATIONS AND WARRANTIES

         Each of Holdings and the Borrower represents and warrants to the
Lenders that:

         SECTION 3.1. Organization; Powers. Each of Holdings and the Restricted
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.

         SECTION 3.2. Authorization; Enforceability. The Transactions to be
entered into by each Loan Party are within such Loan Party's corporate powers
and have been duly authorized by all necessary corporate and, if required,
stockholder action. This Agreement has been duly executed and delivered by each
of Holdings and the Borrower and constitutes, and each other Loan Document to
which any Loan Party is to be a party,


                                       67
<PAGE>

when executed and delivered by such Loan Party, will constitute, a legal, valid
and binding obligation of Holdings, the Borrower or such Loan Party (as the case
may be), enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.

         SECTION 3.3. Governmental Approvals; No Conflicts. The Transactions (a)
do not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority, except such as have been obtained
or made and are in full force and effect and except filings necessary to perfect
Liens created under the Loan Documents (if any), (b) will not violate any
applicable law or regulation or the charter, by-laws or other organizational
documents of Holdings or any Restricted Subsidiary or any order of any
Governmental Authority, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon Holdings or any Restricted
Subsidiary or any of their respective assets, or give rise to a right thereunder
to require any payment to be made by Holdings or any Restricted Subsidiary, and
(d) will not result in the creation or imposition of any Lien on any asset of
Holdings or any Restricted Subsidiary, except Liens created under the Loan
Documents (if any).

         SECTION 3.4. Financial Condition; No Material Adverse Change. (a)
Holdings has heretofore furnished to the Lenders Holdings' consolidated balance
sheet and statements of operations, stockholders equity and cash flows as of and
for the fiscal years ended December 31, 1998, December 31, 1999 and December 31,
2000, reported on by Ernst & Young LLP, independent public accountants. Such
financial statements present fairly, in all material respects, the financial
position and results of operations and cash flows of Holdings and the
Subsidiaries as of such dates and for such periods in accordance with GAAP.

         (b) Holdings has heretofore furnished to the Lenders its pro forma
consolidated balance sheet as of December 31, 2000 and projected pro forma
statements of operations and cash flows for the fiscal year ended December 31,
2001, prepared giving effect to (x) the Transactions under the Incremental
Facility and the Structured Note Financing and (y) the transactions described in
clause (x) and, in addition, the sale of its Williams Communications Solutions
business unit, as if such events had occurred on such date or on the first day
of such fiscal year, as the case may be. Such projected pro forma consolidated
balance sheets and statements of operations and cash flows (i) have been
prepared in good faith based on the same assumptions used to prepare the pro
forma financial statements included in the Information Memorandum (which
assumptions are believed by Holdings and the Borrower to be reasonable), (ii)
are based on the best information available to Holdings and the Borrower after
due inquiry, (iii) accurately reflect all adjustments necessary to give effect
to the Transactions under the Incremental Facility and the Structured Note
Financing and, in the case of one such set of financial statements, the sale of
its Williams Communications Solutions business unit, and (iv) present fairly, in
all material respects, the pro forma financial position of Holdings and


                                       68
<PAGE>

the Subsidiaries as of such date and for such periods as if the Transactions,
the Structured Note Financing and, in the case of one such set of financial
statements, the sale of its Williams Communications Solutions business unit had
occurred on such date or at the beginning of such period, as the case may be.

         (c) Except as disclosed in the financial statements referred to above
or the notes thereto or in the Information Memorandum and except for the
Disclosed Matters, after giving effect to the Transactions, none of Holdings or
any Restricted Subsidiary has, as of the Effective Date, any material contingent
liabilities, unusual material long-term commitments or unrealized material
losses.

         (d) The projections delivered to the Lenders on the Amendment No. 5
Effective Date (the "Projections") were based on assumptions believed by the
Borrower and Holdings in good faith to be reasonable when made and as of their
date represented the Borrower's and Holdings' good faith estimate of future
performance of Holdings and the Subsidiaries and of the Borrower and its
consolidated subsidiaries.

         (e) Since December 31, 2000, there has been no Material Adverse Change.

         SECTION 3.5. Properties. (a) Each of Holdings and the Restricted
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business (including its Mortgaged
Properties, if any), except for minor defects in title that do not interfere
with its ability to conduct its business as currently conducted or to utilize
such properties for their intended purposes. None of the properties and assets
of Holdings or any Restricted Subsidiary is subject to any Lien other than
Permitted Encumbrances, Liens created by the Collateral Documents (if any) and
other Liens permitted under Section 6.02.

         (b) Each of Holdings and the Subsidiaries owns, or is licensed to use,
all trademarks, trade names, copyrights, patents and other intellectual property
material to its business, and the use thereof by Holdings and the Subsidiaries
does not infringe upon the rights of any other Person, except for any such
infringements that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.

         (c) Schedule 3.05 sets forth the address of each real property that is
owned or leased by Holdings, the Borrower or any other Loan Party (other than
the Parent) as of the Effective Date after giving effect to the Transactions.

         SECTION 3.6. Litigation and Environmental Matters. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of Holdings or the Borrower,
threatened against or affecting Holdings or any Subsidiary (i) as to which there
is a reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected,


                                       69
<PAGE>

individually or in the aggregate, to result in a Material Adverse Effect (other
than the Disclosed Matters) or (ii) that involve any of the Loan Documents or
the Transactions.

         (b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, neither Holdings nor any
Subsidiary (i) has failed to comply with any Environmental Law or to obtain,
maintain or comply with any permit, license or other approval required under any
Environmental Law, (ii) has become subject to any Environmental Liability, (iii)
has received written notice of any claim with respect to any Environmental
Liability or (iv) knows of any basis for any violations of any Environmental Law
or any release, threatened release or exposure to any Hazardous Materials that
is likely to form the basis of any Environmental Liability.

         (c) Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.

         SECTION 3.7. Compliance with Laws and Agreements. Each of Holdings and
the Subsidiaries is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.

         SECTION 3.8. Investment and Holding Company Status. Neither Holdings
nor any Restricted Subsidiary is (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.

         SECTION 3.9. Taxes. Each of Holdings and the Subsidiaries has timely
filed or caused to be filed (or the Parent has filed or caused to be filed) all
Tax returns and reports required to have been filed and has paid or caused to be
paid (or the Parent has paid or caused to be paid) all Taxes required to have
been paid by or with respect to it, except (a) Taxes that are being contested in
good faith by appropriate proceedings and for which Holdings or such Subsidiary,
as applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.

         SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting


                                       70
<PAGE>

such amounts, exceed by more than $25,000,000 the fair market value of the
assets of such Plan, and the present value of all accumulated benefit
obligations of all underfunded Plans (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $25,000,000 the fair market value of the assets of all such underfunded
Plans.

         SECTION 3.11. Disclosure. Holdings and the Borrower have disclosed to
the Lenders all agreements, instruments and corporate or other restrictions to
which Holdings or any Restricted Subsidiary is subject, and all other matters
known to any of them, that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect. Neither the Information
Memorandum nor any of the other reports, financial statements, certificates or
other information furnished by or on behalf of any Loan Party to any Agent or
any Lender in connection with the negotiation of this Agreement or any other
Loan Document or delivered hereunder or thereunder (as modified or supplemented
by other information so furnished) contains any material misstatement of fact or
omits to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided that, with respect to projected financial information, Holdings and the
Borrower represent only that such information was prepared in good faith based
upon assumptions believed to be reasonable at the time.

         SECTION 3.12. Subsidiaries. Schedule 3.12 sets forth the name of, and
the direct or indirect ownership interest of Holdings or the Borrower in, each
Subsidiary and identifies each Subsidiary that is a Subsidiary Loan Party, in
each case as of the Effective Date.

         SECTION 3.13. Insurance. Schedule 3.13 sets forth a description of all
insurance maintained by or on behalf of Holdings and the Restricted Subsidiaries
as of the Effective Date. As of the Effective Date, all premiums in respect of
such insurance have been paid.

         SECTION 3.14. Labor Matters. As of the Effective Date, there are no
strikes, lockouts or slowdowns against Holdings or any Restricted Subsidiary
pending or, to the knowledge of Holdings or the Borrower, threatened. The hours
worked by and payments made to employees of Holdings and the Restricted
Subsidiaries have not been in violation of the Fair Labor Standards Act or any
other applicable Federal, state, local or foreign law dealing with such matters.
All payments due from Holdings or any Restricted Subsidiary, or for which any
claim may be made against Holdings or any Restricted Subsidiary, on account of
wages and employee health and welfare insurance and other benefits, have been
paid or accrued as a liability on the books of Holdings or such Restricted
Subsidiary. The consummation of the Transactions and the Reorganization has not
and will not give rise to any right of termination or right of renegotiation on
the part of any union under any collective bargaining agreement by which
Holdings or any Restricted Subsidiary is bound.


                                       71
<PAGE>

         SECTION 3.15. Solvency. Immediately after the consummation of the
Transactions to occur on the Effective Date and immediately following the making
of each Loan made on the Effective Date and after giving effect to the
application of the proceeds of such Loans, (a) the fair value of the assets of
each Loan Party will exceed its debts and liabilities, subordinated, contingent
or otherwise; (b) the present fair saleable value of the property of each Loan
Party will be greater than the amount that will be required to pay the probable
liability of its debts and other liabilities, subordinated, contingent or
otherwise, as such debts and other liabilities become absolute and matured; (c)
each Loan Party will be able to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured; and (d) each Loan Party will not have unreasonably small capital with
which to conduct the business in which it is engaged as such business is now
conducted and is proposed to be conducted following the Effective Date.

         SECTION 3.16. No Burdensome Restrictions. No contract, lease, agreement
or other instrument to which Holdings or any Restricted Subsidiary is a party or
by which any of their property is bound or affected, no charge, corporate
restriction, judgment, decree or order and no provision of applicable law or
governmental regulation could reasonably be expected to have Material Adverse
Effect.

         SECTION 3.17. Representations in Loan Documents True and Correct. As of
the dates when made and as of the Effective Date, each representation and
warranty of Holdings or any Restricted Subsidiary party thereto contained in any
Loan Document is true and correct.


                                    ARTICLE 4

                                   CONDITIONS

         SECTION 4.1. Effective Date. [Intentionally deleted]

         SECTION 4.2. Each Credit Event. The obligation of each Lender to make a
Loan on the occasion of any Borrowing, and of each Issuing Bank to issue, amend,
renew or extend any Letter of Credit, is subject to the satisfaction of the
following conditions:

         (a) The representations and warranties of each Loan Party set forth in
the Loan Documents (excluding Section 3.04(b)) shall be true and correct on and
as of the date of such Borrowing or the date of issuance, amendment, renewal or
extension of such Letter of Credit, as applicable.

         (b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Default shall have occurred and be continuing.


                                       72
<PAGE>

         Each Borrowing and each issuance, amendment, renewal or extension of a
Letter of Credit shall be deemed to constitute a representation and warranty by
Holdings and the Borrower on the date thereof as to the matters specified in
Sections 4.02(a), 4.02(b) and 4.03.

         SECTION 4.3. First Incremental Borrowing Date with Respect to the
Incremental Facility. The obligation of each Incremental Lender to make a Loan
on the occasion of the First Incremental Borrowing Date is subject to the
satisfaction of the following conditions (in addition to the conditions set
forth in Section 4.02):

         (a) The Spin-Off shall have been consummated.

         (b) The Initial Collateral Date shall have occurred (or shall occur on
the date of such Borrowing) and, prior to the making of any Loan on the occasion
of such Borrowing, Holdings and the Borrower shall have complied with all of the
provisions of Section 5.11A.

         (c) The First Incremental Borrowing Date shall be no later than the
date that is 180 days after the date of Amendment No. 5 Effective Date.

         (d) The Administrative Agent shall have received a certificate, in form
and substance reasonably satisfactory to the Administrative Agent, from the
Financial Officer of each of Holdings and the Borrower, certifying as to
compliance of the matters specified in Sections 4.03(a) and 4.03(b).


                                    ARTICLE 5

                              AFFIRMATIVE COVENANTS

         Until the Commitments have expired or been terminated and the principal
of and interest on each Loan and all fees payable hereunder shall have been paid
in full and all Letters of Credit shall have expired or terminated and all LC
Disbursements shall have been reimbursed, each of Holdings and the Borrower
covenants and agrees with the Lenders that:

         SECTION 5.1. Financial Statements and Other Information. Holdings and
the Borrower will furnish to the Administrative Agent and each Lender:

         (a) (i) within 90 days after the end of each fiscal year of Holdings,
its audited consolidated balance sheets and related audited consolidated
statements of operations, stockholders' equity and cash flows as of the end of
and for such fiscal year (including segment reporting with respect to each of
Holdings' and the Subsidiaries' business segments consistent with that provided
in the Notes Offering Registration Statement),


                                       73
<PAGE>

setting forth in each case in comparative form the figures for the previous
fiscal year, all reported on by Ernst & Young LLP or other independent public
accountants of recognized national standing (without a "going concern" or like
qualification or exception and without any qualification or exception as to the
scope of such audit) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and results of
operations of Holdings and the Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, (ii) within 90 days after the end of
each fiscal year of the Borrower, its audited consolidated balance sheets and
related audited consolidated statements of operations, stockholders' equity and
cash flows as of the end of and for such fiscal year (including segment
reporting with respect to each of the Borrower's and its consolidated
subsidiaries' business segments consistent with that provided with respect to
the Borrower's and its consolidated subsidiaries' business segments in the Notes
Offering Registration Statement), setting forth in each case in comparative form
the figures for the previous fiscal year, all reported on by Ernst & Young LLP
or other independent public accountants of recognized national standing (without
a "going concern" or like qualification or exception and without any
qualification or exception as to the scope of such audit) to the effect that
such consolidated financial statements present fairly in all material respects
the financial condition and results of operations of the Borrower and its
consolidated subsidiaries on a consolidated basis in accordance with GAAP
consistently applied and (iii) within 90 days after the end of each fiscal year
of Holdings and the Borrower, (x) supplemental unaudited balance sheets and
related unaudited statements of operations, stockholders' equity and cash flows
as of the end of and for such fiscal year, setting forth in tabular form in each
case the figures for the previous year, for the Borrower and Holdings and the
consolidating adjustments with respect thereto and (y) segment reporting of
EBITDA and Adjusted EBITDA with respect to each business segment of Holdings and
the Subsidiaries and the Borrower and its consolidated subsidiaries consistent
with the business segments reported on in the Notes Offering Registration
Statement;

         (b) (i) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of Holdings, unaudited consolidated and
consolidating balance sheets and related consolidated and consolidating
statements of operations, stockholders' equity and cash flows of Holdings and
the Subsidiaries as of the end of and for such fiscal quarter and the then
elapsed portion of the fiscal year, setting forth in each case in comparative
form the figures for the corresponding period or periods of the previous fiscal
year (or in the case of the balance sheet, as of the end of the previous fiscal
year) (including segment reporting with respect to each of Holdings' and the
Subsidiaries' business segments consistent with that provided in the Notes
Offering Registration Statement and also including segment reporting of EBITDA
and Adjusted EBITDA), all certified by a Financial Officer of Holdings as
presenting fairly in all material respects the financial condition and results
of operations of Holdings and the Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes and (ii) within 45 days after the end
of each of the first three fiscal quarters of each fiscal year of the Borrower,
unaudited consolidated


                                       74
<PAGE>

balance sheets and related statements of operations, stockholders' equity and
cash flows of the Borrower and its consolidated subsidiaries as of the end of
and for such fiscal quarter and the then elapsed portion of the fiscal year,
setting forth in each case in comparative form the figures for the corresponding
period or periods of the previous fiscal year (or, in the case of the balance
sheet, as of the end of the previous fiscal year) (including segment reporting
with respect to each of the Borrower's and its consolidated subsidiaries'
business segments consistent with that provided with respect to the Borrower's
and its consolidated subsidiaries' business segments in the Notes Offering
Registration Statement and also including segment reporting of EBITDA and
Adjusted EBITDA), all certified by a Financial Officer of the Borrower as
presenting fairly in all material respects the financial condition and results
of operations of the Borrower and its consolidated subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;

         (c) concurrently with any delivery of financial statements under
Section 5.01(a) or 5.01(b) above, a certificate of a Financial Officer of the
Borrower (i) certifying as to whether a Default has occurred and, if a Default
has occurred, specifying the details thereof and any action taken or proposed to
be taken with respect thereto, (ii) setting forth in reasonable detail
calculations demonstrating (x) compliance with Section 6.08 and Sections 6.15
through 6.19, including, if applicable, calculations showing capital
contributions made by the Parent pursuant to Section 6.20 and the resulting
effects on the Borrower's compliance with Section 6.08 and Sections 6.15 through
6.19 and (y) Additional Capital at such date, including detail as to the sources
and uses of Additional Capital since June 30, 1999 and (iii) stating whether any
change in GAAP or in the application thereof has occurred since the date of
Holdings' audited financial statements referred to in Section 3.04 and, if any
such change has occurred, specifying the effect of such change on the financial
statements accompanying such certificate;

         (d) concurrently with any delivery of financial statements under clause
5.01(a) above, a certificate of the accounting firm that reported on such
financial statements stating whether they obtained knowledge during the course
of their examination of such financial statements of any Default (which
certificate may be limited to the extent required by accounting rules or
guidelines);

         (e) as soon as practicable after approval by the Board of Directors of
the Parent and in any event not later than 120 days after the commencement of
each fiscal year of the Borrower, a consolidated and consolidating budget of
Holdings for such fiscal year and a consolidated budget of the Borrower for such
fiscal year (including projected consolidated (and, in the case of Holdings,
consolidating) balance sheets, related consolidated (and, in the case of
Holdings, consolidating) statements of projected operations and cash flow as of
the end of and for such fiscal year and segment information with respect to each
of Holdings' and the Subsidiaries' and the Borrower's and its consolidated
subsidiaries' business segments consistent with the categories of information
provided with respect to Holdings' and the Subsidiaries' business segments


                                       75
<PAGE>

in the Notes Offering Registration Statement, together with projected EBITDA and
Adjusted EBITDA for such segments) and, promptly when available, any significant
revisions of such budget;

         (f) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
Holdings or any Restricted Subsidiary with the Commission, or any Governmental
Authority succeeding to any or all of the functions of the Commission, or with
any national securities exchange, or distributed by Holdings to its shareholders
generally, as the case may be, except to the extent any such report, proxy
statement or other material is available electronically on a publicly-accessible
website; and

         (g) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of Holdings
or any Restricted Subsidiary, or compliance with the terms of any Loan Document,
as the Administrative Agent or any Lender may reasonably request.

         SECTION 5.2. Notices of Material Events. Upon knowledge thereof,
Holdings or the Borrower will furnish to the Administrative Agent and each
Lender prompt written notice of the following:

         (a) the occurrence of any Default;

         (b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting Holdings,
the Borrower or any Affiliate thereof that could reasonably be expected to
result in a Material Adverse Effect;

         (c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
a Material Adverse Effect;

         (d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.

         Each notice delivered under this Section shall be accompanied by a
statement of a Financial Officer or other executive officer of the Borrower
setting forth the details of the event or development requiring such notice and
any action taken or proposed to be taken with respect thereto.

         SECTION 5.3. Existence; Conduct of Business. Each of Holdings and the
Borrower will, and will cause each other Restricted Subsidiary to, (i) continue
to engage in business of the same general type as now conducted and (ii) do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect its legal existence and the rights, licenses, permits, privileges,
franchises, patents, copyrights, trademarks


                                       76
<PAGE>

and trade names material to the conduct of its business; provided that the
foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 6.03.

         SECTION 5.4. Payment of Obligations. Each of Holdings and the Borrower
(i) will, and will cause each other Restricted Subsidiary to, pay its
Indebtedness and other material obligations, including tax liabilities, before
the same shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
Holdings, the Borrower or such other Restricted Subsidiary has set aside on its
books adequate reserves with respect thereto in accordance with GAAP, (c) such
contest effectively suspends collection of the contested obligation and the
enforcement of any Lien securing such obligation and (d) the failure to make
payment pending such contest could not reasonably be expected to result in a
Material Adverse Effect and (ii) shall not breach, or permit any other
Restricted Subsidiary to breach, in any material respect, or permit to exist any
material default under, the terms of any material lease, commitment, contract,
instrument or obligation to which it is a party, or by which its properties or
assets are bound, except where the failure to do the foregoing would not in the
aggregate have a Material Adverse Effect.

         SECTION 5.5. Maintenance of Properties. Each of Holdings and the
Borrower will, and will cause each other Restricted Subsidiary to, keep and
maintain all property material to the conduct of its business in good working
order and condition, ordinary wear and tear excepted.

         SECTION 5.6. Insurance. Holdings and the Borrower will, and will cause
each other Restricted Subsidiary to, maintain, with financially sound and
reputable insurance companies, insurance in such amounts and against such risks
as are customarily maintained by companies engaged in the same or similar
businesses operating in the same or similar locations.

         SECTION 5.7. Casualty and Condemnation. The Borrower will (a) furnish
to the Administrative Agent and the Lenders prompt written notice of any
casualty or other insured damage to any portion of any of Holdings' and the
Restricted Subsidiaries' property or assets or the commencement of any action or
proceeding for the taking of any of Holdings' and the Restricted Subsidiaries'
property or assets or any part thereof or interest therein under power of
eminent domain or by condemnation or similar proceeding (in each case with a
value in excess of $10,000,000) and (b) ensure that the Net Proceeds of any such
event (whether in the form of insurance proceeds, condemnation awards or
otherwise) are applied, to the extent such Net Proceeds have not been utilized
to repair, restore or replace such property or assets or to acquire other
Telecommunications Assets within 360 days after such event, to prepay Loans and
reduce Commitments as provided in Sections 2.11(b) and 2.08(f), respectively.

         SECTION 5.8. Books and Records; Inspection and Audit Rights. Each of
Holdings and the Borrower will, and will cause each other Restricted Subsidiary
to, keep proper


                                       77
<PAGE>

books of record and account in which materially full, true and correct entries
are made of all dealings and transactions in relation to its business and
activities. Each of Holdings and the Borrower will, and will cause each other
Restricted Subsidiary to, permit any representatives designated by the
Administrative Agent or any Lender at the expense of the Administrative Agent or
Lender, as the case may be, or, if an Event of Default shall have occurred and
be continuing, at the expense of the Borrower, upon reasonable prior notice, to
visit and inspect its properties, to examine and make extracts from its books
and records, and to discuss its affairs, finances and condition with its
officers and independent accountants, all at such reasonable times and as often
as reasonably requested, subject to Section 10.12.

         SECTION 5.9. Compliance with Laws. Each of Holdings and the Borrower
will, and will cause each other Subsidiary to, comply with all laws, rules,
regulations and orders of any Governmental Authority applicable to it or its
property (including, without limitation, Environmental Laws and ERISA and the
rules and regulations thereunder), except where the necessity of compliance
therewith is contested in good faith by appropriate action and such failure to
comply, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.

         SECTION 5.10. Use of Proceeds and Letters of Credit. (a) The proceeds
of Loans will be used (i) for working capital requirements and general corporate
purposes of the Borrower and the other Restricted Subsidiaries and (ii) to pay
the fees and expenses associated with the Facilities.

         (b) No part of the proceeds of any Loan will be used, whether directly
or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board, including Regulations U and X.

         SECTION 5.11A. Initial Collateral Date. On the Initial Collateral Date,
Holdings and the Borrower hereby agree that they will, and will cause each other
Restricted Subsidiary to:

         (a) Deliver to the Administrative Agent duly executed counterparts of
the Security Agreement, together with the following:

                (i) duly executed counterparts of each supplemental agreement
                required to be executed and delivered by the terms of the
                Security Agreement (including, without limitation, any Patent
                Security Agreement, and Trademark Security Agreement and any
                Control Agreement, in each case as defined in the Security
                Agreement);

                (ii) stock certificates representing any or all of the
                outstanding shares of capital stock or other Equity Interests of
                the Borrower and each Restricted Subsidiary and stock powers and
                instruments of transfer, endorsed in blank, with respect to such
                stock certificates;


                                       78
<PAGE>

                (iii) any or all documents and instruments, including Uniform
                Commercial Code financing statements, required by law or
                reasonably requested by the Administrative Agent to be filed,
                registered or recorded to create or perfect the Liens intended
                to be created under the Security Agreement; and

                (iv) a completed perfection certificate dated the Initial
                Collateral Date, in form and substance reasonably satisfactory
                to the Administrative Agent and the Incremental Facility
                Arrangers and signed by an executive officer or Financial
                Officer of Holdings, together with all attachments contemplated
                thereby, including the results of a search of the Uniform
                Commercial Code (or equivalent) filings made with respect to the
                Loan Parties in the jurisdictions contemplated by such
                perfection certificate and copies of the financing statements
                (or similar documents) disclosed by such search and evidence
                reasonably satisfactory to the Administrative Agent and the
                Incremental Facility Arrangers that the Liens indicated by such
                financing statements (or similar documents) are permitted by
                Section 6.02 or have been released.

         (b) Deliver to the Administrative Agent a favorable written opinion
(addressed to the Agents, the Issuing Banks, the Swingline Lenders and the
Lenders and dated the Initial Collateral Date) of each of (i) counsel for
Holdings, the Borrower and each Subsidiary Loan Party reasonably acceptable to
the Administrative Agent and the Incremental Facility Arrangers, (ii) the
general counsel of Holdings and (iii) local counsel in the jurisdictions where
the Borrower is incorporated and where its chief executive office is located
and, in the case of each such opinion required by this paragraph, covering such
matters relating to the Loan Parties, the Loan Documents, the Collateral and the
Transactions as the Administrative Agent (or its counsel), the Incremental
Facility Arrangers (or its counsel) or the Required Lenders shall reasonably
request.

         SECTION 5.11B. Collateral Event. If a Collateral Event shall have
occurred and be continuing, the Administrative Agent, the Incremental Facility
Arrangers or the Required Lenders may by written notice to the Borrower (a
"Collateral Notice"), request, and Holdings and the Borrower hereby agree that
they will, and will cause each other Restricted Subsidiary to, within 30 days of
the Borrowers' receipt of such Collateral Notice (such thirtieth day, a
"Collateral Establishment Date"):

         (a) Subject to subsection (d) of this Section 5.11B, deliver to the
Administrative Agent duly executed counterparts of the Security Agreement (to
the extent not previously delivered pursuant to Section 5.11A) and each other
Collateral Document reasonably requested by the Administrative Agent, the
Incremental Facility Arrangers or the Required Lenders, in form and substance
satisfactory to the Administrative Agent, the Incremental Facility Arrangers or
the Required Lenders, signed on behalf of Holdings, the Borrower and each
Subsidiary Loan Party requested by the Administrative Agent, the Incremental
Facility Arrangers or the Required Lenders, together with (to the extent not


                                       79
<PAGE>

previously delivered pursuant to Section 5.11A) such of the following as shall
have been so requested:

                (i) stock certificates representing any or all of the
                outstanding shares of capital stock of the Borrower and each
                other Subsidiary of Holdings owned by or on behalf of any Loan
                Party as of such Collateral Establishment Date (except that
                stock certificates representing shares of common stock of a
                Foreign Subsidiary may be limited to 66% of the outstanding
                shares of common stock of such Foreign Subsidiary) and stock
                powers and instruments of transfer, endorsed in blank, with
                respect to such stock certificates;

                (ii) any or all documents and instruments, including Uniform
                Commercial Code financing statements, required by law or
                reasonably requested by the Administrative Agent to be filed,
                registered or recorded to create or perfect the Liens intended
                to be created under the Collateral Documents; and

                (iii) a completed perfection certificate dated such Collateral
                Establishment Date, in form and substance reasonably
                satisfactory to the Administrative Agent and the Incremental
                Facility Arrangers and signed by an executive officer or
                Financial Officer of Holdings, together with all attachments
                contemplated thereby, including the results of a search of the
                Uniform Commercial Code (or equivalent) filings made with
                respect to the Loan Parties in the jurisdictions contemplated by
                such perfection certificate and copies of the financing
                statements (or similar documents) disclosed by such search and
                evidence reasonably satisfactory to the Administrative Agent and
                the Incremental Facility Arrangers that the Liens indicated by
                such financing statements (or similar documents) are permitted
                by Section 6.02 or have been released.

         (b) If requested by the Administrative Agent, the Incremental Facility
Arrangers or the Required Lenders, on or before the thirtieth day following any
Collateral Establishment Date or such later day as shall be acceptable to the
Administrative Agent, the Incremental Facility Arrangers or the Required Lenders
(a "Mortgage Establishment Date"), Holdings and the Borrower shall, and shall
cause each other Restricted Subsidiary to, deliver to the Administrative Agent
(i) counterparts of a Mortgage with respect to each Mortgaged Property as to
which such request is made, in each case signed on behalf of the record owner of
such Mortgaged Property, (ii) a policy or policies of title insurance issued by
a nationally recognized title insurance company, insuring the Lien of each such
Mortgage as a valid first Lien on the Mortgaged Property described therein, free
of any other Liens except as permitted by Section 6.02, together with such
endorsements, coinsurance and reinsurance as the Collateral Agent, the
Incremental Facility Arrangers or the Required Lenders may reasonably request,
and (iii) such surveys, abstracts and appraisals as may be required pursuant to
such Mortgages or as the Administrative Agent, the Incremental Facility
Arrangers or the Required Lenders may reasonably request.


                                       80
<PAGE>

         (c) On or before any Collateral Establishment Date or Mortgage
Establishment Date, Holdings and the Borrower shall deliver a favorable written
opinion (addressed to the Agents, the Incremental Facility Arrangers, the
Issuing Banks, the Swingline Lenders and the Lenders and dated on or prior to
such Collateral Establishment Date or Mortgage Establishment Date) of each of
(i) counsel for Holdings, the Borrower and each Subsidiary Loan Party reasonably
acceptable to the Administrative Agent, (ii) the general counsel of Holdings and
(iii) local counsel in each jurisdiction where any Collateral or Mortgaged
Property is located and, in the case of each such opinion required by this
paragraph, covering such matters relating to the Loan Parties, the Loan
Documents, the Collateral and the Transactions as the Administrative Agent (or
its counsel), the Incremental Facility Arrangers (or its counsel) or the
Required Lenders shall reasonably request.

         (d) Anything in this Agreement to the contrary notwithstanding, the
Liens created under any Collateral Document may also secure, to the extent, but
only to the extent, required under the indentures and other documents governing
such Indebtedness (without taking into account any general exceptions to any
such requirements contained in any such indentures and other documents), equally
and ratably with some or all of the Obligations, the obligations of the Parent
and Holdings under any public Indebtedness of either of them that, by its terms,
requires that such Indebtedness be equally and ratably secured by such Liens.

         (e) None of the Borrower, Holdings or any Restricted Subsidiary of
Holdings shall be required to grant to the Administrative Agent or any Lender,
pursuant to the provisions of this Section 5.11B, a Lien on any of the following
assets: (i) voting Equity Interests of any Foreign Subsidiary representing in
excess of 66% of the outstanding voting Equity Interests of such Foreign
Subsidiary, (ii) any ADP Property to the extent such ADP Property secures any
ADP Obligation and (iii) any other asset subject to a security interest
permitted by clauses (iv), (v), (viii), or (ix) of Section 6.02 but only, in the
case of any asset described in clauses (ii) or (iii), to the extent the granting
of such Lien is prohibited by the terms of the agreement pursuant to which such
security interest has been granted.

         SECTION 5.12. Information Regarding Collateral. (a) (i) The Borrower
will furnish to the Administrative Agent prompt written notice of any change (A)
in any Loan Party's corporate name or in any trade name used to identify it in
the conduct of its business or in the ownership of its properties, (B) in the
location of any Loan Party's chief executive office, its principal place of
business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility), (C)
in any Loan Party's identity or corporate structure or (D) in any Loan Party's
Federal Taxpayer Identification Number; (ii) Holdings and the Borrower will not,
and will not permit any other Restricted Subsidiary to, effect or permit any
change referred to in the preceding sentence unless all filings have been made
under the Uniform Commercial Code or otherwise that are required in order for
the Administrative Agent to continue at


                                       81
<PAGE>

all times following such change to have a valid, legal and perfected security
interest in all the Collateral; and (iii) Holdings and the Borrower will, and
will cause each other Restricted Subsidiary to, promptly notify the
Administrative Agent if any material portion of the Collateral owned by it is
damaged or destroyed.

         (b) At the time of the delivery of annual financial statements with
respect to the preceding fiscal year pursuant to Section 5.01(a), the Borrower
shall also deliver to the Administrative Agent a certificate of a Financial
Officer or the chief legal officer of the Borrower (i) setting forth the
information required pursuant to the perfection certificate or confirming that
there has been no change in such information since the date of the perfection
certificate most recently delivered or the date of the most recent certificate
delivered pursuant to this Section and (ii) certifying that all Uniform
Commercial Code financing statements (including fixture filings, as applicable)
or other appropriate filings, recordings or registrations, including all
refilings, rerecordings and reregistrations, containing a description of the
Collateral have been filed of record in each governmental, municipal or other
appropriate office in each jurisdiction identified pursuant to Section 5.12 to
the extent necessary to protect and perfect the security interests under the
Collateral Documents for a period of not less than 18 months after the date of
such certificate (except as noted therein with respect to any continuation
statements to be filed within such period).

         SECTION 5.13. Additional Subsidiaries. (a) If any additional Subsidiary
is formed or acquired, Holdings and the Borrower will notify the Administrative
Agent and the Lenders thereof and if such Subsidiary is a Subsidiary Loan Party,
(i) cause such Subsidiary, within ten Business Days after such Subsidiary Loan
Party is formed or acquired, to become a party to the Subsidiary Guarantee as an
additional guarantor thereunder and to the Security Agreement as a "Lien
Grantor" thereunder, (ii) deliver all stock certificates representing the
capital stock or other Equity Interests of such Subsidiary to the Administrative
Agent, together with stock powers and instruments of transfer, endorsed in
blank, with respect to such certificates and (iii) take all actions required
under the Security Agreement to perfect, register and/or record the Liens
granted by it thereunder and the Lien on such capital stock or other Equity
Interests or as may be reasonably requested by the Administrative Agent, the
Incremental Facility Arrangers or the Required Lenders.

         (b) If a Collateral Establishment Date has occurred and any Collateral
Event is then continuing, such Subsidiary is a Subsidiary Loan Party and the
Administrative Agent, the Incremental Facility Arrangers or the Required Lenders
so request in writing, Holdings and the Borrower shall (i) within 30 days after
such Subsidiary is formed or acquired, cause such Subsidiary to become a party
to such Collateral Documents (in addition to the Security Agreement) as the
Administrative Agent, the Incremental Facility Arrangers or the Required Lenders
shall request and promptly take such actions as the Administrative Agent,


                                       82
<PAGE>

the Incremental Facility Arrangers or the Required Lenders shall reasonably
request to create and perfect Liens on such of such Subsidiary's assets (in
accordance with the standards set forth in Section 5.11B(a)) as the
Administrative Agent, the Incremental Facility Arrangers or the Required Lenders
shall so request to secure its obligations under the Subsidiary Guarantee, and
(ii) within 60 days after such Subsidiary is formed or acquired, cause such
Subsidiary to enter into such Mortgage or Mortgages as the Administrative Agent,
the Incremental Facility Arrangers or the Required Lenders shall so request with
respect to any or all material real property owned by such Subsidiary to secure
some or all of its obligations under the Subsidiary Guarantee and to take such
actions (including, without limitation, actions of the type referred to in
Section 5.11B(a)) with respect thereto as the Administrative Agent, the
Incremental Facility Arrangers or the Required Lenders shall reasonably request.

         (c) None of the Borrower, Holdings or any Subsidiary Loan Party shall
be required to grant to the Administrative Agent or any Lender, pursuant to the
provisions of this Section 5.13, a Lien on any of the following assets: (i)
voting Equity Interests of any Foreign Subsidiary representing in excess of 66%
of the outstanding voting Equity Interests of such Foreign Subsidiary, (ii) any
ADP Property to the extent such ADP Property secures any ADP Obligation and
(iii) any other asset subject to a security interest permitted by clauses (iv),
(v), (viii), or (ix) of Section 6.02 but only, in the case of any asset
described in clauses (ii) or (iii), to the extent the granting of such Lien is
prohibited by the terms of the agreement pursuant to which such security
interest has been granted.

         SECTION 5.14. Further Assurances. (a) On any date each of Holdings and
the Borrower will, and will cause each Subsidiary Loan Party to, execute any and
all further documents, financing statements, agreements and instruments, and
take all such further actions (including the filing and recording of financing
statements, fixture filings, mortgages, deeds of trust and other documents),
which may be required under any applicable law, or which the Administrative
Agent, the Incremental Facility Arrangers or the Required Lenders may reasonably
request, to effectuate the transactions contemplated by the Loan Documents or to
grant, preserve, protect or perfect the Liens created or intended to be created
by the Collateral Documents required to be in effect on such date or the
validity or priority of any such Lien, all at the expense of the Loan Parties.
Holdings and the Borrower also agree to provide to the Administrative Agent,
from time to time upon request, evidence reasonably satisfactory to the
Administrative Agent as to the perfection and priority of the Liens created or
intended to be created by the Collateral Documents required to be in effect on
such date.

         (b) If any material assets (including any real property or improvements
thereto or any interest therein) are acquired by Holdings, the Borrower or any
Subsidiary Loan Party (other than assets constituting Collateral under any
Collateral Document that become subject to the Lien of such Collateral Document
automatically upon the acquisition thereof), the Borrower will notify the
Administrative Agent and the Lenders thereof, and, if requested by the
Administrative Agent, the Incremental Facility Arrangers or the Required
Lenders, Holdings and the Borrower will, or will cause the applicable Restricted
Subsidiary to, cause such assets to be subjected to a Lien securing some or all
of the Obligations, as requested by the Administrative Agent, the Incremental
Facility


                                       83
<PAGE>

Arrangers or the Required Lenders, and will take, and cause such Subsidiary Loan
Parties to take, such actions as shall be necessary or reasonably requested by
the Administrative Agent, the Incremental Facility Arrangers or the Required
Lenders to grant and perfect such Liens, including actions described in Section
5.11B, all at the expense of the Loan Parties; provided that, none of the
Borrower, Holdings or any Subsidiary Loan Party shall be required to grant to
the Administrative Agent or any Lender, pursuant to the provisions of this
Section 5.14, a Lien on any of the following assets: (i) at any time prior to
any Collateral Establishment Date, any assets of a type other than a type
constituting "Collateral" under the form of Security Agreement set forth on
Exhibit K hereto as in effect on the Amendment No. 4 Effective Date, (ii) voting
Equity Interests of any Foreign Subsidiary representing in excess of 66% of the
outstanding voting Equity Interests of such Foreign Subsidiary, (iii) any ADP
Property to the extent such ADP Property secures any ADP Obligation and (iv) any
other asset subject to a security interest permitted by clauses (iv), (v),
(viii), or (ix) of Section 6.02 but only, in the case of any asset described in
clauses (iii) or (iv), to the extent the granting of such Lien is prohibited by
the terms of the agreement pursuant to which such security interest has been
granted.

         SECTION 5.15. Concentration Accounts. At all times after any Collateral
Establishment Date and before a Collateral Release Date, Holdings and the
Borrower will maintain Holdings' and each Restricted Subsidiary's principal
concentration account with one or more Lenders.

         SECTION 5.16. [Intentionally deleted]

         SECTION 5.17. Sale of Solutions and ATL(a) Not later than September 30,
2001, Holdings and the Borrower shall have sold, or caused to be sold, to one or
more Persons that are not Affiliates of Holdings or any of its Subsidiaries, in
one or more transactions (x) its Williams Communications Solutions business unit
in existence on the Amendment No. 4 Effective Date (except for the portion of
such unit described in clause (b) below) and (y) all of the capital stock of ATL
held by the Borrower, Holdings or any of its Subsidiaries for fair market value
and for Net Proceeds in cash in an aggregate amount of at least $700,000,000.

         (b) Not later than December 31, 2001, Holdings and the Borrower shall
have sold or otherwise disposed of, or caused to be sold or otherwise disposed
of, to one or more Persons that are not Affiliates of Holdings or any of its
Subsidiaries, in one or more transactions, substantially all of the Canadian
assets of its Williams Communications Solutions business unit in existence on
the Amendment No. 4 Effective Date.

         SECTION 5.18. Qualifying Issuances. Not later than December 31, 2001,
the Borrower and/or Holdings shall have consummated Qualifying Issuances for Net
Proceeds in cash in an aggregate amount of at least $500,000,000; provided that
Net Proceeds in cash in an aggregate amount of not more than $350,000,000 shall
have resulted from Qualifying Issuances described in clause (ii) or (iii) of the
definition thereof.


                                       84
<PAGE>


                                    ARTICLE 6

                               NEGATIVE COVENANTS

         Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full
and all Letters of Credit have expired or terminated and all LC Disbursements
shall have been reimbursed, each of Holdings and the Borrower covenants and
agrees with the Lenders that:

         SECTION 6.1. Indebtedness; Certain Equity Securities. Holdings and the
Borrower will not, and will not permit any other Restricted Subsidiary to,
create, incur, assume or permit to exist any Indebtedness, except:

         (a) Indebtedness under the Loan Documents;

         (b) Indebtedness of Holdings under Qualifying Holdings Debt;

         (c) Indebtedness of Holdings under the High Yield Notes and
refinancings thereof, provided that any Indebtedness issued in any such
refinancing shall be on terms no less favorable to Holdings and its Restricted
Subsidiaries than the High Yield Notes, shall be in an aggregate principal
amount no greater than the High Yield Notes refinanced and shall not require any
payment of principal thereof (upon maturity or by mandatory sinking fund,
mandatory redemption, mandatory prepayment or otherwise) prior to the date that
is one year after the Term Maturity Date;

         (d) ADP Outstandings in an aggregate amount not to exceed $750,000,000
at any time outstanding;

         (e) Indebtedness existing on the date hereof and set forth in Schedule
6.01 and extensions, renewals and replacements of any such Indebtedness that do
not increase the outstanding principal amount thereof or result in an earlier
maturity date or decrease the Weighted Average Life to Maturity thereof;

         (f) Indebtedness of Holdings to any Subsidiary and of any Restricted
Subsidiary to any other Subsidiary; provided that Indebtedness of any Subsidiary
that is not a Loan Party to any Loan Party shall be subject to Section 6.04;

         (g) Guarantees by Holdings of Indebtedness of any Subsidiary and by any
Subsidiary of Indebtedness of the Borrower or any other Subsidiary; provided
that Guarantees by Holdings, the Borrower or any Subsidiary Loan Party of
Indebtedness of any Subsidiary that is not a Loan Party shall be subject to
Section 6.04;


                                       85
<PAGE>

         (h) Indebtedness of any Person that becomes a Restricted Subsidiary or
is merged into a Restricted Subsidiary after the date hereof (provided that such
Indebtedness exists at the time such Person becomes a Restricted Subsidiary and
is not created in contemplation of or in connection with such Person becoming a
Restricted Subsidiary) and extensions, renewals or replacements of any such
Indebtedness that do not increase the principal amount thereof or result in an
earlier maturity date or decreased Weighted Average Life to Maturity thereof;

         (i) Indebtedness in respect of performance, surety or appeal bonds and
Guarantees incurred or provided in the ordinary course of business securing the
performance of contractual, franchise, lease, self-insurance or license
obligations and not in connection with an incurrence of Indebtedness;

         (j) Indebtedness in respect of customary agreements providing for
indemnification, purchase price adjustments after closing or similar obligations
in connection with the disposition of any assets (other than Guarantees of
Indebtedness incurred by any Person acquiring all or any portion of such assets
for the purpose of financing such acquisition); provided that (i) any such
disposition is permitted by Section 6.05, (ii) the aggregate principal amount of
such Indebtedness does not exceed the gross proceeds actually received by
Holdings or any Restricted Subsidiary in connection with such disposition and
(iii) to the extent the gross proceeds thereof constitute Net Proceeds
hereunder, such Net Proceeds are applied in accordance with Sections 2.08(f) and
2.11(b);

         (k) Indebtedness of Holdings and the Restricted Subsidiaries pursuant
to Hedging Agreements entered into with Lenders or their affiliates in the
ordinary course of business and not for speculative purposes;

         (l) [Intentionally deleted];

         (m) [Intentionally deleted];

         (n) [Intentionally deleted];

         (o) other Indebtedness of Holdings or any Restricted Subsidiary in an
aggregate principal amount at any time outstanding, together with the aggregate
amount of Attributable Debt in respect of all Sale and Leaseback Transactions
then outstanding, not exceeding 15% of the consolidated net property, plant and
equipment of Holdings and the Restricted Subsidiaries at such time;

         (p) Indebtedness of the Borrower consisting of Qualifying Borrower
Indebtedness;

         (q) Permitted Specified Security Hedging Transactions;


                                       86
<PAGE>

         (r) Indebtedness of Holdings or the Borrower incurred pursuant to a
Qualifying Issuance; provided that the aggregate Net Proceeds in cash received
by Holdings and/or the Borrower from the issuance of such Indebtedness, plus the
Net Proceeds in cash from any Sale and Leaseback Transaction constituting a
Qualifying Issuance shall not exceed $350,000,000;

         (s) Indebtedness with respect to industrial revenue bonds issued for
the benefit of the Borrower, Holdings or any Restricted Subsidiary in an
aggregate principal or face amount not to exceed $50,000,000;

         (t) unsecured Indebtedness of Holdings in an aggregate principal amount
not to exceed $100,000,000 incurred prior to the consummation of the Structured
Note Financing so long as (i) the proceeds of such Indebtedness are used solely
to make the capital contributions described in Section 6.04(u) and (ii) the
terms and conditions of any such Indebtedness shall have been approved by all
the Incremental Facility Arrangers (if any) and the Administrative Agent prior
to the issuance thereof;

         (u) unsecured Indebtedness of Holdings owed to the Structured Note
Trust in an aggregate principal amount up to $1,500,000,000 in connection with
the consummation of the Structured Note Financing, so long as the terms and
conditions of such Indebtedness shall have been approved by all the Incremental
Facility Arrangers (if any) and the Administrative Agent prior to the issuance
thereof; and

         (v) on any date on or after the Leverage Target Date, Indebtedness of
the Borrower owing to a Receivables Subsidiary under a Permitted Receivables
Financing;

provided that, notwithstanding anything in this Agreement to the contrary, the
Borrower and the other Restricted Subsidiaries may not Guarantee any
Indebtedness of Holdings under (i) the High Yield Notes or (ii) any Qualifying
Holdings Debt.

         SECTION 6.2. Liens. (a) Holdings and the Borrower will not, and will
not permit any other Restricted Subsidiary to, create, incur, assume or permit
to exist any Lien on any property or asset now owned or hereafter acquired by
it, or assign or sell any income or revenues or rights in respect of any
thereof, except:

                  (i) Liens created under the Loan Documents (including, without
         limitation, Liens securing Indebtedness of Holdings and the Parent
         created thereunder in accordance with Section 5.11B(d));

                  (ii) Permitted Encumbrances;

                  (iii) Liens on any ADP Property securing only ADP Obligations;


                                       87
<PAGE>

                  (iv) any Lien on any property or asset of Holdings or any
         Restricted Subsidiary existing on the date hereof and set forth in
         Schedule 6.02; provided that (A) such Lien shall not apply to any other
         property or asset of Holdings or any Restricted Subsidiary and (B) such
         Lien shall secure only those obligations which it secures on the date
         hereof and extensions, renewals and replacements thereof that do not
         increase the outstanding principal amount thereof or decrease the
         Weighted Average Life to Maturity thereof;

                  (v) any Lien existing on any property or asset prior to the
         acquisition thereof by Holdings or any Restricted Subsidiary or
         existing on any property or asset of any Person that becomes a
         Restricted Subsidiary after the date hereof prior to the time such
         Person becomes a Subsidiary; provided that (A) such Lien is not created
         in contemplation of or in connection with such acquisition or such
         Person becoming a Restricted Subsidiary, as the case may be, (B) such
         Lien shall not apply to any other property or assets of Holdings or any
         Restricted Subsidiary and (C) such Lien shall secure only those
         obligations which it secures on the date of such acquisition or the
         date such Person becomes a Restricted Subsidiary, as the case may be,
         and extensions, renewals and replacements thereof that do not increase
         the outstanding principal amount thereof or decrease the Weighted
         Average Life to Maturity thereof;

                  (vi) Liens in favor of the Borrower or any Subsidiary Loan
         Party;

                  (vii) Liens on property of Holdings or any Restricted
         Subsidiary consisting of, or securing, licenses of such property;

                  (viii) Liens of a Specified Security securing Permitted
         Specified Security Hedging Transactions with respect to such Specified
         Security;

                  (ix) on any date on or after the Leverage Target Date, Liens
         created in connection with Permitted Receivables Financings, including,
         without limitation, Liens on proceeds in any form and bank accounts in
         which any such proceeds are deposited; provided that, except for the
         assets transferred pursuant to Permitted Receivables Dispositions made
         in connection with such Permitted Receivables Financings, no such Lien
         may extend to any assets of Borrower or any Subsidiary of the Borrower
         that is not a Receivables Subsidiary; and

                  (x) other Liens securing Indebtedness at any time outstanding
         that, together with the aggregate amount of Attributable Debt in
         respect of all Sale and Leaseback Transactions then outstanding, does
         not exceed 5% of the consolidated net property, plant and equipment of
         Holdings and the Restricted Subsidiaries at such time.

         (b) Notwithstanding anything to the contrary contained herein, Holdings
and the Borrower will not, and will not permit any other Restricted Subsidiary
to, create, incur,


                                       88
<PAGE>

assume or permit to exist any Lien on any of its assets to secure (i) except in
accordance with Section 5.11B(d), any obligations in respect of the High Yield
Notes or any refinancing thereof, permitted under Section 6.01(c), or (ii)
except in accordance with Section 5.11B(d), any Qualifying Holdings Debt.

         SECTION 6.3. Fundamental Changes. (a) Neither Holdings nor the Borrower
will, nor will they permit any other Restricted Subsidiary to, merge into or
consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, or liquidate or dissolve, except that, if at the time
thereof and immediately after giving effect thereto no Default shall have
occurred and be continuing (i) any Person may merge into the Borrower in a
transaction in which the Borrower is the surviving corporation, (ii) any Person
may merge into any Restricted Subsidiary in a transaction in which the surviving
entity is a Restricted Subsidiary and (iii) any Restricted Subsidiary may
liquidate or dissolve if the Borrower determines in good faith that such
liquidation or dissolution is in the best interests of the Borrower and is not
materially disadvantageous to the Lenders; provided that any such merger
involving a Person that is not a wholly owned Restricted Subsidiary immediately
prior to such merger shall not be permitted unless also permitted by Section
6.04.

         (b) The Borrower will not, and will not permit any other Restricted
Subsidiary to, engage to any material extent in any business other than
businesses of the type conducted by the Borrower and its Subsidiaries on the
date of execution of this Agreement and businesses reasonably related thereto.

         (c) Holdings will not engage in any business or activity other than (i)
the ownership of all of the outstanding Equity Interests in the Borrower, (ii)
the issuance of the High Yield Notes, (iii) issuances of Qualifying Holdings
Debt, (iv) issuances of its Equity Interests, (v) the holding of 100% of the
Equity Interests of any Unrestricted Subsidiary which is engaged exclusively in
the buying, selling and trading of telecommunications services as a commodity on
a developing or an established market (a "Trading Subsidiary") and (vi) the
holding of Qualifying Borrower Indebtedness permitted under Section 6.01(q) and,
with respect to each of the foregoing, activities incidental thereto. Holdings
will not own or acquire any assets (other than Qualifying Equity Interests in
the Borrower, Qualifying Borrower Indebtedness, Equity Interests in any Trading
Subsidiary, cash and Cash Equivalent Investments) or incur any liabilities
(other than liabilities under the Loan Documents, liabilities in respect of the
High Yield Notes, liabilities in respect of Qualified Holdings Debt permitted
hereunder, liabilities in respect of the Structured Note Financing, liabilities
imposed by law, including tax liabilities, and other liabilities incidental to
its existence and permitted business and activities).

         SECTION 6.4. Investments, Loans, Advances, Guarantees and Acquisitions.
Holdings will not, and will not permit any Restricted Subsidiary to, purchase,
hold or acquire (including pursuant to any merger with any Person that was not a
wholly owned Restricted Subsidiary prior to such merger) any capital stock,
evidences of indebtedness


                                       89
<PAGE>

or other securities (including any option, warrant or other right to acquire any
of the foregoing) of, make or permit to exist any loans or advances to,
Guarantee any obligations of, or make or permit to exist any investment or any
other interest in, any other Person, or purchase or otherwise acquire (in one
transaction or a series of transactions) any assets of any other Person
constituting a business unit (collectively, "Investments"), except:

         (a) Cash Equivalent Investments;

         (b) Investments existing on the date hereof and set forth on Schedule
6.04;

         (c) Investments by Holdings and the Restricted Subsidiaries in Equity
Interests in Subsidiaries; provided that, (i) the aggregate amount of
Investments by Loan Parties in, and Guarantees by Loan Parties of Indebtedness
of, Subsidiaries that are not Loan Parties (including, without limitation, any
Deemed Subsidiary Investment pursuant to Section 6.14) shall be subject to the
proviso to this Section 6.04 and (ii) all Equity Interests acquired or held by
Holdings pursuant to this Section 6.04(c) shall be Qualifying Equity Interests
in the Borrower or Equity Interests in a Trading Subsidiary;

         (d) loans or advances made by Holdings to any Restricted Subsidiary and
made by any Restricted Subsidiary to any other Restricted Subsidiary; provided
that the amount of such loans and advances made by Loan Parties to Subsidiaries
that are not Loan Parties shall be subject to the proviso to this Section 6.04;

         (e) Guarantees constituting Indebtedness permitted by Section 6.01;
provided that (i) no Restricted Subsidiary shall Guarantee any High Yield Notes,
any Indebtedness of Holdings or the Borrower constituting a Qualifying Issuance
or Qualifying Holdings Debt and (ii) the aggregate principal amount of
Indebtedness of Subsidiaries that are not Loan Parties that is Guaranteed by any
Loan Party shall be subject to the proviso to this Section 6.04;

         (f) Investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;

         (g) acquisitions by the Borrower of ADP Property for consideration paid
on and prior to any date not exceeding Additional Capital as of such date; minus
(i) Investments permitted under clause (ii) of the proviso to this Section 6.04
made on or prior to such date and (iii) Capital Expenditures permitted under
Section 6.08(b) made on or prior to such date;

         (h) Hedging Agreements permitted under Section 6.01(k);

         (i) Capital Expenditures made in accordance with Section 6.08;


                                       90
<PAGE>

         (j) subject to the proviso to this Section 6.04, Investments in the
Telecommunications Business;

         (k) subject to the proviso to this Section 6.04, Investments in
Existing International Joint Ventures; provided that the acquisition by Holdings
or any Restricted Subsidiary of any equity interest in Algar Telecom S.A.
(formerly known as Lightel S.A.) owned by the Parent or its subsidiaries (other
than Holdings and the Subsidiaries) shall not be permitted under this clause (k)
but shall only be permitted under clause (p) of this Section 6.04;

         (l) exchanges and substitutions of ADP Property for like property which
take place prior to the occurrence of the Completion Date, the Expiration Date,
the Termination Date, or an ADP Event of Default, Environmental Trigger or
Unwind Event under the Operative Documents;

         (m) any Investment by a Restricted Subsidiary in any Person engaged in
the Telecommunication Business if such Investment is made in connection with an
agreement by such Person to utilize certain of the Borrower's or the Subsidiary
Loan Parties' Telecommunications Business, provided that, at any date, (i) the
aggregate amount of Investments made in all such Persons at any time outstanding
pursuant to this paragraph (m) (valued at the cost of acquisition thereof,
without regard to any increase or decrease in the value thereof based on
subsequent performance of such Person, but net of any distributions received by
the Borrower or any Subsidiary Loan Party in respect of such Investment) shall
not exceed 15% of Consolidated Assets at such time and (ii) the aggregate amount
of such Investments made in all such Persons with cash or Cash Equivalent
Investments that are at any time outstanding pursuant to this paragraph (m)
shall not exceed 5% of Consolidated Assets;

         (n) (i) loans to directors, officers and employees of Holdings or any
Restricted Subsidiary all of the proceeds of which are used (A) to pay
relocation expenses of any such director, officer or employee or (B) to purchase
Equity Interests in Holdings pursuant to and in accordance with stock option
plans or other benefit plans for directors, officers and employees of Holdings
and its Restricted Subsidiaries, provided that, in the case of any of the Loans
referred to in this subclause (B), any proceeds to Holdings of any such
purchases of Equity Interests shall be contributed to the Borrower and (ii)
other loans to directors, officers and employees of Holdings and its Restricted
Subsidiaries made in the ordinary course of business in an aggregate principal
amount not to exceed $5,000,000 at any time outstanding;

         (o) trade accounts receivable for goods sold or services provided
arising in the ordinary course of business and on customary payment terms (not
to exceed 120 days after the date such receivables are accrued in accordance
with GAAP);

         (p) Investments for which the consideration paid by Holdings and its
Restricted Subsidiaries consists exclusively of Qualifying Equity Interests in
Holdings;


                                       91
<PAGE>

         (q) Investments made in any Person (a "REINVESTMENT PERSON") in whom
the Borrower or any of its Subsidiaries has, or at any time after the Closing
Date had, an Investment permitted under clause (b), (f) or (p) above or this
clause (q) (an "ORIGINAL INVESTMENT"); provided that the aggregate amount of
Investments in any Reinvestment Person permitted under this clause (q) may not
exceed the aggregate amount of the cash proceeds received, within 270 days prior
to the making of such Investment, by the Borrower and its Subsidiaries from
sales or other dispositions of, or distributions with respect to Original
Investments in such Reinvestment Person;

         (r) Permitted Specified Security Hedging Transactions; and

         (s) Investments in Persons that become Subsidiary Loan Parties if such
Persons, prior to such Investments, were engaged principally in the transmission
of voice, video or data through or over owned or leased fiber optic cable and/or
the holding, developing or constructing of assets or technology used therein;

         (t) Letters of Credit to support obligations of a Trading Subsidiary
incurred in the ordinary course of business; and

         (u) capital contributions made by Holdings to the Borrower and by the
Borrower to the Structured Note Trust, in each case in an aggregate principal
amount not to exceed $100,000,000 and in order to consummate the Structured Note
Financing;

         (v) Investments in Receivables Subsidiaries made in connection with
Permitted Receivables Financings;

provided that the aggregate amount of all Investments (valued at the cost of
acquisition thereof, without regard to any increase or decrease in the value
thereof based on subsequent performance of the Person in which such Investment
is held), but net, in case of each such Investment (but not below zero), of any
distributions received by the Borrower or any Subsidiary Loan Party in respect
of such Investment and any proceeds received upon any disposition (other than a
disposition to Holdings or any of its Subsidiaries or the Parent or any of its
Subsidiaries) of such Investment, made pursuant to Sections 6.04(j) and 6.04(k)
on or prior to any date, or referred to in Section 6.04(c)(i), the proviso to
Section 6.04(d) and Section 6.04(e)(ii) and made on or prior to such date, shall
not exceed the sum of an amount (which amount, for purposes of this proviso
only, shall not be less than zero) equal to (x) the amount of Additional Capital
as of such date minus (y) (A) acquisitions of ADP Property permitted under
Section 6.04(g) made on or prior to such date and (B) Capital Expenditures
permitted under Section 6.08(b) made on or prior to such date.

         SECTION 6.5. Asset Sales. Holdings and the Borrower will not, and will
not permit any other Restricted Subsidiary to, sell, transfer, lease or
otherwise dispose of any


                                       92
<PAGE>

asset, including any Equity Interests owned by it, nor will Holdings permit any
of its Restricted Subsidiaries to issue any additional Equity Interests, except:

         (a) sales, transfers, leases or other dispositions of fiber optic cable
capacity, sales of inventory, and sales of used or surplus equipment and Cash
Equivalent Investments, in each case in the ordinary course of business;

         (b) sales, transfers and dispositions to the Borrower or a Subsidiary;
provided that any such sales, transfers or dispositions involving a Subsidiary
that is not a Loan Party shall be made in compliance with Section 6.09;

         (c) issuances to the Borrower or any other Restricted Subsidiary of
Equity Interests in any Restricted Subsidiary other than the Borrower;

         (d) issuances to Holdings by the Borrower of Qualifying Equity
Interests in the Borrower;

         (e) Permitted Telecommunications Asset Dispositions;

         (f) sales, transfers and dispositions of assets to the extent
constituting Investments permitted under Section 6.04;

         (g) Restricted Payments permitted under Section 6.07(a) and payments of
principal and interest permitted under Section 6.07(b);

         (h) the sale, transfer or other dispositions required by Section 5.17
or 5.18;

         (i) any transfer of Receivables and Related Transferred Rights (each as
defined in the Security Agreement attached hereto as Exhibit K) in order to
consummate a Permitted Receivables Transaction or to transfer such assets
pursuant to a factoring arrangement; and

         (j) sales, transfers and dispositions of assets (other than
Telecommunications Assets) that are not permitted by any other clause of this
Section; provided that the aggregate fair market value of all assets sold,
transferred or otherwise disposed of in reliance upon this Section 6.05(j) shall
not exceed $25,000,000 during any fiscal year of the Borrower;

provided that all sales, transfers, leases and other dispositions permitted
under Sections 6.05(e) and 6.05(j) shall be made (x) for fair value and (y) only
if at least 75% of the consideration paid therefor is cash or Cash Equivalent
Investments (or, if less than 75%, the remainder of such consideration consists
of Telecommunications Assets).

         SECTION 6.6. Sale and Leaseback Transactions. Holdings and the Borrower
will not, and will not permit any other Restricted Subsidiary to, enter into any
arrangement,


                                       93
<PAGE>

directly or indirectly, whereby it shall (a) sell or transfer any property, real
or personal, used or useful in its business, whether now owned or hereafter
acquired, and thereafter rent or lease such property or other property that it
intends to use for substantially the same purpose or purposes as the property
sold or transferred or (b) lease any property, real or personal, from any entity
substantially all of whose activities consist of acquiring, constructing or
developing property to be leased to Holdings and the Restricted Subsidiaries
pursuant to leases intended to cover, and measured by the cost of or the
financing incurred by such entity to finance, such property (the transactions
referred to in clause (a) and (b) being collectively referred to as "Sale and
Leaseback Transactions"), except for (i) sales and leases of ADP Property
pursuant to the ADP in respect of ADP Outstandings not to exceed $750,000,000 at
any time outstanding and (ii) (x) any such sale referred to in clause (a) above
of any fixed or capital assets that is made for cash consideration in an amount
not less than the cost of such fixed or capital asset and is consummated within
270 days after the Borrower or such other Restricted Subsidiary acquires or
completes the construction of such fixed or capital asset and (y) any such lease
referred to in clause (b) above providing for rental payments measured by the
cost of the property leased or the financing incurred by the lessor thereof to
acquire, construct or develop the property so leased; provided that the sum of
the aggregate amount of Attributable Debt in respect of all such Sale and
Leaseback Transactions permitted under this clause (ii) at any time outstanding
(other than any such Attributable Debt with respect to any Sale and Leaseback
Transaction constituting a Qualifying Issuance) and the aggregate amount of
Indebtedness secured by Liens permitted by Section 6.02(a)(viii) at such time
outstanding shall not exceed 5% of consolidated net property, plant and
equipment of Holdings and the Restricted Subsidiaries at such time. For purposes
of determining compliance with the proviso set forth in the immediately
preceding sentence, Capital Lease Obligations shall not in any event be included
in the calculation of "Attributable Debt."

         SECTION 6.7. Restricted Payments; Certain Payments of Indebtedness. (a)
Neither Holdings nor the Borrower will, nor will they permit any other
Restricted Subsidiary to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, or enter into any transaction the economic
effect of which is substantially similar to any Restricted Payment, except (i)
Holdings and the Borrower may declare and pay dividends with respect to their
capital stock payable solely in additional shares of their respective common
stock, (ii) Restricted Subsidiaries (other than the Borrower) may declare and
pay dividends ratably with respect to their capital stock, (iii) Holdings may
make Restricted Payments, not exceeding $3,000,000 during any fiscal year,
pursuant to and in accordance with stock option plans or other benefit plans for
management or employees of Holdings and the Restricted Subsidiaries; (iv) so
long as no Default shall have occurred and be continuing or result from the
making of such payment, the Borrower may pay dividends to Holdings at such times
and in such amounts as shall be necessary to permit Holdings to discharge, to
the extent permitted hereunder, its permitted liabilities; (v) on and after the
Leverage Target Date, Holdings may declare and pay dividends in cash with
respect to its convertible preferred stock outstanding as of the Amendment No. 4
Effective Date in an amount not exceeding


                                       94
<PAGE>

$40,000,000 in any fiscal year and the Borrower may declare and pay dividends to
Holdings to permit Holdings to declare and pay such dividends and (vi) at any
time after the consummation of the Structured Note Financing, the Borrower may
declare and pay a dividend to Holdings so long as (x) the aggregate amount of
such dividend shall not exceed the principal amount of the Structured Note
Bridge Indebtedness outstanding at the time such dividend is paid plus accrued
interest thereon, (y) no Default has occurred and is continuing or would result
therefrom and (z) immediately upon receipt thereof, Holdings shall apply all of
the proceeds of such dividend to repay in full the Structured Note Bridge
Indebtedness then outstanding.

         (b) Neither Holdings nor the Borrower will, nor will they permit any
Restricted Subsidiary to, make, directly or indirectly, any voluntary payment or
other distribution (whether in cash, securities or other property) of or in
respect of principal of or interest on any High Yield Notes, any Qualifying
Holdings Debt or any Qualifying Borrower Indebtedness (collectively "Specified
Indebtedness"), or any voluntary payment or other distribution (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any Specified Indebtedness (or enter into any transaction the
economic effect of which is substantially similar to any of the foregoing),
except, provided no Default has occurred and is continuing or would result
therefrom, payments of regularly scheduled interest as and when due in respect
of any Specified Indebtedness other than Qualifying Borrower Indebtedness.

         SECTION 6.8. Limitation on Capital Expenditures. (a) Capital
Expenditures (other than Capital Expenditures permitted under Section 6.08(b)
below) for any fiscal year set forth below shall not exceed the amount set forth
below opposite such fiscal year:

<Table>
<Caption>
FISCAL YEAR                                               AMOUNT
- -----------                                               ------
<S>                                                   <C>
2001                                                  $2,750,000,000
2002                                                  $2,500,000,000
2003                                                  $2,250,000,000
2004                                                  $2,250,000,000
2005                                                  $2,250,000,000
2006 and each fiscal year thereafter                  $2,800,000,000
</Table>

provided that if the aggregate amount of Capital Expenditures (other than
Capital Expenditures permitted under Section 6.08(b) below) actually made in any
such period or fiscal year shall be less than the limit with respect thereto set
forth above (before giving effect to any increase therein pursuant to this
proviso) (the "Base Amount"), then an amount equal to 50% of such shortfall may
be added to the amount of such Capital Expenditures permitted for the
immediately succeeding fiscal year (such amount to be added for any fiscal year,
the "Rollover Amount"); provided further that any Capital Expenditures (other
than Capital Expenditures permitted under Section 6.08(b) below) made during any
fiscal year for which any Rollover Amount shall have been so added


                                       95
<PAGE>

shall be applied, first, to the Rollover Amount added for such fiscal year and,
second, to the Base Amount for such fiscal year.

         (b) In addition to Capital Expenditures permitted under Section 6.08(a)
above, Holdings and the Restricted Subsidiaries may make (i) Capital
Expenditures consisting of acquisitions of ADP Property permitted under Section
6.04(g) or 6.04(l) and (ii) Capital Expenditures on any date after the Amendment
No. 4 Effective Date in an aggregate amount not to exceed Additional Capital as
of such date minus (A) Investments permitted under clause (ii) of the proviso to
Section 6.04 made on or prior to such date and (B) purchases of ADP Property
permitted under Section 6.04(g) made on or prior to such date.

         SECTION 6.9. Transactions with Affiliates. Neither Holdings nor the
Borrower will, nor will they permit any other Restricted Subsidiary to, sell,
lease or otherwise transfer any property or assets to, or purchase, lease or
otherwise acquire any property or assets from, or otherwise engage in any other
transactions with, any of their respective Affiliates, except (a) transactions
that are at prices and on terms and conditions not less favorable to Holdings,
the Borrower or such other Restricted Subsidiary than could be obtained on an
arm's-length basis from unrelated third parties, (b) transactions between or
among the Borrower and the Subsidiary Loan Parties not involving any other
Affiliate, (c) any Restricted Payment permitted by Section 6.07 and (d)
transactions required to be effected pursuant to, and on terms provided for in,
existing agreements (as in effect on the date hereof) listed in Schedule 6.09
hereto.

         SECTION 6.10. Restrictive Agreements. Neither Holdings nor the Borrower
will, nor will they permit any other Restricted Subsidiary to, directly or
indirectly, enter into, incur or permit to exist any agreement or other
arrangement that prohibits, restricts or imposes any condition upon (a) the
ability of Holdings or any Restricted Subsidiary to create, incur or permit to
exist any Lien upon any of its property or assets, or (b) the ability of any
Restricted Subsidiary to pay dividends or other distributions with respect to
any shares of its capital stock or to make or repay loans or advances to the
Borrower or any other Restricted Subsidiary or to Guarantee Indebtedness of the
Borrower or any other Restricted Subsidiary; provided that (i) the foregoing
shall not apply to restrictions and conditions imposed by law or by any Loan
Document, the High Yield Notes or, to the extent that any such restrictions
therein, taken as a whole, are no more restrictive than those contained in the
High Yield Notes, any Qualifying Holdings Debt, (ii) the foregoing shall not
apply to restrictions and conditions existing on the date hereof identified on
Schedule 6.10 (but shall apply to any extension or renewal of, or any amendment
or modification expanding the scope of, any such restriction or condition),
(iii) the foregoing shall not apply to customary restrictions and conditions
contained in agreements relating to the sale of a Subsidiary pending such sale,
provided such restrictions and conditions apply only to the Subsidiary that is
to be sold and such sale is permitted hereunder, (iv) Section 6.10(a) of the
foregoing shall not apply to restrictions or conditions imposed by any agreement
relating to secured Indebtedness permitted by this Agreement if such
restrictions or conditions apply only to the property or assets securing such
Indebtedness


                                       96
<PAGE>

and (v) Section 6.10(a) of the foregoing shall not apply to customary provisions
in leases and other contracts restricting the assignment thereof.

         SECTION 6.11. Fiscal Year. Holdings and the Borrower will not, and will
not permit any other Restricted Subsidiary to, change its fiscal year from a
fiscal year ending December 31.

         SECTION 6.12. Change in Business. Holdings and the Borrower will not,
and will not permit any other Restricted Subsidiary to, engage in any material
line of business other than the Telecommunications Business.

         SECTION 6.13. Amendment of Material Documents. Holdings and the
Borrower will not, and will not permit any other Restricted Subsidiary to,
without the prior written consent of the Required Lenders, consent to any
amendment, modification or waiver of (a) its certificate of incorporation,
by-laws or other organizational documents (except for the filing of a
Certificate of Designation with the Secretary of State of Delaware relating to
the issuance of preferred securities that are Qualifying Equity Interests of
such Person, to the extent provided for in its certificate of incorporation,
by-laws or other organizational documents), (b) the Other Financing Documents,
(c) any agreements governing any Qualifying Holdings Debt, (d) the Parent
Indemnity or (e) the Operative Documents, in each of the foregoing cases if such
amendment, modification of waiver could reasonably be expected to have (i) an
adverse effect on the ability of any Loan Party to perform any of its
obligations under any Loan Document or the rights of, or benefits available to,
the Lenders under any Loan Document or (ii) a Material Adverse Effect.

         SECTION 6.14. Designation of Unrestricted Subsidiaries. Holdings and
the Borrower will not designate any Restricted Subsidiary (other than a newly
created Subsidiary in which no Investment has previously been made) as an
Unrestricted Subsidiary (a "Subsidiary Designation") unless:

         (i)      no Default shall have occurred and be continuing at the time
                  of or after giving effect to such Subsidiary Designation;

         (ii)     after giving effect to such Subsidiary Designation, Holdings
                  would be in compliance with the covenants contained in Section
                  6.08 and Sections 6.15 through 6.19 on a pro forma basis as if
                  such Subsidiary Designation had been made on the first day of
                  the period of four fiscal quarters most recently ended in
                  respect of which financial statements have been delivered by
                  the Company pursuant to Section 5.01(a) or 5.01(b);

         (iii)    Holdings has delivered to the Administrative Agent (x) written
                  notice of such Subsidiary Designation and (y) a certificate of
                  a Financial Officer setting forth in reasonable detail
                  calculations demonstrating pro forma compliance with the
                  financial covenants contained in Section 6.08 and Sections
                  6.15 through 6.19, as required by clause (ii) above; and


                                       97
<PAGE>

         (iv)     on the date of such Subsidiary Designation, Holdings and the
                  Borrower would not be prohibited by Section 6.04(c) and the
                  proviso to Section 6.04 from making an Investment (a "Deemed
                  Subsidiary Investment") in an aggregate amount equal to the
                  fair market value (valued at the date of such Subsidiary
                  Designation) of (x) the net assets of such Restricted
                  Subsidiary or (y) if less than 100% of the Equity Interests in
                  such Restricted Subsidiary are held by Holdings and its
                  Restricted Subsidiaries, in an aggregate amount equal to the
                  percentage interest of Holdings and the Restricted
                  Subsidiaries in such net assets.

         Holdings and the Borrower will not, and will not permit any other
Restricted Subsidiary to (x) Guarantee any Indebtedness of any Unrestricted
Subsidiary, (y) be directly or indirectly liable for any Indebtedness of any
Unrestricted Subsidiary or (z) be directly or indirectly liable for any other
Indebtedness which provides that the holder thereof may (upon notice, lapse of
time or both) declare a default thereon (or cause such Indebtedness or the
payment thereof to be accelerated, payable or subject to repurchase prior to its
final scheduled maturity) upon the occurrence of a default with respect to any
other Indebtedness that is Indebtedness of an Unrestricted Subsidiary, except in
the case of clause (x) or (y) to the extent permitted under Section 6.01 and
Section 6.04 hereof. In no event may the Borrower be designated as an
Unrestricted Subsidiary.

         SECTION 6.15. Total Net Debt to Contributed Capital Ratio. The Total
Net Debt to Contributed Capital Ratio shall at no time prior to January 1, 2002
exceed .65 to 1.00.

         SECTION 6.16. Minimum EBITDA. The amount equal to (i) EBITDA for the
period of four fiscal quarters ending during any period set forth below plus
(ii) ADP Interest Expense for such period minus (iii) gains for such period
attributable to Dark Fiber and Capacity Dispositions plus (iv) Dark Fiber and
Capacity Proceeds for such period shall not be less than the amount set forth
below opposite such period:

<Table>
<Caption>
PERIOD                                                AMOUNT
- ------                                                ------
<S>                                                   <C>
January 1, 2001-March 31, 2001                        $200,000,000
April 1, 2001-June 30, 2001                           $300,000,000
July 1, 2001-September 30, 2001                       $350,000,000
October 1, 2001-December 31, 2001                     $350,000,000
</Table>

         SECTION 6.17. Total Leverage Ratio. (a) The Total Leverage Ratio during
any period set forth below shall not exceed the ratio set forth below opposite
such period:

<Table>
<Caption>
                                                      TOTAL
PERIOD                                                LEVERAGE RATIO
- ------                                                --------------
<S>                                                   <C>
March 31, 2002-December 30, 2002                      12.50:1.00
December 31, 2002-December 30, 2003                   9.50:1.00
December 31, 2003 and thereafter                      4.00:1.00
</Table>


                                       98
<PAGE>

         SECTION 6.18. Senior Leverage Ratio. The Senior Leverage Ratio during
any period set forth below shall not exceed the ratio set forth below opposite
such period:

<Table>
<Caption>
                                                      SENIOR
PERIOD                                                LEVERAGE RATIO
- ------                                                --------------
<S>                                                   <C>
March 31, 2002-December 30, 2002                      5.25:1.00
December 31, 2002-December 30, 2003                   3.25:1.00
December 31, 2003 and thereafter                      2.50:1.00
</Table>

         SECTION 6.19. Interest Coverage Ratio. The Interest Coverage Ratio for
any period of four consecutive fiscal quarters ending during any period set
forth below shall not be less than the ratio set forth below opposite such
period:

<Table>
<Caption>
                                                     INTEREST
PERIOD                                               COVERAGE RATIO
- ------                                               --------------
<S>                                                  <C>
June 30, 2002-June 29, 2003                          1.00:1.00
June 30, 2003-December 30, 2003                      1.50:1.00
December 31, 2003 and thereafter                     2.00:1.00
</Table>

         SECTION 6.20. Financial Covenant Non-Compliance Cure. (a) At any time
prior to the consummation of the Spin-Off, in the event that Holdings and the
Restricted Subsidiaries fail to comply with any of Sections 6.15 through 6.19,
inclusive, for any period or on any date set forth therein, the Parent shall
have the right, but not the obligation, to make, within three Business Days of
the date upon which financial statements as of the last day of such period are
delivered or required to be delivered pursuant to Section 5.01(a) or (b), a cash
equity contribution to Holdings in exchange for Qualifying Equity Interests of
Holdings (which Holdings shall thereupon contribute to the Borrower, in exchange
for Qualifying Equity Interests of the Borrower) to cure such failure.

          (b) If such contribution is made to cure a failure to comply with the
covenant contained in Section 6.16, such contribution shall be in an amount
sufficient, when added to EBITDA for the applicable period, to enable Holdings
and the Restricted Subsidiaries to comply with such covenant on a consolidated
basis. Upon the making of any such capital contribution to Holdings and to the
Borrower in the amount specified above, the amount so contributed (to the
extent, but only to the extent, of the shortfall in EBITDA for the applicable
period) shall thereafter be deemed to have been EBITDA in the last fiscal
quarter of such period for purposes of all calculations in respect of compliance
with Section 6.16 thereafter.


                                       99
<PAGE>

         (c) If such contribution is made to cure a failure to comply with a
covenant contained in Section 6.15, 6.17, 6.18 or 6.19, such contribution shall
be in an amount sufficient, when applied to repay or prepay Indebtedness of
Holdings and the Restricted Subsidiaries, to enable Holdings and the Restricted
Subsidiaries, on a pro forma basis after giving effect to such contribution and
application, to comply with such covenant on a consolidated basis.

         (d) The right to cure provided in this Section 6.20 may not be
exercised in respect of more than two consecutive quarters or more than three
times in the aggregate during the term of the Facilities.


                                    ARTICLE 7

                                EVENTS OF DEFAULT

         SECTION 7.1. Events of Default. If any of the following events ("Events
of Default") shall occur:

         (a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise;

         (b) the Borrower shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount referred to in Section 7.01(a))
payable under this Agreement or any other Loan Document, when and as the same
shall become due and payable, and such failure shall continue unremedied for a
period of three Business Days;

         (c) any representation or warranty made or deemed made by or on behalf
of the Parent or any Loan Party in or in connection with any Loan Document or
any amendment or modification thereof or waiver thereunder, or in any report,
certificate, financial statement or other document furnished pursuant to or in
connection with any Loan Document or any amendment or modification thereof or
waiver thereunder, shall prove to have been incorrect in any material respect
when made or deemed made;

         (d) (i) Holdings or the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.02, 5.03 (with respect
to the existence of Holdings or the Borrower), 5.10, 5.11A, 5.11B, 5.13, 5.17,
5.18 or in Article 6, or (i) such failure shall continue unremedied for a period
of 30 days after the earlier to occur of (x) knowledge thereof by any Loan Party
or (y) notice thereof from the Administrative Agent to the Borrower (which
notice will be given at the request of any Lender);


                                      100
<PAGE>

         (e) any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in any Loan Document (other than those
specified in Sections 7.01(a), 7.01(b) or 7.01(d)), and such failure shall
continue unremedied for a period of 30 days after the earlier to occur of (i)
knowledge thereof by any Loan Party or (ii) notice thereof from the
Administrative Agent to the Borrower (which notice will be given at the request
of any Lender);

         (f) Holdings or any Restricted Subsidiary shall fail to make any
payment (whether of principal or interest and regardless of amount) in respect
of any Material Indebtedness, when and as the same shall become due and payable
(subject to any applicable grace period);

         (g) any event or condition occurs that results in any Material
Indebtedness or Permitted Receivables Financing becoming due prior to its
scheduled maturity or that enables or permits (with or without the giving of
notice, the lapse of time or both) the holder or holders of any Material
Indebtedness or Permitted Receivables Financing or any trustee or agent on its
or their behalf to cause any Material Indebtedness or Permitted Receivables
Financing to become due, or to require the prepayment, repurchase, redemption or
defeasance thereof, prior to its scheduled maturity; provided that this Section
7.01(g) shall not apply to secured Indebtedness permitted hereunder that becomes
due as a result of the voluntary sale or transfer of the property or assets
securing such Indebtedness;

         (h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of Holdings or any Restricted Subsidiary or its debts, or of a
substantial part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for Holdings or any Restricted Subsidiary or for a substantial
part of its assets, and, in any such case, such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or ordering any
of the foregoing shall be entered;

         (i) Holdings or any Restricted Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation, reorganization
or other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in Section 7.01(h), (iii) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for Holdings or any Restricted Subsidiary or for a
substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;


                                      101
<PAGE>

         (j) Holdings or any Restricted Subsidiary shall become unable, admit in
writing its inability or fail generally, to pay its debts as they become due;

         (k) one or more judgments for the payment of money in an aggregate
amount in excess of $25,000,000 shall be rendered against Holdings, any
Restricted Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution shall
not be effectively stayed, or any action shall be legally taken by a judgment
creditor to attach or levy upon any assets of Holdings or any Restricted
Subsidiary to enforce any such judgment;

         (l) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of Holdings and
the Restricted Subsidiaries in an aggregate amount exceeding $25,000,000 for all
periods;

         (m) any Lien (if any) purported to be created under any Collateral
Document shall cease to be, or shall be asserted by any Loan Party not to be, a
valid and perfected Lien on any Collateral having a fair market value in excess
of $1,000,000, with the priority required by the applicable Collateral Document,
except (i) as a result of the sale or other disposition of the applicable
Collateral in a transaction permitted under the Loan Documents or (ii) pursuant
to a Collateral Release Event;

         (n) any Guarantee by Holdings or any Subsidiary Loan Party under any
Loan Document shall cease for any reason (other than the merger out of existence
of such Guarantor pursuant to a transaction permitted hereunder or pursuant to
the express terms of such Guarantee) to be in full force and effect, or Holdings
or any Subsidiary Loan Party shall so assert in writing;

         (o) a Change in Control shall occur; and

         (p) at any time prior to the consummation of the Spin-Off, the senior
unsecured long-term debt of the Parent shall be rated less than BBB- by S&P or
less than Baa3 by Moody's;

then, and in every such event (other than an event with respect to Holdings or
the Borrower described in Section 7.01(h) or 7.01(i)), and at any time
thereafter during the continuance of such event, the Administrative Agent may,
and at the request of the Required Lenders shall, by notice to the Borrower,
take either or both of the following actions, at the same or different times:
(i) terminate the Commitments, and thereupon the Commitments shall terminate
immediately, and (ii) declare the Loans then outstanding to be due and payable
in whole (or in part, in which case any principal not so declared to be due and
payable may thereafter be declared to be due and payable), and thereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon and all fees and other obligations of the Borrower accrued
hereunder, shall become due and payable immediately, without presentment,
demand, protest or other


                                      102
<PAGE>

notice of any kind, all of which are hereby waived by Holdings and the Borrower;
and in the case of any event with respect to Holdings or the Borrower described
in Section 7.01(h) or 7.01(i), the Commitments shall automatically terminate and
the principal of the Loans then outstanding, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall automatically become due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by Holdings and the
Borrower.


                                    ARTICLE 8

                                   THE AGENTS

         SECTION 8.1. Appointment, Powers, Immunities. (a) Each Lender,
Swingline Lender and Issuing Bank hereby irrevocably appoints the Administrative
Agent as its agent and authorizes the Administrative Agent to take such actions
on its behalf and to exercise such powers as are delegated to the Administrative
Agent by the terms of the Loan Documents, together with such actions and powers
as are reasonably incidental thereto.

         (b) The institutions serving as Agents hereunder shall have the same
rights and powers in their capacities as Lenders, Swingline Lenders or Issuing
Banks, as the case may be, as any other Lenders, Swingline Lenders or Issuing
Banks and may exercise the same as though they were not Agents, and each such
institution and its affiliates may accept deposits from, lend money to and
generally engage in any kind of business with Holdings or any Subsidiary or
other Affiliate thereof as if it were not an Agent hereunder.

         (c) The Agents shall not have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the generality of
the foregoing, (i) the Agents shall not be subject to any fiduciary or other
implied duties, regardless of whether a Default has occurred and is continuing,
(ii) the Agents shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated by the Loan Documents that an Agent is required to
exercise in writing by the Required Lenders (or such other number or percentage
of the Lenders as shall be necessary under the circumstances as provided in
Section 10.02), and (iii) except as expressly set forth in the Loan Documents,
the Agents shall not have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to Holdings or any Subsidiary that
is communicated to or obtained by any institution serving as an Agent or any of
its affiliates in any capacity.

         (d) No Agent shall be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 10.02) or in the absence of its own gross negligence or
wilful misconduct.


                                      103
<PAGE>

         (e) No Agent shall be deemed to have knowledge of any Default unless
and until written notice thereof is given to such Agent by Holdings, the
Borrower or a Lender, and no Agent shall be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with any Loan Document, (ii) the contents of any certificate,
report or other document delivered thereunder or in connection therewith, (iii)
the performance or observance of any of the covenants, agreements or other terms
or conditions set forth in any Loan Document, (iv) the validity, enforceability,
effectiveness or genuineness of any Loan Document or any other agreement,
instrument or document, or (v) the satisfaction of any condition set forth in
Article 4 or elsewhere in any Loan Document, other than, in the case of the
Administrative Agent, to confirm receipt of items expressly required to be
delivered to the Administrative Agent.

         SECTION 8.2. Reliance by Agents. Each Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person. Each
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to be made by the proper Person, and shall not incur any
liability for relying thereon. Each Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.

         SECTION 8.3. Delegation to Sub-Agents. Each Agent may perform any and
all of its duties and exercise any of its rights and powers by or through any
one or more sub-agents appointed by such Agent. The Agents and any such
sub-agents may perform any and all of their duties and exercise rights and
powers through their respective Related Parties. The exculpatory provisions of
the preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of each Agent and any such sub-agent, and shall apply to their
respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Agent.

         SECTION 8.4. Resignation of Agents. Subject to the appointment and
acceptance of a successor Agent as provided in this paragraph, any Agent may
resign at any time by notifying the Lenders, the Issuing Banks and the Borrower.
Upon any such resignation, the Required Lenders shall have the right, in
consultation with the Borrower, to appoint a successor. If no successor shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Agent gives notice of its
resignation, then the retiring Agent may, on behalf of the Lenders and the
Issuing Banks, appoint a successor Agent which shall be a bank organized under
the laws of the United States or any State thereof, having (x) an office in any
State of the United States and (y) capital, surplus and undivided profits
aggregating at least $200,000,000, or an affiliate of any such bank. Upon the
acceptance of its appointment as Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights,


                                      104
<PAGE>

powers, privileges and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations hereunder. The fees payable
by the Borrower to a successor Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such successor.
After the Agent's resignation hereunder, the provisions of this Article and
Section 10.03 shall continue in effect for the benefit of such retiring Agent,
its sub-agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while it was acting as Agent.

         SECTION 8.5. Non-reliance on Agents or other Lenders. Each Lender
acknowledges that it has, independently and without reliance upon any Agent or
any other Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon any Agent, any Issuing Bank or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any other Loan Document or related agreement or any
document furnished hereunder or thereunder.

         SECTION 8.6. Syndication Agent, Incremental Facility Arrangers and
Co-Documentation Agents. Notwithstanding anything in this Agreement or any Loan
Document to the contrary, the Syndication Agent, the Incremental Facility
Arrangers and the Co-Documentation Agents shall have no obligation or
responsibility as such hereunder other than, in the case of the Syndication
Agent or the Incremental Facility Arrangers, as expressly set forth herein.



                                    ARTICLE 9

                               HOLDINGS GUARANTEE

         SECTION 9.1. The Guarantee. Holdings unconditionally and irrevocably
guarantees the full and punctual payment of all present and future indebtedness
and other obligations of the Borrower evidenced by or arising under any Loan
Document and all present and future indebtedness and other obligations of the
Borrower or any other Restricted Subsidiary under any Hedging Agreement
permitted under Section 6.01 (a "Specified Hedging Agreement") as and when the
same shall become due and payable, whether at maturity or by declaration or
otherwise, according to the terms hereof and thereof (including, without
limitation, any Post-Petition Interest). If the Borrower or any other Restricted
Subsidiary fails punctually to pay any indebtedness or other obligation
guaranteed hereby which is due and payable, Holdings unconditionally agrees to
cause such payment to be made punctually as and when the same shall become due
and payable, whether at maturity or by declaration or otherwise, and as if such
payment were made by the Borrower or such other Restricted Subsidiary.


                                      105
<PAGE>

         SECTION 9.2. Guarantee Unconditional. The obligations of Holdings under
this Article 9 shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:

                  (a) any extension, renewal, settlement, compromise, waiver or
         release in respect of any obligation of the Borrower or any other Loan
         Party under any Loan Document or Specified Hedging Agreement, by
         operation of law or otherwise;

                  (b) any modification, amendment or waiver of or supplement to
         any Loan Document or Specified Hedging Agreement;

                  (c) any release, impairment, non-perfection or invalidity of
         any direct or indirect security, or of any guarantee or other liability
         of any third party, for any obligation of the Borrower or any Loan
         Party under any Loan Document or Specified Hedging Agreement;

                  (d) any change in the corporate existence, structure or
         ownership of the Borrower or any other Loan Party or any insolvency,
         bankruptcy, reorganization or other similar proceeding affecting the
         Borrower or any other Loan Party or its assets, or any resulting
         release or discharge of any obligation of the Borrower or any other
         Loan Party contained in any Loan Document or Specified Hedging
         Agreement;

                  (e) the existence of any claim, set-off or other rights which
         Holdings may have at any time against the Borrower or any other Loan
         Party, any Agent, any Issuing Bank, any Lender or any other Person,
         whether or not arising in connection herewith or any unrelated
         transaction; provided that nothing herein shall prevent the assertion
         of any such claim by separate suit or compulsory counterclaim;

                  (f) any invalidity or unenforceability relating to or against
         the Borrower or any other Loan Party for any reason of any Loan
         Document or Specified Hedging Agreement, or any provision of applicable
         law or regulation purporting to prohibit the payment by any other Loan
         Party of any amount payable by it under any Loan Document or Specified
         Hedging Agreement; or

                  (g) any other act or omission to act or delay of any kind by
         any other Loan Party, any Lender or any other Person or any other
         circumstance that might, but for the provisions of this Section,
         constitute a legal or equitable discharge of Holdings' obligations
         under this Article 9.

         SECTION 9.3. Discharge Only Upon Payment in Full; Reinstatement in
Certain Circumstances. Holdings' obligations under this Article 9 constitute a
continuing guaranty and shall remain in full force and effect until the
Commitments shall have been terminated, all Letters of Credit shall have expired
or been terminated, all Specified


                                      106
<PAGE>

Hedging Agreements shall have been terminated and all amounts payable under the
Loan Documents and the Specified Hedging Agreements shall have been indefeasibly
paid in full. If at any time any amount payable by the Borrower under any Loan
Document or by the Borrower or any other Restricted Subsidiary under any
Specified Hedging Agreement is rescinded or must be otherwise restored or
returned upon the insolvency, bankruptcy or reorganization of any Loan Party or
otherwise, Holdings' obligations under this Article 9 with respect to such
payment shall be reinstated at such time as though such payment had become due
but had not been made at such time.

         SECTION 9.4. Waiver. Holdings irrevocably waives acceptance hereof,
presentment, demand, protest and any notice not provided for herein, as well as
any requirement that at any time any action be taken by any Person against the
Borrower or any other Restricted Subsidiary or any other Person.

         SECTION 9.5. Subrogation. When Holdings makes any payment under this
Article 9 with respect to the obligations of the Borrower or any other
Restricted Subsidiary, Holdings shall be subrogated to the rights of the payee
against the Borrower or such other Restricted Subsidiary with respect to the
portion of such obligations paid by Holdings; provided that Holdings shall not
enforce any payment by way of subrogation or contribution against the Borrower
or any Subsidiary so long as any amount payable under any Loan Document or
Specified Hedging Agreement remains unpaid.

         SECTION 9.6. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by any Loan Party under any Loan Document or
Specified Hedging Agreement is stayed upon the insolvency, bankruptcy or
reorganization of such Loan Party, all such amounts otherwise subject to
acceleration under the terms of such Loan Document or Specified Hedging
Agreement shall nonetheless be payable by Holdings under this Article 9
forthwith on demand by the Administrative Agent made, in the case of any Loans,
at the request of the requisite number of Lenders specified in Section 7.01
hereof or, in the case of obligations under a Specified Hedging Agreement, at
the request of the relevant Lender or Lenders or affiliate or affiliates of such
Lender or Lenders.

         SECTION 9.7. Successors and Assigns. This guarantee is for the benefit
of the Lenders, the Hedge Counterparties and their respective successors and
assigns. If any Loans, participations in Letters of Credit or Swingline Loans or
other amounts payable under the Loan Documents are assigned pursuant to Section
10.04 of the Credit Agreement, or any rights under any Specified Hedging
Agreement are assigned pursuant thereto, the rights under this Article 9, to the
extent applicable to the indebtedness so assigned, shall be transferred with
such indebtedness.


                                      107
<PAGE>

                                   ARTICLE 10

                                  MISCELLANEOUS


         SECTION 10.1. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

         (a) if to Holdings or the Borrower, to it at Williams Communications
Group, Inc., One Williams Center, Suite 2600, Tulsa, Oklahoma 74172, Attention
of (other than administrative notices) Scott E. Schubert (Telecopy No.
918-573-6024) or (for administrative notices) Attention of Kerri Lyle (Telecopy
No. 918-573-6558);

         (b) if to the Administrative Agent, to it at Bank of America, N.A., 901
Main Street, Dallas, Texas 75202, Attention of (other than Borrowing Requests)
Pamela Kurtzman, 64th Floor (Telecopy No. (214) 209-9390) or (for Borrowing
Requests) Judy Schneidmiller, 14th Floor (Telecopy No. 214-209-2118);

         (c) if to Bank of America, as Issuing Bank, to it at 901 Main Street,
64th Floor, Main Street, Dallas, Texas 75202, Attention of Pamela Kurtzman
(Telecopy No. 214-209-9390);

         (d) if to Chase, as Issuing Bank, to it at 270 Park Avenue, 37th Floor,
New York, New York 10017, Attention of Joe Brusco (Telecopy No. 212-270-4164);

         (e) if to Bank of America, as Swingline Lender, to it at 901 Main
Street, 64th Floor, Main Street, Dallas, Texas 75202, Attention of Pamela
Kurtzman (Telecopy No. 214-209-9390);

         (f) if to Chase, as Swingline Lender, to it at One Chase Manhattan
Plaza, 8th Floor, New York, New York 10081, Attention of Winslowe Ogbourne
(Telecopy No. 212-552-5700); and

         (g) if to any other Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.

         Any party hereto may change its address or telecopy number for notices
and other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.

         SECTION 10.2. Waivers; Amendments. (a) No failure or delay by the
Administrative Agent, any Issuing Bank, any Swingline Lender or any Lender in
exercising any right or power hereunder or under any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Administrative Agent, the Issuing Banks, the Swingline


                                      108
<PAGE>

Lenders and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of any Loan Document or consent to
any departure by any Loan Party therefrom shall in any event be effective unless
the same shall be permitted by Section 10.02(b), and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent, any Lender, any Issuing
Bank or any Swingline Lender may have had notice or knowledge of such Default at
the time.

         (b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by Holdings, the Borrower and the Required Lenders or, in the case
of any other Loan Document, pursuant to an agreement or agreements in writing
entered into by the Administrative Agent and the Loan Party or Loan Parties that
are parties thereto, in each case with the consent of the Required Lenders;
provided that no such agreement shall (i) increase the Commitment of any Lender
without the written consent of such Lender, (ii) reduce the principal amount of
any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce
any fees payable hereunder, without the written consent of each Lender affected
thereby, (iii) postpone the scheduled date of payment of the principal amount of
any Loan or LC Disbursement, or any interest thereon, or any fees payable
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the written
consent of each Lender affected thereby, (iv) change Section 2.18(b) or 2.18(c)
in a manner that would alter the pro rata sharing of payments required thereby,
without the written consent of each Lender, (v) change any of the provisions of
this Section or the definition of "Required Lenders" or any other provision of
any Loan Document specifying the number or percentage of Lenders (or Lenders of
any Class) required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, without the written consent of
each Lender (or each Lender of such Class, as the case may be), (vi) release
Holdings or substantially all of the Subsidiary Loan Parties from their
respective Guarantees hereunder under the Subsidiary Guarantee (except as
expressly provided herein or therein), or limit its liability in respect of such
Guarantee, without the written consent of each Lender, (vii) change any
condition set forth in Section 4.03 without the written consent of each
Incremental Lender, or (viii) change any provisions of any Loan Document in a
manner that by its terms adversely affects the rights in respect of payments due
to, or requirements to make loans by, Lenders holding Loans of any Class
differently than those holding Loans of any other Class, without the written
consent of Lenders holding a majority in interest of the outstanding Loans and
unused Commitments of each affected Class; provided further that (A) no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent, any Issuing Bank or any Swingline Lender without the prior
written consent of the Administrative Agent, the affected Issuing Bank or the
affected Swingline Lender, as the case may be, and (B) any


                                      109
<PAGE>

waiver, amendment or modification of this Agreement that by its terms affects
the rights or duties under this Agreement of the Lenders with Commitments or
Loans of any Class or Classes (but not Lenders with Commitments or Loans of any
other Class or Classes) may be effected by an agreement or agreements in writing
entered into by Holdings, the Borrower and the requisite percentage in interest
of the Lenders with Commitments or Loans of the affected Class or Classes.

         SECTION 10.3. Expenses; Indemnity; Damage Waiver. (a) The Borrower
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent, the Syndication Agent and the Incremental Facility
Arrangers and their respective affiliates, including the reasonable fees,
charges and disbursements of counsel for the Administrative Agent, the
Syndication Agent and the Incremental Facility Arrangers in connection with the
syndication of the credit facilities provided for herein, the preparation and
administration of the Loan Documents or any amendments, modifications or waivers
of the provisions thereof (whether or not the transactions contemplated hereby
or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses
incurred by any Issuing Bank in connection with the issuance, amendment, renewal
or extension of any Letter of Credit or any demand for payment thereunder and
(iii) all out-of-pocket expenses incurred by the Administrative Agent, the
Syndication Agent, the Incremental Facility Arrangers, any Issuing Bank, any
Swingline Lender or any Lender, including the fees, charges and disbursements of
any counsel for the Administrative Agent, the Incremental Facility Arrangers and
the Syndication Agent, any Issuing Bank, any Swingline Lender or any Lender, in
connection with the enforcement or protection of its rights in connection with
the Loan Documents, including its rights under this Section, or in connection
with the Loans made or Letters of Credit issued hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.

         (b) The Borrower shall indemnify the Administrative Agent, the
Syndication Agent, the Incremental Facility Arrangers, the Issuing Banks, the
Swingline Lenders and each Lender, and each Related Party of any of the
foregoing Persons (each such Person being called an "Indemnitee") against, and
hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including the fees, charges and disbursements
of any counsel for any Indemnitee, incurred by or asserted against any
Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of any Loan Document or any other agreement or instrument
contemplated hereby, the performance by the parties to the Loan Documents of
their respective obligations thereunder or the consummation of the Transactions
or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit
or the use of the proceeds therefrom (including any refusal by any Issuing Bank
to honor a demand for payment under a Letter of Credit if the documents
presented in connection with such demand do not strictly comply with the terms
of such Letter of Credit), (iii) any actual or alleged presence or release of
Hazardous Materials on or from any property owned or operated by Holdings or any
Subsidiary, or any Environmental Liability related in any way to Holdings or any
Subsidiary, or (iv) any actual or prospective claim, litigation,


                                      110
<PAGE>

investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of such Indemnitee.

         (c) To the extent that the Borrower fails to pay any amount required to
be paid by it to the Administrative Agent, the Incremental Facility Arrangers,
any Issuing Bank or any Swingline Lender under Sections 10.03(a) or 10.03(b),
each Lender severally agrees to pay to the Administrative Agent, the Syndication
Agent, the Incremental Facility Arrangers, any Issuing Bank or any Swingline
Lender, as the case may be, such Lender's pro rata share (determined as of the
time that the applicable unreimbursed expense or indemnity payment is sought) of
such unpaid amount; provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Administrative Agent, the Syndication Agent, the
Incremental Facility Arrangers, any Issuing Bank or any Swingline Lender in its
capacity as such. For purposes hereof, a Lender's "pro rata share" shall be
determined based upon its share of the sum of the total Revolving Exposures,
outstanding Loans (other than Revolving Loans) and unused Commitments (other
than Revolving Commitments) at the time.

         (d) To the extent permitted by applicable law, Holdings and the
Borrower will not and will not permit any other Restricted Subsidiary to assert,
and each hereby waives for itself and on behalf of its subsidiaries, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the Transactions, any Loan or
Letter of Credit or the use of the proceeds thereof.

         (e) All amounts due under this Section shall be payable promptly after
written demand therefor.

         SECTION 10.4. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including any
affiliate of any Issuing Bank that issues any Letter of Credit), except that the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender, each Issuing Bank
and each Swingline Lender (and any attempted assignment or transfer by the
Borrower without such consent shall be null and void). Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby (including any affiliate of any Issuing Bank that issues any
Letter of Credit) and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative


                                      111
<PAGE>

Agent, the Issuing Banks, the Swingline Lenders and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.

         (b) (1) Any Lender may assign to one or more assignees all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its Commitments and the Loans at the time owing to it); provided that (i)
each of the Borrower (except in the case of an assignment to a Lender or an
affiliate of a Lender) and Administrative Agent (except in the case of an
assignment to an affiliate of a Lender) (and, in the case of an assignment of
all or a portion of a Revolving Commitment or any Lender's obligations in
respect of its LC Exposure or Swingline Exposure, the Issuing Banks and the
Swingline Lenders) must give its prior written consent to such assignment (which
consent shall not be unreasonably withheld), (ii) except in the case of an
assignment to a Lender or an affiliate of a Lender or an assignment of the
entire remaining amount of the assigning Lender's Commitments or Loans, after
giving effect to such assignment, the amount of the Commitments or Loans of each
Class held by each of the assignor Lender and its affiliates and the assignee
Lender and its affiliates (determined in each case as of the date the Assignment
and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $1,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, (iii) each partial
assignment shall be made as an assignment of a proportionate part of all the
assigning Lender's rights and obligations under this Agreement, except that this
Section 10.04(b)(iii) shall not be construed to prohibit the assignment of a
proportionate part of all the assigning Lender's rights and obligations in
respect of one Class of Commitments or Loans, (iv) the parties to each
assignment (excluding any assignment by a Lender to an affiliate of such Lender)
shall execute and deliver to the Administrative Agent an Assignment and
Acceptance, together with a processing and recordation fee of $3,500, (v) the
parties to each assignment by a Lender to an affiliate of such Lender shall
execute and deliver to the Administrative Agent an Assignment and Acceptance,
together with a processing and recordation fee of $1,500, (vi) the assignee, if
it shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire and (vii) the Incremental Facility Arrangers shall
be notified by the Administrative Agent of any assignment of the Incremental
Facility; and provided further that any consent of the Borrower otherwise
required under this paragraph shall not be required if an Event of Default has
occurred and is continuing. Subject to acceptance and recording thereof pursuant
to Section 10.04(d), from and after the effective date specified in each
Assignment and Acceptance the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Acceptance, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all of the assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Sections
2.15, 2.16, 2.17 and 10.03). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this paragraph shall
be treated for purposes of this Agreement as a sale by such Lender of a


                                      112
<PAGE>

participation in such rights and obligations in accordance with Section
10.04(e). Each Lender that is an investment fund hereby agrees to notify the
Administrative Agent and the Incremental Facility Arrangers of any change of the
identity of the investment manager for such fund.

         (2) Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Lender") may grant to a special purpose funding vehicle (an
"SPC") identified as such in writing from time to time by the Granting Lender to
the Administrative Agent and the Borrower, the option to provide to the Borrower
all or any part of any Loan that such Granting Lender would otherwise be
obligated to make to the Borrower pursuant to this Agreement; provided that (i)
nothing herein shall constitute a commitment by any SPC to make any Loan, (ii)
if an SPC elects not to exercise such option or otherwise fails to provide all
or any part of such Loan, the Granting Lender shall be obligated to make such
Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder
shall utilize the Commitment of the Granting Lender to the same extent, and as
if, such Loan were made by such Granting Lender. Each party hereto hereby agrees
that no SPC shall be liable for any indemnity or similar payment obligation
under this Agreement (all liability for which shall remain with the Granting
Lender). In furtherance of the foregoing, each party hereto hereby agrees (which
agreement shall survive the termination of this Agreement) that, prior to the
date that is one year and one day after the payment in full of all outstanding
commercial paper or other senior indebtedness of any SPC, it will not institute
against, or join any other person in instituting against, such SPC any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under the laws of the United States or any State thereof. In addition,
notwithstanding anything to the contrary contained in this Section 10.04, any
SPC may (i) with notice to, but without the prior written consent of, the
Borrower and the Administrative Agent and without paying any processing fee
therefor, assign all or a portion of its interests in any Loans to the Granting
Lender or to any financial institutions (consented to by the Borrower and
Administrative Agent) providing liquidity and/or credit support to or for the
account of such SPC to support the funding or maintenance of Loans and (ii)
disclose on a confidential basis any non-public information relating to its
Loans to any rating agency, commercial paper dealer or provider of any surety,
guarantee or credit or liquidity enhancement to such SPC. This section may not
be amended without the written consent of each SPC that, at the time of such
proposed amendment, has an outstanding Loan or Loans to the Borrower. For
purposes of Section 10.02 of this Agreement and any other provision of any Loan
Document requiring the consent or approval of any Lender, the Granting Lender
shall, notwithstanding the funding of any Loans by any SPC, have the sole right
to consent to or approve any waiver or amendment of any provision of this
Agreement or any other Loan Document or to exercise any other right to consent
or to grant approval under any Loan Document.

         (c) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in any State of the United
States, a copy of each Assignment and Acceptance delivered to it and a register
for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amount of


                                      113
<PAGE>

the Loans and LC Disbursements owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall be
conclusive, and Holdings, the Borrower, the Administrative Agent, the Issuing
Banks, the Swingline Lenders and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Borrower, any Issuing Bank,
any Swingline Lender and any Lender, at any reasonable time and from time to
time upon reasonable prior notice.

         (d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in Section 10.04(b)
and any written consent to such assignment required by Section 10.04(b), the
Administrative Agent shall accept such Assignment and Acceptance and record the
information contained therein in the Register. No assignment shall be effective
for purposes of this Agreement unless it has been recorded in the Register as
provided in this paragraph.

         (e) Any Lender may, without the consent of the Borrower, the
Administrative Agent, any Issuing Bank or any Swingline Lender, sell
participations to one or more banks or other entities (a "Participant") in all
or a portion of such Lender's rights and obligations under this Agreement
(including all or a portion of its Commitments and the Loans owing to it);
provided that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) Holdings, the Borrower,
the Administrative Agent, the Issuing Banks, the Swingline Lenders and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce the Loan
Documents and to approve any amendment, modification or waiver of any provision
of the Loan Documents; provided that such agreement or instrument may provide
that such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section
10.02(b) that affects such Participant. Subject to Section 10.04(f), the
Borrower agrees that each Participant shall be entitled to the benefits of
Sections 2.15, 2.16 and 2.17 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to Section 10.04(b). To the extent
permitted by law, each Participant also shall be entitled to the benefits of
Section 10.08 as though it were a Lender, provided such Participant agrees to be
subject to Section 2.18(c) as though it were a Lender.

         (f) A Participant shall not be entitled to receive any greater payment
under Section 2.15 or 2.17 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Borrower's
prior written consent. A Participant that


                                      114
<PAGE>

would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 2.17 unless the Borrower is notified of the participation
sold to such Participant and such Participant agrees, for the benefit of the
Borrower, to comply with Section 2.17(e) as though it were a Lender.

         (g) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.

         SECTION 10.5. Survival. All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, any Issuing
Bank, any Swingline Lender or any Lender may have had notice or knowledge of any
Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount
payable under this Agreement is outstanding and unpaid or any Letter of Credit
is outstanding and so long as the Commitments have not expired or terminated.
The provisions of Sections 2.15, 2.16, 2.17 and 10.03 and Article 8 shall
survive and remain in full force and effect regardless of the consummation of
the transactions contemplated hereby, the repayment of the Loans, the expiration
or termination of the Letters of Credit and the Commitments or the termination
of this Agreement or any provision hereof.

         SECTION 10.6. Counterparts; Integration; Effectiveness. This Agreement
may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and any separate letter agreements with respect to fees payable
to the Administrative Agent or any Issuing Bank constitute the entire contract
among the parties relating to the subject matter hereof and supersede any and
all previous agreements and understandings, oral or written, relating to the
subject matter hereof. Except as provided in Section 4.01, this Agreement shall
become effective when it shall have been executed by the Administrative Agent
and when the Administrative Agent shall have received counterparts hereof which,
when taken together, bear the signatures of each of the other parties hereto,
and thereafter shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. Delivery of an executed
counterpart of a signature page of this Agreement


                                      115
<PAGE>

by telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.

         SECTION 10.7. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

         SECTION 10.8. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender, Issuing Bank and Swingline Lender and
each of their respective affiliates is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other obligations at any time owing by such Lender, Issuing
Bank, Swingline Lender or affiliate to or for the credit or the account of the
Borrower or Holdings against any and all of the obligations of the Borrower or
Holdings, as the case may be, now or hereafter existing under this Agreement
held by such Lender, Issuing Bank or Swingline Lender, irrespective of whether
or not such Lender, Issuing Bank or Swingline Lender shall have made any demand
under this Agreement and although such obligations may be unmatured. The rights
of each Lender, Issuing Bank and Swingline Lender under this Section are in
addition to other rights and remedies (including other rights of setoff) which
such Lender, Issuing Bank or Swingline Lender may have.

         SECTION 10.9. Governing Law; Jurisdiction; Consent to Service of
Process. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.

         (b) Each of Holdings and the Borrower hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to any Loan Document, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement or any other Loan Document shall
affect any right that the Administrative Agent, any Issuing Bank, any Swingline
Lender or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or any other Loan Document against Holdings, the
Borrower or their respective properties in the courts of any jurisdiction.


                                      116
<PAGE>

         (c) Each of Holdings and the Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
any other Loan Document in any court referred to in Section 10.09(b). Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.

         (d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 10.01. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.

         SECTION 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.

         SECTION 10.11. Headings. Article and Section headings used herein and
the Table of Contents are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

         SECTION 10.12. Confidentiality. Each of the Administrative Agent, the
Issuing Banks, the Swingline Lenders and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its affiliates' (other than affiliates that are
direct competitors of any material business of Holdings and the Restricted
Subsidiaries) directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit,


                                      117
<PAGE>

action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to any
assignee of or Participant in, or any prospective assignee of or Participant in,
any of its rights or obligations under this Agreement (other than a direct
competitor of any material business of Holdings and the Restricted
Subsidiaries), (g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) becomes available to the Administrative Agent, any Issuing
Bank, any Swingline Lender or any Lender on a nonconfidential basis from a
source other than Holdings or the Borrower. For the purposes of this Section,
"Information" means all information received from Holdings or the Borrower
relating to Holdings or the Borrower or its business, other than any such
information that is available to the Administrative Agent, any Issuing Bank, any
Swingline Lender or any Lender on a nonconfidential basis prior to disclosure by
Holdings or the Borrower; provided that, in the case of information received
from Holdings or the Borrower after the date hereof, such information is clearly
identified at the time of delivery as confidential. Any Person required to
maintain the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

         SECTION 10.13. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.


                                      118
<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.


                                     WILLIAMS COMMUNICATIONS, LLC


                                     By /s/ Scott E. Schubert
                                        ----------------------------------------
                                        Title: Senior Vice President and Chief
                                                   Financial Officer


                                     WILLIAMS COMMUNICATIONS GROUP, INC.


                                     By /s/ Scott E. Schubert
                                        ----------------------------------------
                                        Title: Senior Vice President and Chief
                                                    Financial Officer


                                     BANK OF AMERICA, N.A.


                                     By /s/ Pamela S. Kurtzman
                                        ----------------------------------------
                                        Title: Principal


                                     THE CHASE MANHATTAN BANK


                                     By /s/ Constance M. Coleman
                                        ----------------------------------------
                                        Title: Vice President


                                     BANK OF MONTREAL


                                     By /s/ W.T. Calder
                                        ----------------------------------------
                                        Title: Managing Director


                                      119
<PAGE>

                                     THE BANK OF NEW YORK


                                     By /s/ Brendan T. Nedzi
                                        ----------------------------------------
                                        Title: Senior Vice President


                                     SCOTIABANC INC.


                                     By /s/ M. D. Smith
                                        ----------------------------------------
                                        Title: Treasurer


                                     ABN AMRO BANK, N.V.


                                     By /s/
                                        ----------------------------------------
                                        Title:


                                     By /s/
                                        ----------------------------------------
                                        Title:


                                     FLEET NATIONAL BANK


                                     By /s/ Suzanne M. MacKay
                                        ----------------------------------------
                                        Title: Vice President


                                     CIBC INC.


                                     By /s/ Amy V. Kothari
                                        ----------------------------------------
                                        Title: Executive Director


                                      120
<PAGE>

                                    CREDIT SUISSE FIRST BOSTON


                                    By /s/ David L. Sawyer
                                       -----------------------------------------
                                       Title: Vice President


                                    By /s/ Lalita Advani
                                       -----------------------------------------
                                       Title: Assistant Vice President


                                    DEUTSCHE BANK AG
                                    NEW YORK BRANCH AND/OR CAYMAN ISLANDS BRANCH


                                    By /s/ Steve M. Godeke
                                       -----------------------------------------
                                       Title: Director


                                    By /s/ Alexander Richarz
                                       -----------------------------------------
                                       Title: Vice President


                                    CREDIT LYONNAIS NEW YORK BRANCH


                                    By /s/ Jeremy Horn
                                       -----------------------------------------
                                       Title: Authorized Signature


                                      121
<PAGE>

                                    BANK AUSTRIA CREDIT ANSTALT
                                    CORPORATE FINANCE, INC.


                                    By /s/ John T. Murphy
                                       -----------------------------------------
                                       Title: Senior Vice President

                                    By /s/ William W. Hunter
                                       -----------------------------------------
                                       Title: Vice President


                                    FIRST UNION NATIONAL BANK


                                    By /s/ Brand Hosford
                                       -----------------------------------------
                                       Title: Vice President


                                    IBM CREDIT CORPORATION


                                    By /s/ Thomas S. Curcio
                                       -----------------------------------------
                                       Title: Manager of Credit


                                    THE INDUSTRIAL BANK OF JAPAN, LIMITED,
                                    NEW YORK BRANCH


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


                                      122
<PAGE>

                                    BANK OF OKLAHAMA N.A.


                                    By /s/ Robert D. Mattax
                                       -----------------------------------------
                                       Title: Senior Vice President


                                    BANK ONE, N.A.


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


                                    KBC BANK, N.V.


                                    By /s/ Robert Snauffer
                                       -----------------------------------------
                                       Title: First Vice President


                                    By /s/ Eric Raskin
                                       -----------------------------------------
                                       Title: Assistant Vice President


                                    THE FUJI BANK, LIMITED


                                    By /s/ Nobuoki Koike
                                       -----------------------------------------
                                       Title: Vice President & Senior Team
                                              Leader


                                      123
<PAGE>

                                    INCREMENTAL TRANCHE A LENDERS:


                                    BANK OF AMERICA, N.A.


                                    By /s/ Pamela S. Kurtzman
                                       -----------------------------------------
                                       Title: Principal


                                    THE CHASE MANHATTAN BANK


                                    By /s/ Constance M. Coleman
                                       -----------------------------------------
                                       Title: Vice President


                                    LEHMAN COMMERCIAL PAPER INC.


                                    By /s/ G. Andrew Keith
                                       -----------------------------------------
                                       Title: Authorized Signatory


                                    CITICORP USA, INC.


                                    By /s/ Caesar W. Wyszomirski
                                       -----------------------------------------
                                       Title: Vice President


                                    MERRILL LYNCH & CO., INC.


                                    By /s/ Merrill Lynch & Co., Inc.
                                       -----------------------------------------
                                       Name:  Parker A. Weil
                                       Title: Managing Director


                                      124
<PAGE>

Acknowledged and agreed:

CRITICAL CONNECTIONS, INC.
SBCI - PACIFIC NETWORKS, INC.
WCS COMMUNICATIONS SYSTEMS, INC.
WCS, INC.
WILLIAMS COMMUNICATIONS OF
     VIRGINIA, INC.
WILLIAMS COMMUNICATIONS
     PROCUREMENT, L.L.C.
WILLIAMS COMMUNICATIONS
     PROCUREMENT, L.P.
WILLIAMS GLOBAL COMMUNICATIONS
     HOLDINGS, INC.
WILLIAMS INTERNATIONAL
     VENTURES COMPANY
WILLIAMS LEARNING NETWORK, INC.
WILLIAMS LOCAL NETWORK, INC.
WILLIAMS WIRELESS, INC.
WILLIAMS TECHNOLOGY CENTER, LLC
WILLIAMS COMMUNICATIONS AIRCRAFT, LLC


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


                                      125
<PAGE>

                                  SCHEDULE 2.01
                                   COMMITMENTS

<Table>
<Caption>
REVOLVING AND TERM                             REVOLVING          TERM
LENDERS                                        COMMITMENT      COMMITMENT
<S>                                           <C>            <C>
Bank of America, N.A.                          32,500,000       32,500,000
The Chase Manhattan Bank                       50,000,000       50,000,000
Bank of Montreal                               42,625,000       42,625,000
The Bank of New York                           42,625,000       42,625,000
ABN AMRO Bank N.V.                             34,250,000       34,250,000
CIBC Inc.                                      34,250,000       34,250,000
Credit Lyonnais
   New York Branch                             34,250,000       34,250,000
Credit Suisse First Boston                     34,250,000       34,250,000
Deutsche Bank AG
   New York Branch and/or
   Cayman Islands Branch                       34,250,000       34,250,000
Fleet National Bank                            34,250,000       34,250,000
Scotiabanc Inc.                                34,250,000       34,250,000
Bank Austria Creditanstalt
   Corporate Finance, Inc.                     17,500,000       17,500,000
First Union National Bank                      17,500,000       17,500,000
The Fuji Bank, Limited                         17,500,000       17,500,000
IBM Credit Corporation                         17,500,000       17,500,000
The Industrial Bank of Japan, Limited
   New York Branch                             17,500,000       17,500,000
Bank of Oklahoma N.A.                          10,000,000       10,000,000
Bank One, N.A.                                 10,000,000       10,000,000
KBC Bank N.V.                                  10,000,000       10,000,000
                           Total              525,000,000      525,000,000

         GRAND TOTAL                                         1,050,000,000


INCREMENTAL LENDERS

Citicorp USA, Inc.                                             150,000,000
Lehman Commercial Paper, Inc.                                  150,000,000
Merrill Lynch & Co., Inc.                                       75,000,000
The Chase Manhattan Bank                                        40,000,000
Bank of America, N.A.                                           35,000,000

         GRAND TOTAL                                           450,000,000
</Table>


                                      126

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(V)
<SEQUENCE>13
<FILENAME>d93687ex10-v.txt
<DESCRIPTION>AIRCRAFT DRY LEASE N358WC, DATED 9/13/01
<TEXT>
<PAGE>
                                                                   EXHIBIT 10(v)


                               AIRCRAFT DRY LEASE
                                     N358WC

                  This Aircraft Dry Lease ("Lease") dated as of September 13,
2001 ("Effective Date"), is by and between Williams Communications Aircraft,
LLC, a Delaware limited liability company and a wholly owned subsidiary of
Williams Aircraft, Inc. ("Lessor") and Williams Communications, LLC, a Delaware
limited liability company (the "Lessee").

                  Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor the aircraft described on Schedule "B" attached hereto, together with all
engines, equipment, attachments, substitutions, replacements and additions
(collectively, the "Aircraft").

         1. Certain Definitions: For purposes of this Lease the terms
"Additional Charge", "Affiliate", "Change in Control", "Debt", "Encumbrance",
"Environmental Laws", "ERISA", "ERISA Event", "GAAP:", "Governmental Authority",
"Hazardous Materials", "Material Adverse Affect", "Material Debt", "Notice",
"Officer's Certificate", "Overdue Rate", "Permitted Encumbrances", "Person",
"Plan", "Prime Rate", "Proceeding", "Transfer", and "WCG" shall have the
meanings described for such capitalized terms as contained in the Master Lease
dated September 13, 2001, among Williams Headquarters Building Company, Williams
Technology Center, LLC, and Williams Communications, LLC. Capitalized terms not
otherwise specifically defined in this Lease shall have the meanings described
for such capitalized terms as contained in the Credit Agreement dated as of
September 8, 1999 (the "Credit Agreement") among Lessee, Bank of America, N.A.,
The Chase Manhattan Bank and other parties (and capitalized terms contained
within such definitions as set forth in the Credit Agreement shall similarly
have the meanings described for such capitalized terms therein) with respect to
the financial covenants therein. A copy of the Credit Agreement is attached
hereto as Exhibit I. Lessee shall provide copies of any amendments or
restatements or waivers to the Credit Agreement to Lessor within five (5) days
of execution thereof. Such amendments or restatements or waivers shall
automatically become a part hereof with respect to the financial covenants.

         2. Term and Rent: This Lease is for a term of ten (10) years, beginning
September 13, 2001, and ending September 1, 2011. For said term or any portion
thereof, Lessee shall pay to Lessor rentals ("Rent") payable in accordance with
Schedule "A", of which the first is due October 1, 2001, and the others on a
like date of each month thereafter. All Rent shall be paid at Lessor's place of
business shown below, or such other place as the Lessor may designate by written
notice to the Lessee. All Rent shall be paid without notice or demand and
without abatement, deduction or set-off of any amount whatsoever. The operation
and use of the Aircraft shall be at the risk of Lessee, and not of Lessor and
the obligation of Lessee to pay Rent hereunder shall be unconditional.

                  2.1 Late Charge; Interest: If any Rent payable to Lessor is
         not paid when due, Lessee shall pay Lessor on demand, as an Additional
         Charge, (a) a late charge equal to (i) two percent (2%) of the amount
         not paid within five (5) days of the date when due plus (b)


<PAGE>


         if such Rent (including the late charge) is not paid within ten (10)
         days of the date due, interest thereon at the Overdue Rate from such
         tenth (10th) day until such Rent (including the late charge and
         interest) is paid in full.

         3. Destruction of Aircraft: If the Aircraft is lost, stolen, totally
destroyed, damaged beyond repair or permanently rendered unfit for use for any
reason whatsoever, the liability of the Lessee to pay Rent therefor may be
discharged by paying to Lessor all the Rent due thereon, plus all the Rent to
become due thereon less the net amount of the recovery, if any, actually
received by Lessor from insurance or otherwise for such loss or damage. Lessor
shall not be obligated to undertake, by litigation or otherwise, the collection
of any claim against any person for loss or damage of the Aircraft. Except as
expressly provided in this paragraph, the total or partial destruction of the
Aircraft, or total or partial loss of use or possession thereof to Lessee, shall
not release or relieve Lessee from the duty to pay the Rent herein provided.

         4. No Warranties by Lessor; Compliance with Laws and Insurance: Lessor,
not being the manufacturer of the Aircraft, nor manufacturer's agent, makes no
warranty or representation, either express or implied, as to the fitness,
quality, design, condition, capacity, suitability, merchantability or
performance of the Aircraft or of the material or workmanship thereof, or that
the Aircraft will satisfy the requirements of any law, rule, specification or
contract, it being agreed that the Aircraft is leased "as is" and that all such
risks, as between the Lessor and the Lessee, are to be borne by the Lessee at
its sole risk and expense, Lessee accordingly agrees not to assert any claim
whatsoever against the Lessor based thereon. Lessee further agrees, regardless
of cause, not to assert any claim whatsoever against the Lessor for loss of
anticipatory profits or consequential, indirect, special or punitive damages.
Lessor shall have no obligation to test or service the Aircraft. Lessee agrees,
at its own cost and expense, (a) to pay all charges and expenses in connection
with the operation of the Aircraft; (b) to comply with all governmental laws,
ordinances, regulations, requirements and rules with respect to the use and
operation of the Aircraft; and (c) to maintain at all times (i) Aircraft hull
insurance, including all-risk ground and flight insurance on the Aircraft for
the stated value thereof (not to be less than the full current market value as
determined annually by the parties) for the term of this Lease, plus other
insurance thereon in amounts and against such risks as Lessor may specify, and
deliver each policy to Lessor with a standard long form endorsement attached
thereto showing loss payable to Lessor as its interest may appear, and (ii)
combined single limit liability insurance covering bodily injury liability,
property damage liability and passenger liability for the term of this Lease
naming Lessor its parent and affiliates as additional insureds to the full
extent of the policies carried, but in no event less than $200,000,000.00 per
occurrence. Lessee shall deliver to Lessor evidence of such insurance coverage.
All insurance policies must provide that no cancellation or non-renewal thereof
shall be effective without 30 days prior written notice to Lessor and all
insurance policies shall be in form, terms and amounts and with insurance
carriers satisfactory to Lessor.


                                       2
<PAGE>


         5. Maintenance. Lessee, at its cost and expense, shall:

                  5.1 perform or cause to be performed all airworthiness
         directives, mandatory manufacturer's service bulletins, and all other
         mandatory service, inspections, repair, maintenance, overhaul and
         testing: (a) as may be required under applicable Federal Aviation
         Administration (the "FAA") rules and regulations, (b) in the same
         manner and with the same care as shall be the case with similar
         aircraft and engines owned by or operated on behalf of Lessee without
         discrimination, and (c) so as to keep the Aircraft in as good operating
         condition as when delivered to the Lessee, ordinary wear and tear
         excepted, with all systems in good operating condition;

                  5.2 keep the Aircraft in such condition as is necessary to
         enable the airworthiness certification of the Aircraft to be maintained
         at all times under applicable FAA regulations and any other applicable
         law, including, but not limited to any equipment modifications or
         installations required by the FAA;

                  5.3 maintain, in the English language, all records and other
         materials required by and in a manner acceptable to the FAA and any
         other governmental entity having jurisdiction over the Aircraft and its
         operation;

                  5.4 Lessee shall furnish Lessor reports on an annual basis a
         list of those service bulletins, airworthiness directives and
         engineering modifications incorporated on the Aircraft during the
         preceding calendar year.

         6. Taxes: Lessee agrees that, during the term of this Lease, in
addition to the Rent and all other amounts provided herein to be paid, it will
promptly pay all taxes, assessments and other governmental charges (including
penalties and interest, if any, and fees for titling or registration, if
required) levied or assessed: (a) upon the interest of the Lessee in the
Aircraft or upon the use or operation thereof or on the earnings arising
therefrom; and (b) against Lessor on account of its acquisition or ownership of
the Aircraft, or the use or operation thereof or the leasing thereof to the
Lessee, or the Rent herein provided for, or the earnings arising therefrom,
exclusive, however, of any taxes based on net income of Lessor ("Taxes"). Lessee
agrees to file, on behalf of Lessor, all required tax returns and reports
concerning the Aircraft with all appropriate governmental agencies, and within
not more than 45 days after the due date of such filing to send Lessor
confirmation, in form satisfactory to Lessor, of such filing.

                  6.1 Lease Characterization: Lessor and Lessee agree that the
         terms of this Lease create an operating lease for federal and state
         income tax purposes. Consistent with the foregoing, Lessor intends to
         retain all tax benefits associated with this Lease and Lessee agrees
         not to take an inconsistent position on its federal or state income tax
         filings. If any action taken by one party under this Lease causes this
         Lease to be ultimately determined by any taxing authority not to be an
         operating lease, that party shall indemnify the other party for any
         resulting increase in the other party's federal or state income tax
         liability for any period.


                                       3
<PAGE>


                  6.2 Permitted Contests: Lessee, on its own or on Lessor's
         behalf or in Lessor's name, but at Lessee's sole cost and expense,
         shall have the right to contest, by an appropriate legal proceeding
         conducted in good faith and with due diligence, the amount or validity
         of any levy or assessment of Taxes provided (a) prior notice of such
         contest is given to Lessor, (b) the Aircraft would not be in any danger
         of being sold, forfeited or attached as a result of such contest, and
         there is no risk to Lessor of a loss of or interruption in the payment
         of Rent, (c) in the case of unpaid Taxes, collection thereof is
         suspended during the pendency of such contest, and (d) compliance may
         legally be delayed pending such contest. Upon request of Lessor, Lessee
         shall deposit funds or assure Lessor in some other manner reasonably
         satisfactory to Lessor that the Taxes, together with interest and
         penalties, if any, thereon, and any and all costs for which Lessee is
         responsible will be paid if and when required upon the conclusion of
         such contest. Lessee shall defend, indemnify and save harmless Lessor
         from all costs or expenses arising out of or in connection with any
         such contest, including but not limited to payment of Taxes and
         attorneys' fees. If at any time Lessor reasonably determines that
         payment of the Taxes contested by Lessee is necessary in order to
         prevent loss of the Aircraft or Rent or civil or criminal penalties or
         other damage, upon such prior notice to Lessee as is reasonable in the
         circumstances Lessor may pay such amount or take such other action as
         it may deem necessary to prevent such loss or damage. If reasonably
         necessary, upon Lessee's written request Lessor, at Lessee's expense,
         shall cooperate with Lessee in a permitted contest, provided Lessee
         upon demand reimburses Lessor for Lessor's costs incurred in
         cooperating with Lessee in such contest.

         7. Lessor's Right of Inspection and Identification of Aircraft: All
equipment, engines, radios, accessories, instruments and parts now or hereafter
used in connection with the Aircraft shall become part of the Aircraft by
accession. Lessor warrants that the Aircraft is not registered under the laws of
any foreign country. Lessee shall permit Lessor or its designee, on 5 days prior
written notice to visit and inspect the Aircraft, its condition, use and
operation, and the records maintained in connection therewith, at any reasonable
time without interfering with the normal operation of the Aircraft, at Lessor's
cost and expense, provided that no Default or Event of Default has occurred and
is continuing. Lessor shall have no duty to make any such inspection and shall
not incur any liability or obligation by reason of not making any such
inspection. Lessor's failure to object to any condition or procedure observed or
observed in the course of an inspection hereunder shall not be deemed to waive
or modify any of the terms of this Lease with respect to such condition or
procedure.

         8. Possession and Place of Use: The Aircraft shall be based at the
location specified in Schedule "B", and shall not be permanently removed
therefrom without Lessor's prior written consent. Lessee shall not, without
Lessor's prior written consent, (a) part with possession or control


                                       4



<PAGE>


of the Aircraft, (b) attempt or purport to sell, pledge, mortgage or otherwise
encumber the Aircraft or otherwise dispose of or encumber any interest under
this Lease, or (c) fly or permit the Aircraft to be flown or located outside the
area covered by insurance required by paragraph 3 of this Lease.

         9. Lessee's Warranties: Lessee warrants that the Aircraft will be
registered under the laws of the United States and will not be registered under
the laws of any foreign country; that the Aircraft and/or equipment will not be
held, maintained or used in violation of any law, regulation, ordinance or
policy of insurance affecting the maintenance, use or flight of Aircraft. These
warranties are conditions of Lessee's right of possession and use, and delivery
is made in reliance thereon.

         10. Performance of Obligations of Lessee by Lessor: In the event that
Lessee shall fail duly and promptly to perform any of its obligations under the
provisions of this Lease, Lessor may, at its option, perform the same for the
account of Lessee without thereby waiving such default, and any amount paid or
expense (including reasonable attorneys' fees), penalty or other liability
incurred by Lessor in such performance, together with interest at the Overdue
Rate until paid by Lessee to Lessor, shall be payable by Lessee upon demand as
additional rent for the Aircraft.

         11. Purchase Option: At any time during the term of this Lease, if
Lessee has paid in full all rentals owing hereunder and is not in default
hereunder, Lessee shall have the option to purchase the Aircraft for an amount
equal to the greater of (1) fair market value of the Aircraft or (2) the
Termination Value in accordance with Schedule "C" plus accrued interest. Lessee
shall give Lessor written notice of its intent to exercise such option not less
than 30 days prior to the transfer of the Aircraft to Lessee. Fair market value
shall be determined by a mutually agreed upon independent aircraft broker. If
the parties cannot agree on the selection of a broker, each party shall
designate a broker. Such selected brokers will then select a third broker to
appraise the Aircraft. Such third party broker appraisal shall be binding upon
the parties.

                  Lessee shall also have the right to purchase the Aircraft as
of October 1, 2006 ("Early Buy-Out Option") for the Termination Value for such
date in accordance with Schedule "C" plus accrued interest. Lessee shall also be
responsible for all transaction costs associated with any exercise in accordance
with this Section 11.

         12. Put Option: Upon the expiration of the original term of this Lease,
Lessor shall have the option to require the Lessee to purchase the Aircraft for
an amount equal to the agreed fair market value of the Aircraft as defined in
Section 11 hereof. Lessor shall provide Lessee written notice of its intent to
exercise such option not less than 30 days prior to the expiration of the
original term of this Lease.


                                       5
<PAGE>


         Lessee shall also be responsible for all transaction costs associated
with any exercise in accordance with this Section 12.

         13. Default: An event of default ("Event of Default") shall occur if:

                  (a) Lessee fails to pay or cause to be paid the Rent when due
and payable;

                  (b) Either Lessee or WCG, has a petition in bankruptcy filed
against it, is adjudicated a bankrupt or has an order for relief thereunder
entered against it, or a court of competent jurisdiction enters an order or
decree appointing a receiver of Lessee or WCG or of the whole or substantially
all of its property, or approving a petition filed against Lessee seeking
reorganization or arrangement of Lessee under the federal bankruptcy laws or any
other applicable law or statute of the United States of America or any state
thereof, any such judgment, order or decree is not vacated or set aside or
stayed within sixty (60) days from the date of the entry thereof, subject to the
applicable provisions of the Bankruptcy Code (11 U.S.C Section 101, et seq);

                  (c) Lessee or WCG: (i) admits in writing its inability to pay
its debts generally as they become due, (ii) files a petition in bankruptcy or a
petition to take advantage of any insolvency law, (iii) makes a general
assignment for the benefit of its creditors, (iv) consents to the appointment of
a receiver of itself or of the whole or any substantial part of its property, or
(v) files a petition or answer seeking reorganization or arrangement under the
Federal bankruptcy laws or any other applicable law or statute of the United
States of America or any state thereof, subject to the applicable provisions of
the Bankruptcy Code (11 U.S.A. Section 101, et seq);

                  (d) Lessee or WCG, is liquidated or dissolved, or begins a
Proceeding toward liquidation or dissolution, or has filed against it a petition
or other Proceeding to cause it to be liquidated or dissolved and the Proceeding
is not dismissed within thirty (30) days thereafter, or Lessee in any manner
permits the sale or divestiture of substantially all of its assets;

                  (e) The estate or interest of Lessee in the Aircraft or any
part thereof is levied upon or attached in any Proceeding and the same is not
vacated or discharged within thirty (30) days thereafter (unless Lessee is in
the process of consenting such lien or attachment in good faith);

                  (f) Any representation or warranty made by Lessee in the
Membership Interest Purchase Agreement or in the certificate delivered in
connection therewith shall prove to be incorrect in any material respect when
made or deemed made, Lessor is materially and adversely affected thereby and
Lessee fails within twenty (20) days after Notice from Lessor thereof to cure
such condition by terminating such adverse effect and making Lessor whole for
any damage suffered therefrom, or, if with due diligence such cure cannot be
effected within twenty (20) days, if Lessee has failed to commence to cure the
same within the twenty (20) days or failed thereafter to proceed promptly and
with due diligence to cure such condition and complete such cure prior to the
time that such condition causes a default in any other lease to which Lessee is
subject and prior to the time that the same results in civil or criminal
penalties to Lessor, Lessee, or any Affiliates of any of such parties or the
Aircraft;


                                       6
<PAGE>


                  (g) A Transfer occurs without the prior written consent of
Lessor;

                  (h) Except as otherwise provided in subsection (m) below, a
default occurs under any Material Debt when and as the same become due and
payable (subject to any applicable grace period);

                  (i) Lessee fails to purchase the Aircraft if and as required
under this Lease;

                  (j) Lessee or WCG breaches any of the financial covenants set
forth in Section 14 hereof and the breach is not cured within a period of thirty
(30) days after the earlier to occur of (i) the Notice thereof from Lessor, or
(ii) knowledge thereof by Lessee or WCG;

                  (k) Lessee fails to observe or perform any other term,
covenant or condition of this Lease and the failure is not cured by Lessee
within a period of thirty (30) days after Notice thereof from Lessor:

                  (l) Lessee breaches any representation or warranty made by it
in this Lease;

                  (m) An Event of Default as defined in the Credit Agreement,
occurs and an acceleration of any of the Loans as defined in the Credit
Agreement results;

                  (n) One or more judgments for the payment of money in an
aggregate amount in excess of $25,000,000 shall be rendered against Lessee or
WCG, or any combination thereof and the same shall remain undischarged for a
period of thirty (30) consecutive days during which execution shall not be
effectively stayed, or any action shall be legally taken by a judgment creditor
to attach or levy upon any assets of Lessee or WCG to enforce any such judgment;

                  (o) An ERISA Event shall have occurred that, in the opinion of
the Lessor, when taken together with all other ERISA Events that have occurred,
could reasonable be expected to result in liability of Lessee or WCG in an
aggregate amount exceeding $25,000,000 for all periods;

                  (p) Lessee fails to maintain the Aircraft in accordance with
the terms of this Lease;

                  (q) A Change in Control shall occur;

                  (r) Lessee fails to observe or perform any provisions of
Section 4 and Section 14.4 regarding insurance; or

                  (s) Lessee defaults on any other Aircraft Dry Lease dated
concurrently herewith.


                                       7
<PAGE>


         Upon the occurrence of an Event of Default, Lessor, at Lessor's option,
may: (a) proceed by appropriate court action or actions or other proceedings
either at law or in equity to enforce performance by Lessee of any and all
covenants of this Lease and to recover damages for the breach thereof; (b)
demand that Lessee deliver the Aircraft forthwith to Lessor at Lessee's expense
at such place as Lessor may designate; (c) Lessor and/or Lessor's agents may,
without notice or liability or legal process, enter into any premises of or
under control or jurisdiction of Lessee or any agent of Lessee where the
Aircraft may be or by Lessor is believed to be, and repossess the Aircraft,
using all force necessary or permitted by applicable law so to do, Lessee hereby
expressly waiving all further rights to possession of the Aircraft and all
claims for injuries suffered through or loss caused by such repossession; (d)
terminate this Lease, whereupon Lessee shall, without further demand, as
liquidated damages for loss of the bargain and not as a penalty forthwith pay to
Lessor any unpaid Rent that accrued on or before the occurrence of the event of
default plus an amount equal to the difference between the value, as of the date
of the occurrence of such event of default, of the aggregate Rent reserved
hereunder for the unexpired term of this Lease and the then value of the
aggregate rental value of the Aircraft for such unexpired term which the Lessor
reasonably estimates to be obtainable for the use of the Aircraft during such
unexpired terms. Should any proceedings be instituted by or against Lessor for
monies due to Lessor hereunder and/or for possession of the Aircraft or for any
other relief, Lessee shall pay a reasonable sum as attorneys' fees. If any
statute governing the proceeding in which damages are to be proved specifies the
amount of such claim, Lessor shall be entitled to prove as and for damages for
the breach an amount equal to that allowed under such statute. The remedies of
this Lease provided in favor of Lessor shall not be deemed exclusive, but shall
be cumulative, and shall be in addition to all other remedies in its favor
existing at law or in equity, and the exercise, or beginning of exercise by
Lessor of any one or more of such remedies shall not preclude the simultaneous
or later exercise by Lessor of any or all such remedies. No express or implied
waiver by Lessor of any event of default hereunder shall in any way be, or be
construed to be, a waiver of any future or subsequent events of default.

         14. Covenants: Lessee represents, warrants and covenants that:

                  14.1 Existence; Conduct of Business. Lessee and WCG each will
         (i) continue to engage in business of the same general type as now
         conducted and (ii) do or cause to be done all things necessary to
         preserve, renew and keep in full force and effect its legal existence
         and the rights, licenses, permits, privileges, franchises, patents,
         copyrights, trademarks and trade names material to the conduct of its
         business.

                  14.2 Payment of Obligations. Lessee and WCG each (i) will pay
         its Debt and other material obligations, including tax liabilities,
         before the same shall become delinquent or in default, except where (a)
         the validity or amount thereof is being contested in good faith by
         appropriate legal process, (b) has set aside on its books adequate
         reserves with respect thereto in accordance with GAAP, (c) such contest
         effectively suspends collection of the contested obligation and the
         enforcement of any Encumbrance securing such obligation and


                                       8
<PAGE>


         (d) the failure to make payment pending such contest could not
         reasonably be expected to result in a Material Adverse Effect and (ii)
         shall not breach, in any material respect, or permit to exist any
         material default under, the terms of any material lease, commitment,
         contract, instrument or obligation to which it is a party, or by which
         its properties or assets are bound, except where the failure to do the
         foregoing would not in the aggregate have a Material Adverse Effect.

                14.3 Maintenance of Properties. Lessee and WCG each will keep
         and maintain all property material to the conduct of its business in
         good working order and condition, ordinary wear and tear excepted.

                14.4 Insurance. In addition to the insurance required in Section
         4, Lessee and WCG each will maintain, with financially sound and
         reputable insurance companies, insurance in such amounts and against
         such risks as are customarily maintained by companies engaged in the
         same or similar businesses operating in the same or similar locations.
         As of the Effective Date, all premiums in respect of all insurance
         described in the Lease have been paid. Lessee shall deliver an
         insurance certificate to Lessor as of the Effective Date evidencing all
         such insurance coverages.

                14.5 Casualty and Condemnation. The Lessee will furnish to
         Lessor prompt written notice of any casualty or other insured damage to
         any portion of any of Lessor's property or assets or the commencement
         of any action or Proceeding for the taking of any of Lessor's property
         or assets or any part thereof or interest therein under power of
         eminent domain or by condemnation or similar Proceeding (in each case
         with a value in excess of $10,000,000).

                14.6 Books and Records; Inspection and Audit Rights. Lessee and
         WCG each will keep proper books of record and account in which
         materially full, true and correct entries are made of all dealings and
         transactions in relation to its business and activities. Lessee and WCG
         each will permit any representatives designated by the Lessor at the
         expense of Lessor, or, if an Event of Default shall have occurred and
         be continuing, at the expense of the Lessee, upon reasonable prior
         notice, to visit and inspect its properties, to examine and make
         extracts from its books and records, and to discuss its affairs,
         finances and condition with its officers and independent accountants,
         all at such reasonable times and as often as reasonably requested.

                14.7 Compliance with Laws. Lessee and WCG each will comply with
         all laws, rules, regulations and orders of any Governmental Authority
         applicable to it or its property (including, without limitation,
         Environmental Laws and ERISA and the rules and regulations thereunder),
         except where the necessity of compliance therewith is contested in good
         faith by appropriate action and such failure to comply, individually or
         in the aggregate, could not reasonably be expected to result in a
         Material Adverse Effect.


                                       9
<PAGE>


                14.8 Further Assurances. At any time and from time to time,
         Lessee will execute any and all further documents, financing
         statements, agreements and instruments, and take all such further
         actions (including the filing and recording of financing statements,
         fixture filings, mortgages, deeds of trust and other documents), which
         may be required under any applicable law, or which the Lessor may
         reasonably request, to effectuate the transactions contemplated by this
         Lease or to grant, preserve, protect or perfect the Encumbrances
         created or intended to be created in connection with this Lease or any
         of the other documents contemplated herein, required to be in effect or
         the validity or priority of any such Encumbrance, all at the expense of
         Lessee and Lessor. Lessee and Lessor also agree to provide to Lessor,
         from time to time upon request, evidence reasonably satisfactory to
         Lessor as to the perfection and priority of the Encumbrance created or
         intended to be created in connection with this Lease or any of the
         other documents contemplated herein.

                  14.9 Pledge or Encumber Assets. Lessee shall not pledge or
         otherwise encumber any of its assets, other than leased equipment used
         in the operation of the Aircraft.

                  14.10 Encumbrances. Lessee will not create, incur, assume or
         permit to exist any Encumbrance on any property or asset now owned or
         hereafter acquired by it, or assign or sell any income or revenues or
         rights in respect of any thereof, except for any Permitted Encumbrances
         or Encumbrances created in connection with or specifically contemplated
         by this Lease or permitted by the Credit Agreement.

                  14.11 Fundamental Changes. Lessee and WCG each will not merge
         into or consolidate with any other Person, or permit any other Person
         to merge into or consolidate with it, or liquidate or dissolve, except
         that, if at the time thereof and immediately after giving effect
         thereto no Event of Default shall have occurred and be continuing (i)
         any Person may merge into the Lessee in a transaction in which the
         Lessee is the surviving entity, provided that any such merger involving
         a Person that is not a wholly owned by Lessor immediately prior to such
         merger shall not be permitted, and (ii) any person may merge into the
         Lessee in a transaction in which the Lessee is the surviving
         corporation.

                  14.12 Other Material Agreements. Lessee shall not (i) enter
         into any other material agreement relating to any portion of the
         Aircraft, or (ii) if entered into with Lessor's consent, thereafter,
         amend, modify, renew, replace or otherwise change the terms of any such
         material agreement without the prior written consent of Lessor.

                  14.13 Total Net Debt to Contributed Capital Ratio. The Total
         Net Debt to Contributed Capital ratio shall at no time prior to January
         1, 2002 exceed .65 to 1.00.

                  14.14 Minimum EBITDA. The amount equal to (i) EBITDA for the
         period of four (4) fiscal quarters ending during any period set forth
         below plus (ii) ADP Interest Expense


                                       10
<PAGE>


         for such period minus (iii) gains for such period attributable to Dark
         Fiber and Capacity Dispositions plus (iv) Dark Fiber and Capacity
         Proceeds for such period shall not be less than the amount set forth
         below opposite such period:

<Table>
<Caption>
              PERIOD                                         AMOUNT
              ------                                         ------
<S>                                                      <C>

  January 1,2001-March 31, 2001                           $200,000,000

   April 1, 2001-June 30, 2001                            $300,000,000

 July 1, 2001-September 20, 2001                          $350,000,000

October 1, 2001-December 31, 2001                         $350,000,000
</Table>

                  14.15 Total Leverage Ratio. (a) The Total Leverage Ratio
         during any period set forth below shall not exceed the ratio set forth
         below opposite such period:

<Table>
<Caption>
               PERIOD                               TOTAL LEVERAGE RATIO
               ------                               --------------------
<S>                                                 <C>

  March 31, 2001-December 30, 2001                       12.50:1.00

December 31, 2002-December 30, 2003                       9.50:1.00

  December 31, 2003 and thereafter                        4.00:1.00
</Table>

                  14.16 Senior Leverage Ratio. The Senior Leverage Ratio during
         any period set forth below shall not exceed the ratio set forth below
         opposite such period:

<Table>
<Caption>
               PERIOD                              SENIOR LEVERAGE RATIO
               ------                              ---------------------
<S>                                               <C>

  March 31, 2002-December 30, 2002                       5.25:1.00

December 31, 2002-December 30, 2003                      3.25:1.00

  December 31, 2003 and thereafter                       2.50:1.00
</Table>

                14.17 Interest Coverage Ratio. The Interest Coverage Ratio for
         any period of four (4) consecutive fiscal quarters ending during any
         period set forth below shall not be less than the ratio set forth below
         opposite such period:

<Table>
<Caption>
            PERIOD                               INTEREST COVERAGE RATIO
            ------                               -----------------------
<S>                                             <C>

  June 30, 2002-June 29, 2003                            1.00:1.00

June 30, 2003-December 30, 2003                          1.50:1.00

December 31, 2003 and thereafter                         2.00:1.00
</Table>


                                       11
<PAGE>


                  14.18 Organization; Powers. Lessee is duly organized, validly
         existing and in good standing under the laws of the jurisdiction of its
         organization, has all requisite power and authority to carry on its
         business as now conducted and, except where the failure to do so,
         individually or in the aggregate, could not reasonably be expected to
         result in a Material Adverse Effect, is qualified to do business in,
         and is in good standing in, every jurisdiction where such qualification
         is required.

                  14.19 Authorization; Enforceability. The execution of and
         performance under this Lease is within Lessee's' entity powers and has
         been duly authorized by all necessary member, corporate and, if
         required, stockholder action as the case may be. This Lease has been
         duly executed and delivered by Lessee and constitutes a legal, valid
         and binding obligation of the Lessee, enforceable in accordance with
         its terms, subject to applicable bankruptcy, insolvency,
         reorganization, moratorium or other laws affecting creditors' rights
         generally and subject to general principles of equity, regardless of
         whether considered in a Proceeding in equity or at law.

                  14.20 Governmental Approvals; No Conflicts. The Lease or any
         of the other documents contemplated herein, (a) does not require any
         consent or approval of, registration or filing with, or any other
         action by, any Governmental Authority, except such as have been
         obtained or made and are in full force and effect and except filings
         necessary to perfect Lessor's rights under this Lease, (b) will not
         violate any applicable law or regulation or the charter, by-laws or
         other organizational documents of Lessee or Lessor or any order of any
         Governmental Authority, (c) will not violate or result in a default
         under any indenture, agreement or other instrument binding upon Lessee
         or Lessor or any of their respective assets, or give rise to a right
         thereunder to require any payment to be made by Lessee or Lessor, and
         (d) will not result in the creation or imposition of any Encumbrance on
         any asset of Lessee or Lessor, except any Encumbrance created by or in
         accordance with the Lease.

                  14.21 Material Adverse Change. Since December 31, 2000, there
         has been no Material Adverse Change.

                  14.22 Properties. Lessee has good title to, or valid leasehold
         interests in, all its real and personal property material to its
         business, except for minor defects in title that do not interfere with
         its ability to conduct its business as currently conducted or to
         utilize such properties for their intended purposes. None of the
         properties and assets of Lessee or Lessor is subject to any Encumbrance
         other than Permitted Encumbrances, and Encumbrances created by or in
         connection with this Lease.

                  14.23 Intellectual Property. Lessee owns, or is licensed to
         use, all trademarks, trade names, copyrights, patents and other
         intellectual property material to its business, and the use thereof by
         Lessee does not infringe upon the rights of any other Person, except
         for any such infringements that, individually or in the aggregate,
         could not reasonably be expected to result in a Material Adverse
         Effect.


                                       12
<PAGE>


                  14.24 Litigation and Environmental Matters. There is no
         action, suit or Proceeding by or before any arbitrator or Governmental
         Authority pending against or, to the knowledge of Lessee or Lessor,
         threatened against or affecting Lessee or WCG (i) as to which there is
         a reasonable possibility-bility of an adverse determination and that,
         if adversely determined, could reasonably be expected, individually or
         in the aggregate, to result in a Material Adverse Effect or (ii) that
         involve this Lease or any of the other documents contemplated herein.

                           14.24.1 Environmental Compliance. Except with respect
                  to other matters that, individually or in the aggregate, could
                  not reasonably be expected to result in a Material Adverse
                  Effect, Lessee (i) has not failed to comply with any
                  Environmental Law or to obtain, maintain or comply with any
                  permit, license or other approval required under any
                  Environmental Law, (ii) has not become subject to any
                  liability with respect to any Environmental Law, (iii) has not
                  received written notice of any claim with respect to any
                  Environmental Law or (iv) does not know of any basis for any
                  violations of any Environmental Law or any release, threatened
                  release or exposure to any Hazardous Materials that is likely
                  to form the basis of any liability under any Environmental
                  Law.

                  14.25 Compliance with Laws and Agreements. Lessee is in
         compliance with all laws, regulations and orders of any Governmental
         Authority applicable to it or its property and all indentures,
         agreements and other instruments binding upon it or its property,
         except where the failure to do so, individually or in the aggregate,
         could not reasonably be expected to result in a Material Adverse
         Effect. No Event of Default has occurred and is continuing.

                  14.26 Investment and Holding Company Status. Lessee is not (a)
         an "investment company" as defined in, or subject to regulation under,
         the Investment Company Act of 1940 or (b) a "holding company" as
         defined in, or subject to regulation under, the Public Utility Holding
         Company Act of 1935.

                  14.27 Taxes. Lessee or WCG has timely filed or caused to be
         filed all tax returns and reports required to have been filed and has
         paid or caused to be paid all taxes required to have been paid by or
         with respect to it, except (a) taxes that are being contested in good
         faith by an appropriate Proceeding and for which Lessee or Lessor, as
         applicable, has set aside on its books adequate reserves or (b) to the
         extent that the failure to do so could not reasonably be expected to
         result in a Material Adverse Effect.

                  14.28 ERISA. No ERISA Event has occurred or is reasonably
         expected to occur that, when taken together with all other such ERISA
         Events for which liability is reasonably expected to occur, could
         reasonably be expected to result in a Material Adverse Effect. The
         present value of all accumulated benefit obligations under each Plan
         (based on the assumptions used for purposes of Statement of Financial
         Accounting Standards No. 87) did not, as of the date of the most recent
         financial statements reflecting such amounts, exceed by more than
         $25,000,000 the fair market value of the assets of such Plan, and the
         present value of all accumulated benefit obligations of all underfunded
         Plans (based on the assumptions used for purposes of Statement of
         Financial Accounting Standards No. 87) did not, as of the date of the
         most recent financial statements reflecting such amounts, exceed by
         more than $25,000,000 the fair market value of the assets of all such
         underfunded Plans.


                                       13
<PAGE>


                  14.29 Disclosure. Lessee has disclosed all agreements,
         instruments and corporate or other restrictions to which Lessee is
         subject, and all other matters known to Lessee, that, individually or
         in the aggregate, could reasonably be expected to result in a Material
         Adverse Effect. None of the reports, financial statements, certificates
         or other information furnished by or on behalf of Lessee in connection
         with the negotiation of this Lease or delivered hereunder (as modified
         or supplemented by other information so furnished) contains any
         material misstatement of fact or omits to state any material fact
         necessary to make the statements therein, in the light of the
         circumstances under which they were made, not misleading; provided
         that, with respect to projected financial information, Lessee
         represents only that such information was prepared in good faith based
         upon assumptions believed to be reasonable at the time.

                  14.30 Labor Matters. As of the Effective Date, there are no
         strikes, lockouts or slowdowns against Lessee pending or, to the
         knowledge of Lessee, threatened. The hours worked by and payments made
         to employees of Lessee have not been in violation of the Fair Labor
         Standards Act or any other applicable Federal, state, local or foreign
         law dealing with such matters. All payments due from Lessee, or for
         which any claim may be made against Lessee, on account of wages and
         employee health and welfare insurance and other benefits, have been
         paid or accrued as a liability on the books of Lessee. The execution of
         this Lease has not and will not give rise to any right of termination
         or right of renegotiation on the part of any union under any collective
         bargaining agreement by which Lessee is bound.

                  14.31 No Burdensome Restrictions. No contract, lease,
         agreement or other instrument to which Lessee is a party or by which
         any of its property is bound or affected, no charge, corporate
         restriction, judgment, decree or order and no provision of applicable
         law or governmental regulation could reasonably be expected to have
         Material Adverse Effect.

                  14.32 Representations True and Correct. As of the dates when
         made and as of the Effective Date, each representation and warranty of
         Lessee thereto contained in this Lease or any other documents executed
         in connection herewith, is true and correct.

         15. OFFICER'S CERTIFICATES AND FINANCIAL STATEMENTS. Lessee shall
furnish or cause to be furnished to one another:

                  15.1 Fiscal Year Information. (i) within 90 days after the end
         of each fiscal year of WCG, its audited consolidated balance sheets and
         related audited consolidated statements of operations, stockholders' or
         members' equity and cash flows as of the end of and for such fiscal
         year (including segment reporting with respect to each of WCG's
         business segments consistent), setting forth in each case in
         comparative form the figures for the previous fiscal year, all reported
         on by Ernst & Young LLP or other independent public accountants of
         recognized national standing (without a "going concern" or like
         qualification or exception and without any qualification or exception
         as to the scope of such audit) to the effect that such consolidated
         financial statements present fairly in all material respects the
         financial condition and results of operations of WCG on a consolidated
         basis in accordance with GAAP consistently applied, and (ii) within 90
         days after the end of each fiscal year of WCG,


                                       14
<PAGE>


         supplemental unaudited balance sheets and related unaudited statements
         of operations, stockholders' or members' equity and cash flows as of
         the end of and for such fiscal year, setting forth in tabular form in
         each case the figures for the previous year, for WCG and the
         consolidating adjustments with respect thereto.

                  15.2 Quarterly Information. (i) within 45 days after the end
         of each of the first 3 fiscal quarters of each fiscal year of WCG,
         unaudited consolidated and consolidating balance sheets and related
         consolidated and consolidating statements of operations, stockholders'
         or members' equity and cash flow of WCG as of the end of and for such
         fiscal quarter and the then elapsed portion of the fiscal year, setting
         forth in each case in comparative form the figures for the
         corresponding period or periods of the previous fiscal year (or in the
         case of the balance sheet, as of the end of the previous fiscal year),
         all certified by an Officer's Certificate as presenting fairly in all
         material respects the financial condition and results of operations of
         WCG on a consolidated basis in accordance with GAAP consistently
         applied, subject to normal year-end audit adjustments and the absence
         of footnotes and (ii) within 45 days after the end of each of the first
         3 fiscal quarters of each fiscal year of WCG, unaudited balance sheets
         and related statements of operations, stockholders' or members' equity
         and cash flow of Lessor as of the end of and for such fiscal quarter
         and the then elapsed portion of the fiscal year, setting forth in each
         case in comparative form the figures for the corresponding period or
         periods of the previous fiscal year (or, in the case of the balance
         sheet, as of the end of the previous fiscal year) all certified by a
         Officer's Certificate as presenting fairly in all material respects the
         financial condition and results of operations of WCG in accordance with
         GAAP consistently applied, subject to normal year-end audit adjustments
         and the absence of footnotes.

                  15.3 Officers Certificate. Concurrently with any delivery of
         financial statements in accordance with this Lease, an Officer's
         Certificate of the Lessee (i) certifying as to whether an Event of
         Default has occurred and, if an Event of Default has occurred,
         specifying the details thereof and any action taken or proposed to be
         taken with respect thereto, (ii) setting forth in reasonable detail
         calculations demonstrating compliance with Sections 14.13 through
         14.17, and (iii) stating whether any change in GAAP or in the
         application thereof has occurred since the date referred to in
         paragraph 14.24 and, if any such change has occurred, specifying the
         effect of such change on the financial statements accompanying such
         Officer's Certificate.

                  15.4 Accounting Firm Certificate. Concurrently with any
         delivery of financial statements in accordance with this Lease, a
         certificate of the accounting firm that reported on such financial
         statements stating whether they obtained knowledge during the course of
         their examination of such financial statements of any Event of Default
         (which certificate may be limited to the extent required by accounting
         rules or guidelines).

                  15.5 Budget. As soon as practicable after approval by the
         Board of Directors of WCG, and in any event not later than 120 days
         after the commencement of each fiscal year of Lessor, a consolidated
         and consolidating budget of WCG for such fiscal year and a consolidated
         budget of WCG for such fiscal year and, promptly when available, any
         significant revisions of any such budget.


                                       15
<PAGE>


                  15.6 SEC Filings. Promptly after the same become publicly
         available, copies of all periodic and other reports, proxy statements
         and other materials filed by WCG or any of its Affiliates with the SEC,
         or any Governmental Authority succeeding to any or all of the functions
         of the SEC, or with any national securities exchange, or distributed by
         WCG to its members generally, as the case may be, except to the extent
         any such report, proxy statement or other material is available
         electronically on a publicly-accessible website.

                  15.7 Other Information. Promptly following any request
         therefor, such other information regarding the operations, business
         affairs and financial condition of Lessee, or compliance with the terms
         of this Lease or any of the documents contemplated herein.

                  15.8 Credit Agreement Information. To the extent not
         previously covered by the provisions of this paragraph, copies of all
         information provided by Lessee or any Affiliates pursuant to the Credit
         Agreement, contemporaneously with its delivery pursuant thereto.

         16. NOTICES OF MATERIAL EVENTS. Upon knowledge thereof, Lessee will
furnish prompt written notice of the following. Each notice delivered under this
paragraph shall be accompanied by a statement of an Officer's Certificate, duly
executed, setting forth the details of the event or development requiring such
notice and any action taken or proposed to be taken with respect thereto.

                  16.1 Event of Default. The occurrence of any Event of Default.

                  16.2 Action, Suit or Proceeding. The filing or commencement of
         any action, suit or Proceeding by or before any arbitrator or
         Governmental Authority against or affecting Lessee, WCG or any
         Affiliate thereof that could reasonably be expected to result in a
         Material Adverse Effect.

                  16.3 ERISA Event. The occurrence of any ERISA Event that,
         alone or together with any other ERISA Events that have occurred, could
         reasonably be expected to result in a Material Adverse Effect.

                  16.4 Credit Agreement. Any change or modification to the
         Credit Agreement.

                  16.5 Other Matters. Any other development that results in, or
         could reasonably be expected to result in, a Material Adverse Effect.

         17. Indemnity: Lessee agrees that Lessor shall not be liable to Lessee
for, and Lessee shall indemnify and save Lessor, its parent and affiliated
companies harmless from and against any and all liability, loss, damage,
expense, causes of action, suits, claims or judgments arising from or caused
directly or indirectly by (a) Lessee's failure to promptly perform any of its
obligations under the provisions of this Lease, (b) injury to person or property
resulting from or based upon the actual or alleged use, operation, delivery or
transportation of the Aircraft or its location or condition, or (c) inadequacy
of the Aircraft for any purpose or any deficiency or defect therein or the use
or maintenance thereof or any repairs, servicing or adjustments thereto or any
delay in providing or


                                       16
<PAGE>


failure to provide any thereof or any interruption or loss of service or use
thereof or any loss of business; and shall, at its own cost and expense, defend
any and all suits which may be brought against Lessor, either alone or in
conjunction with others upon any such liability or claim or claims and shall
satisfy, pay and discharge any and all judgments and fines that may be recovered
against Lessor in any such action or actions, provided, however, that Lessor
shall give Lessee written notice of any such claim or demand.

         18. Assignments and Notices: Neither this Lease nor Lessee's rights
hereunder shall be assignable except with Lessor's written consent; the
conditions hereof shall bind any permitted successors and assigns of Lessee.
Lessor may assign this Lease without consent of Lessee. Lessee, after receiving
notice of any assignment, shall abide thereby and make payment as may therein be
directed. Following such assignment, solely for the purpose of determining
assignor's rights hereunder, the term "Lessor" shall be deemed to include or
refer to Lessor's assignee. All notices relating hereto shall be delivered in
person to an officer of Lessor or Lessee or shall be mailed to Lessor or Lessee
at its respective address herein shown or at any later address last known to the
sender.

         19. Further Assurances: Lessee shall execute and deliver to Lessor,
upon Lessor's request, such instruments and assurances as Lessor deems necessary
or advisable for the confirmation or perfection of this Lease and Lessor's
rights hereunder, including the filing or recording of this Lease at Lessor's
option.

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

         21. Entire Agreement: There are no oral or written agreements or
representations between the parties hereto affecting this Lease. This Lease
supersedes and cancels any and all previous negotiations, arrangements,
representations, brochures, agreements and understandings, if any, between
Lessor and Lessee.

         22. Governing Law: This Lease is executed and delivered in the State of
Oklahoma, and except insofar as the law of another state or jurisdiction may be
mandatorily applicable, shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the laws of said State.

         23. Truth-in-Leasing Clause: THE AIRCRAFT HAS BEEN MAINTAINED AND
INSPECTED UNDER FEDERAL AVIATION REGULATION PART 91 FOR THE 12 MONTHS PRECEDING
THE DATE OF THIS LEASE. THE AIRCRAFT WILL BE MAINTAINED AND INSPECTED UNDER
FEDERAL AVIATION REGULATION PART 91 FOR OPERATIONS TO BE CONDUCTED UNDER THIS
LEASE. THE LESSEE CERTIFIES THAT IT IS RESPONSIBLE FOR OPERATIONAL CONTROL OF
THE AIRCRAFT AND THAT IT UNDERSTANDS ITS RESPONSIBILITIES FOR COMPLIANCE WITH
APPLICABLE FEDERAL AVIATION REGULATIONS. AN EXPLANATION OF THE FACTORS BEARING


                                       17
<PAGE>


ON OPERATIONAL CONTROL AND THE PERTINENT FEDERAL AVIATION REGULATIONS CAN BE
OBTAINED FROM THE NEAREST FAA FLIGHT STANDARDS DISTRICT OFFICE.

LESSOR:                                  LESSEE:

WILLIAMS COMMUNICATIONS                  WILLIAMS COMMUNICATIONS, LLC
   AIRCRAFT, LLC



By: /s/ Mark W. Husband                  By: /s/ Howard S. Kalika
    ------------------------------           -----------------------------------

Name:   Mark W. Husband                  Name:   Howard S. Kalika
      ----------------------------             ---------------------------------

Title:  Assistant Treasurer              Title:  Treasurer and Vice President
       ---------------------------              --------------------------------



Signature page to Aircraft Dry Lease (N358WC) by and between Williams
Communications Aircraft, LLC and Williams Communications, LLC dated September
13, 2001


                                       18
<PAGE>


                                  SCHEDULE "A"

                                  RENT -N358WC

                  Rent shall be payable in one hundred and twenty (120) equal
successive monthly rental payments in an amount as would be necessary to
amortize $17,750,000 on a straight-line basis over a period of one hundred and
twenty (120) months plus interest calculated at the Interest Rate as set forth
below:

                  The following definitions shall apply to this SCHEDULE "A":

                  "ABR", when used herein, refers to interest at a rate
determined by reference to the Alternate Base Rate.

                  "Applicable Margin" means, for any day, the applicable rate
per annum set forth below under the caption "Eurodollar Spread" or "ABR Spread",
as the case may be, based upon the Lessee's Bank Facility Rating set by S&P and
Moody's, respectively, applicable on such date plus (ii) the applicable rate per
annum set forth below under the caption "Leverage Premium", unless the Total
Leverage Ratio, as determined by reference to the financial statements delivered
to the Lessor in respect of the most recently ended fiscal quarter of WCG, is
less than 6:00 to 1:00.

                  "Eurodollar", when used herein, refers to interest at a rate
determined by reference to the Adjusted LIBO Rate.

                  "LIBO Rate" means, with respect to any Eurodollar Rate, the
rate appearing on Page 3750 of the Telerate Service (or on any successor or
substitute page of such Service, or any successor to or substitute for such
Service, providing rate quotations comparable to those currently provided on
such page of such Service, as determined by the Lessor from time to time for
purposes of providing quotations of interest rates applicable to dollar deposits
in the London interbank market) at approximately 11:00 a.m., London time, two
(2) Business Days prior to the FIRST DAY of each calendar month, as the rate for
dollar deposits with a maturity of thirty (30) days. In the event that such rate
is not available at such time for any reason, then the "LIBO Rate" shall be the
rate (rounded upwards, if necessary, to the next 1/16 of 1%) at which dollar
deposits of $5,000,000 and for a maturity of thirty (30) days are offered by the
principal London office of the CitiBank, N.A., in immediately available funds in
the London interbank market at approximately 11:00 a.m., London time, two (2)
Business Days prior to the FIRST DAY of each calendar month. IN EITHER CASE, THE
APPLICABLE LIBO RATE SHALL BE EFFECTIVE FOR THE CALENDAR MONTH NEXT SUCCEEDING
THE CALENDAR MONTH COMMENCING IMMEDIATELY AFTER SUCH DETERMINATION.

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

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

                  "WCG" means Williams Communications Group, Inc., a Delaware
corporation, and the parent company of Williams Communications, LLC.


                                       19
<PAGE>


Interest Rate Calculation

At Lessee's option, ABR plus Applicable Margin or LIBO Rate plus Applicable
Margin (the "Rate") as determined from time to time by S&P or by Moody's based
on Lessee's Facilities Rating in accordance with the grid below:


<Table>
<Caption>
                     Facilities Rating of                        Eurodollar    Leverage
                            Lessee                 ABR Spread      Spread       Premium
- -----------    --------------------------------    ----------    ----------    --------
<S>            <C>                                 <C>           <C>           <C>

 Level I           BBB- and Baa3 or higher            0.50%         1.50%        .25%
 Level II                BB+ and Ba1                 0.875%        1.875%        .25%
Level III                 BB and Ba2                  1.25%         2.25%        .25%
 Level IV                BB- and Ba3                  1.50%         2.50%        .25%
 Level V       Lower than BB- or lower than Ba3       1.75%         2.75%        .25%
</Table>

         For purposes of the foregoing (i) if neither S&P nor Moody's or any
replacement or successor facility of similar size shall have in effect a rating
for the Facilities, then the Applicable Margin shall be the rate set forth in
Level V, (ii) if either S&P or Moody's, but not bot S&P or Moody's, shall have
in effect a rating for the Facilities, then the Applicable Margin shall be based
on such rating, (iii) if the ratings established by S&P or Moody's for the
Facilities shall fall within different Levels, then the Applicable Margin shall
be based on the lower of the two ratings, (iv) if the ratings established by S&P
or Moody's for the Facilities shall fall within the same Level, then the
Applicable Margin shall be based on that Level and (v) if the ratings
established by S&P or Moody's for the Facilities shall be changed (other than as
a result of a change in the rating system of S&P of Moody's), such change shall
be effective as of the date on which it is first announced by the applicable
rating agency. Each change in the Applicable Margin shall apply during the
period commencing on the effective date of such change and engine on the date
immediately preceding the effective date of the next such change.



                                       20
<PAGE>


                                  SCHEDULE "B"

Cessna model 750 Citation X aircraft with manufacturer's serial number 750-0121
and United States nationality and registration marks N358WC.

Allison model AE3007C aircraft engines with manufacturer's serial numbers
CAE330260 and CAE330261.

Such aircraft to be based at Tulsa International Airport, City of Tulsa,
Oklahoma, Country of U.S.A.



                                       21
<PAGE>


                                  SCHEDULE "C"

                                Termination Value

The Termination Value of the Aircraft shall be set forth opposite the applicable
rent payment, plus accrued interest to such date.

CAPITALIZED LESSOR'S COST:         $17,750,000.00

<Table>
<Caption>
                                                (1)              (2)               (3)               (4)                (2)+(4)
                           Termination       Ten Year                             Monthly        Present Value
   Payment     Monthly      Value as a     Straight-Line     Unamortized       Depreciation     Of Depreciation       Termination
   Number      Period       % of Cost       Amotization        Balance           Benefits           Benefits             Value
<S>          <C>           <C>            <C>              <C>                <C>               <C>                <C>

         1     10/1/01       133.83%        $147,916.67    $17,750,000.00       $295,833.33      $6,004,572.15      $23,754,572.15
         2     11/1/01       131.55%        $147,916.67    $17,602,083.33       $295,833.33      $5,748,769.30      $23,350,852.63
         3     12/1/01       129.27%        $147,916.67    $17,454,166.67       $295,833.33      $5,491,261.09      $22,945,427.76
         4      1/1/02       126.98%        $147,916.67    $17,306,250.00       $118,333.33      $5,232,036.17      $22,538,286.17
         5      2/1/02       125.67%        $147,916.67    $17,158,333.33       $118,333.33      $5,148,583.07      $22,306,916.41
         6      3/1/02       124.37%        $147,916.67    $17,010,416.67       $118,333.33      $5,064,573.63      $22,074,990.29
         7      4/1/02       123.06%        $147,916.67    $16,862,500.00       $118,333.33      $4,980,004.12      $21,842,504.12
         8      5/1/02       121.74%        $147,916.67    $16,714,583.33       $118,333.33      $4,894,870.81      $21,609,454.15
         9      6/1/02       120.43%        $147,916.67    $16,566,666.67       $118,333.33      $4,809,169.95      $21,375,836.62
        10      7/1/02       119.11%        $147,916.67    $16,418,750.00       $118,333.33      $4,722,897.75      $21,141,647.75
        11      8/1/02       117.79%        $147,916.67    $16,270,833.33       $118,333.33      $4,636,050.40      $20,906,883.74
        12      9/1/02       116.46%        $147,916.67    $16,122,916.67       $118,333.33      $4,548,624.07      $20,671,540.74
        13     10/1/02       115.13%        $147,916.67    $15,975,000.00       $118,333.33      $4,460,614.90      $20,435,614.90
        14     11/1/02       113.80%        $147,916.67    $15,827,083.33       $118,333.33      $4,372,019.00      $20,199,102.33
        15     12/1/02       112.46%        $147,916.67    $15,679,166.67       $118,333.33      $4,282,832.46      $19,961,999.13
        16      1/1/03       111.12%        $147,916.67    $15,531,250.00       $ 71,000.00      $4,193,051.34      $19,724,301.34
        17      2/1/03       110.05%        $147,916.67    $15,383,333.33       $ 71,000.00      $4,150,005.02      $19,533,338.35
        18      3/1/03       108.97%        $147,916.67    $15,235,416.67       $ 71,000.00      $4,106,671.72      $19,342,088.38
        19      4/1/03       107.89%        $147,916.67    $15,087,500.00       $ 71,000.00      $4,063,049.53      $19,150,549.53
        20      5/1/03       106.81%        $147,916.67    $14,939,583.33       $ 71,000.00      $4,019,136.53      $18,958,719.86
        21      6/1/03       105.73%        $147,916.67    $14,791,666.67       $ 71,000.00      $3,974,930.77      $18,766,597.44
        22      7/1/03       104.64%        $147,916.67    $14,643,750.00       $ 71,000.00      $3,930,430.31      $18,574,180.31
        23      8/1/03       103.56%        $147,916.67    $14,495,833.33       $ 71,000.00      $3,885,633.18      $18,381,466.51
        24      9/1/03       102.47%        $147,916.67    $14,347,916.67       $ 71,000.00      $3,840,537.40      $18,188,454.06
        25     10/1/03       101.38%        $147,916.67    $14,200,000.00       $ 71,000.00      $3,795,140.98      $17,995,140.98
        26     11/1/03       100.29%        $147,916.67    $14,052,083.33       $ 71,000.00      $3,749,441.92      $17,801,525.25
        27     12/1/03        99.20%        $147,916.67    $13,904,166.67       $ 71,000.00      $3,703,438.20      $17,607,604.87
        28      1/1/04        98.10%        $147,916.67    $13,756,250.00       $226,135.00      $3,657,127.79      $17,413,377.79
        29      2/1/04        96.13%        $147,916.67    $13,608,333.33       $226,135.00      $3,455,373.64      $17,063,706.97
        30      3/1/04        94.16%        $147,916.67    $13,460,416.67       $226,135.00      $3,252,274.46      $16,712,691.13
        31      4/1/04        92.17%        $147,916.67    $13,312,500.00       $226,135.00      $3,047,821.29      $16,360,321.29
        32      5/1/04        90.18%        $147,916.67    $13,164,583.33       $226,135.00      $2,842,005.10      $16,006,588.44
        33      6/1/04        88.18%        $147,916.67    $13,016,666.67       $226,135.00      $2,634,816.80      $15,651,483.47
        34      7/1/04        86.17%        $147,916.67    $12,868,750.00       $226,135.00      $2,426,247.25      $15,294,997.25
        35      8/1/04        84.15%        $147,916.67    $12,720,833.33       $226,135.00      $2,216,287.23      $14,937,120.56
        36      9/1/04        82.13%        $147,916.67    $12,572,916.67       $226,135.00      $2,004,927.48      $14,577,844.15
        37     10/1/04        80.10%        $147,916.67    $12,425,000.00       $226,135.00      $1,792,158.66      $14,217,158.66
        38     11/1/04        78.06%        $147,916.67    $12,277,083.33       $226,135.00      $1,577,971.39      $13,855,054.72
        39     12/1/04        76.01%        $147,916.67    $12,129,166.67       $226,135.00      $1,362,356.20      $13,491,522.86
</Table>


                                       22
<PAGE>

The Termination Value of the Aircraft shall be set forth opposite the applicable
rent payment, plus accrued interest to such date.

<Table>
<Caption>
                                                (1)              (2)               (3)               (4)                (2)+(4)
                           Termination       Ten Year                             Monthly        Present Value
   Payment     Monthly      Value as a     Straight-Line     Unamortized       Depreciation     Of Depreciation       Termination
   Number      Period       % of Cost       Amotization        Balance           Benefits           Benefits             Value
<S>          <C>           <C>            <C>              <C>                <C>               <C>                <C>
        40      1/1/05        73.95%        $147,916.67    $11,981,250.00       $ 68,160.00      $1,145,303.57      $13,126,553.57
        41      2/1/05        72.78%        $147,916.67    $11,833,333.33       $ 68,160.00      $1,084,778.93      $12,918,112.26
        42      3/1/05        71.60%        $147,916.67    $11,685,416.67       $ 68,160.00      $1,023,850.79      $12,709,267.45
        43      4/1/05        70.42%        $147,916.67    $11,537,500.00       $ 68,160.00      $  962,516.46      $12,500,016.46
        44      5/1/05        69.24%        $147,916.67    $11,389,583.33       $ 68,160.00      $  900,773.23      $12,290,356.57
        45      6/1/05        68.06%        $147,916.67    $11,241,666.67       $ 68,160.00      $  838,618.39      $12,080,285.06
        46      7/1/05        66.87%        $147,916.67    $11,093,750.00       $ 68,160.00      $  776,049.18      $11,869,799.18
        47      8/1/05        65.68%        $147,916.67    $10,945,833.33       $ 68,160.00      $  713,062.84      $11,658,896.17
        48      9/1/05        64.49%        $147,916.67    $10,797,916.67       $ 68,160.00      $  649,656.59      $11,447,573.26
        49     10/1/05        63.30%        $147,916.67    $10,650,000.00       $ 68,160.00      $  585,827.64      $11,235,827.64
        50     11/1/05        62.11%        $147,916.67    $10,502,083.33       $ 68,160.00      $  521,573.15      $11,023,656.49
        51     12/1/05        60.91%        $147,916.67    $10,354,166.67       $ 68,160.00      $  456,890.31      $10,811,056.98
        52      1/1/06        59.71%        $147,916.67    $10,206,250.00       $ 34,080.00      $  391,776.24      $10,598,026.24
        53      2/1/06        58.70%        $147,916.67    $10,058,333.33       $ 34,080.00      $  360,308.09      $10,418,641.42
        54      3/1/06        57.68%        $147,916.67    $ 9,910,416.67       $ 34,080.00      $  328,630.14      $10,239,046.81
        55      4/1/06        56.67%        $147,916.67    $ 9,762,500.00       $ 34,080.00      $  296,741.01      $10,059,241.01
        56      5/1/06        55.66%        $147,916.67    $ 9,614,583.33       $ 34,080.00      $  264,639.28      $ 9,879,222.61
        57      6/1/06        54.64%        $147,916.67    $ 9,466,666.67       $ 34,080.00      $  232,323.54      $ 9,698,990.21
        58      7/1/06        53.63%        $147,916.67    $ 9,318,750.00       $ 34,080.00      $  199,792.37      $ 9,518,542.37
        59      8/1/06        52.61%        $147,916.67    $ 9,170,833.33       $ 34,080.00      $  167,044.31      $ 9,337,877.65
        60      9/1/06        51.59%        $147,916.67    $ 9,022,916.67       $ 34,080.00      $  134,077.94      $ 9,156,994.61
        61     10/1/06        50.57%        $147,916.67    $ 8,875,000.00       $ 34,080.00      $  100,891.80      $ 8,975,891.80
        62     11/1/06        49.55%        $147,916.67    $ 8,727,083.33       $ 34,080.00      $   67,484.41      $ 8,794,567.74
        63     12/1/06        48.52%        $147,916.67    $ 8,579,166.67       $ 34,080.00      $   33,854.30      $ 8,613,020.97
        64      1/1/07        47.50%        $147,916.67    $ 8,431,250.00                                           $ 8,431,250.00
        65      2/1/07        46.67%        $147,916.67    $ 8,283,333.33                                           $ 8,283,333.33
        66      3/1/07        45.83%        $147,916.67    $ 8,135,416.67                                           $ 8,135,416.67
        67      4/1/07        45.00%        $147,916.67    $ 7,987,500.00                                           $ 7,987,500.00
        68      5/1/07        44.17%        $147,916.67    $ 7,839,583.33                                           $ 7,839,583.33
        69      6/1/07        43.33%        $147,916.67    $ 7,691,666.67                                           $ 7,691,666.67
        70      7/1/07        42.50%        $147,916.67    $ 7,543,750.00                                           $ 7,543,750.00
        71      8/1/07        41.67%        $147,916.67    $ 7,395,833.33                                           $ 7,395,833.33
        72      9/1/07        40.83%        $147,916.67    $ 7,247,916.67                                           $ 7,247,916.67
        73     10/1/07        40.00%        $147,916.67    $ 7,100,000.00                                           $ 7,100,000.00
        74     11/1/07        39.17%        $147,916.67    $ 6,952,083.33                                           $ 6,952,083.33
        75     12/1/07        38.33%        $147,916.67    $ 6,804,166.67                                           $ 6,804,166.67
        76      1/1/08        37.50%        $147,916.67    $ 6,656,250.00                                           $ 6,656,250.00
        77      2/1/08        36.67%        $147,916.67    $ 6,508,333.33                                           $ 6,508,333.33
        78      3/1/08        35.83%        $147,916.67    $ 6,360,416.67                                           $ 6,360,416.67
        79      4/1/08        35.00%        $147,916.67    $ 6,212,500.00                                           $ 6,212,500.00
        80      5/1/08        34.17%        $147,916.67    $ 6,064,583.33                                           $ 6,064,583.33
        81      6/1/08        33.33%        $147,916.67    $ 5,916,666.67                                           $ 5,916,666.67
        82      7/1/08        32.50%        $147,916.67    $ 5,768,750.00                                           $ 5,768,750.00
</Table>


                                       23
<PAGE>

The Termination Value of the Aircraft shall be set forth opposite the applicable
rent payment, plus accrued interest to such date.

CAPITALIZED LESSOR'S COST:   $17,750,000.00

<Table>
<Caption>
                                                (1)              (2)               (3)               (4)                (2)+(4)
                           Termination       Ten Year                             Monthly        Present Value
   Payment     Monthly      Value as a     Straight-Line     Unamortized       Depreciation     Of Depreciation       Termination
   Number      Period       % of Cost      Amortization        Balance           Benefits           Benefits             Value
<S>          <C>           <C>            <C>              <C>                <C>               <C>                <C>
        83      8/1/08        31.67%        $147,916.67    $ 5,620,833.33                                           $ 5,620,833.33
        84      9/1/08        30.83%        $147,916.67    $ 5,472,916.67                                           $ 5,472,916.67
        85     10/1/08        30.00%        $147,916.67    $ 5,325,000.00                                           $ 5,325,000.00
        86     11/1/08        29.17%        $147,916.67    $ 5,177,083.33                                           $ 5,177,083.33
        87     12/1/08        28.33%        $147,916.67    $ 5,029,166.67                                           $ 5,029,166.67
        88      1/1/09        27.50%        $147,916.67    $ 4,881,250.00                                           $ 4,881,250.00
        89      2/1/09        26.67%        $147,916.67    $ 4,733,333.33                                           $ 4,733,333.33
        90      3/1/09        25.83%        $147,916.67    $ 4,585,416.67                                           $ 4,585,416.67
        91      4/1/09        25.00%        $147,916.67    $ 4,437,500.00                                           $ 4,437,500.00
        92      5/1/09        24.17%        $147,916.67    $ 4,289,583.33                                           $ 4,289,583.33
        93      6/1/09        23.33%        $147,916.67    $ 4,141,666.67                                           $ 4,141,666.67
        94      7/1/09        22.50%        $147,916.67    $ 3,993,750.00                                           $ 3,993,750.00
        95      8/1/09        21.67%        $147,916.67    $ 3,845,833.33                                           $ 3,845,833.33
        96      9/1/09        20.83%        $147,916.67    $ 3,697,916.67                                           $ 3,697,916.67
        97     10/1/09        20.00%        $147,916.67    $ 3,550,000.00                                           $ 3,550,000.00
        98     11/1/09        19.17%        $147,916.67    $ 3,402,083.33                                           $ 3,402,083.33
        99     12/1/09        18.33%        $147,916.67    $ 3,254,166.67                                           $ 3,254,166.67
       100      1/1/10        17.50%        $147,916.67    $ 3,106,250.00                                           $ 3,106,250.00
       101      2/1/10        16.67%        $147,916.67    $ 2,958,333.33                                           $ 2,958,333.33
       102      3/1/10        15.83%        $147,916.67    $ 2,810,416.67                                           $ 2,810,416.67
       103      4/1/10        15.00%        $147,916.67    $ 2,662,500.00                                           $ 2,662,500.00
       104      5/1/10        14.17%        $147,916.67    $ 2,514,583.33                                           $ 2,514,583.33
       105      6/1/10        13.33%        $147,916.67    $ 2,366,666.67                                           $ 2,366,666.67
       106      7/1/10        12.50%        $147,916.67    $ 2,218,750.00                                           $ 2,218,750.00
       107      8/1/10        11.67%        $147,916.67    $ 2,070,833.33                                           $ 2,070,833.33
       108      9/1/10        10.83%        $147,916.67    $ 1,922,916.67                                           $ 1,922,916.67
       109     10/1/10        10.00%        $147,916.67    $ 1,775,000.00                                           $ 1,775,000.00
       110     11/1/10         9.17%        $147,916.67    $ 1,627,083.33                                           $ 1,627,083.33
       111     12/1/10         8.33%        $147,916.67    $ 1,479,166.67                                           $ 1,479,166.67
       112      1/1/11         7.50%        $147,916.67    $ 1,331,250.00                                           $ 1,331,250.00
       113      2/1/11         6.67%        $147,916.67    $ 1,183,333.33                                           $ 1,183,333.33
       114      3/1/11         5.83%        $147,916.67    $ 1,035,416.67                                           $ 1,035,416.67
       115      4/1/11         5.00%        $147,916.67    $   887,500.00                                           $   887,500.00
       116      5/1/11         4.17%        $147,916.67    $   739,583.33                                           $   739,583.33
       117      6/1/11         3.33%        $147,916.67    $   591,666.67                                           $   591,666.67
       118      7/1/11         2.50%        $147,916.67    $   443,750.00                                           $   443,750.00
       119      8/1/11         1.67%        $147,916.67    $   295,833.33                                           $   295,833.33
       120      9/1/11         0.83%        $147,916.67    $   147,916.67                                           $   147,916.67
</Table>




                                       24
<PAGE>


                                                                       EXHIBIT I


================================================================================

                                 $1,500,000,000

                      AMENDED AND RESTATED CREDIT AGREEMENT

                                   dated as of

                                SEPTEMBER 8, 1999

                                      among

                          WILLIAMS COMMUNICATIONS, LLC,
                                   as Borrower

                      WILLIAMS COMMUNICATIONS GROUP, INC.,
                                  as Guarantor

                            THE LENDERS PARTY HERETO,

                             BANK OF AMERICA, N.A.,
                            as Administrative Agent,

                                       and

                            THE CHASE MANHATTAN BANK,
                              as Syndication Agent

                                   ----------

                            SALOMON SMITH BARNEY INC.

                                       and

                             LEHMAN BROTHERS, INC.,
                  as Joint Lead Arrangers and Joint Bookrunners
           with respect to the Incremental Facility referred to herein

                           SALOMON SMITH BARNEY INC.,

                             LEHMAN BROTHERS, INC.,

                                       and

                            MERRILL LYNCH & CO., INC.

                           as Co-Documentation Agents

================================================================================

<PAGE>



<Table>
<S>                                                                           <C>
                              ARTICLE 1 DEFINITIONS


SECTION 1.01.  Defined Terms......................................................1
SECTION 1.02.  Classification of Loans and Borrowings............................36
SECTION 1.03.  Terms Generally...................................................36
SECTION 1.04.  Accounting Terms; GAAP............................................37

                              ARTICLE 2 THE CREDITS


SECTION 2.01.  Commitments.......................................................38
SECTION 2.02.  Loans and Borrowings..............................................38
SECTION 2.03.  Requests for Borrowings...........................................39
SECTION 2.04.  Swingline Loans...................................................40
SECTION 2.05.  Letters of Credit.................................................42
SECTION 2.06.  Funding of Borrowings.............................................46
SECTION 2.07.  Interest Elections................................................47
SECTION 2.08.  Termination and Reduction of Commitments..........................48
SECTION 2.09.  Repayment of Loans; Evidence of Debt..............................51
SECTION 2.10.  Amortization of Term Loans and Incremental Term Loans.............52
SECTION 2.11.  Prepayment of Loans...............................................55
SECTION 2.12.  Fees..............................................................57
SECTION 2.13.  Interest..........................................................58
SECTION 2.14.  Alternate Rate of Interest........................................59
SECTION 2.15.  Increased Costs...................................................60
SECTION 2.16.  Break Funding Payments............................................61
SECTION 2.17.  Taxes.............................................................62
SECTION 2.18.  Payments Generally; Pro Rata Treatment; Sharing of Set-offs.......63
SECTION 2.19.  Mitigation Obligations; Replacement of Lenders....................65
SECTION 2.20.  Additional Incremental Facilities and Commitments.................66

                    ARTICLE 3 REPRESENTATIONS AND WARRANTIES


SECTION 3.01.  Organization; Powers..............................................67
SECTION 3.02.  Authorization; Enforceability.....................................67
SECTION 3.03.  Governmental Approvals; No Conflicts..............................68
SECTION 3.04.  Financial Condition; No Material Adverse Change...................68
SECTION 3.05.  Properties........................................................69
SECTION 3.06.  Litigation and Environmental Matters..............................69
SECTION 3.07.  Compliance with Laws and Agreements...............................70
SECTION 3.08.  Investment and Holding Company Status.............................70
</Table>


                                       i
<PAGE>


<Table>
<S>                                                                           <C>
SECTION 3.09.  Taxes.............................................................70
SECTION 3.10.  ERISA.............................................................70
SECTION 3.11.  Disclosure........................................................71
SECTION 3.12.  Subsidiaries......................................................71
SECTION 3.13.  Insurance.........................................................71
SECTION 3.14.  Labor Matters.....................................................71
SECTION 3.15.  Solvency..........................................................72
SECTION 3.16.  No Burdensome Restrictions........................................72
SECTION 3.17.  Representations in Loan Documents True and Correct................72

                              ARTICLE 4 CONDITIONS


SECTION 4.01.  Effective Date....................................................72
SECTION 4.02.  Each Credit Event.................................................72
SECTION 4.03.  First Incremental Borrowing Date with Respect to the Incremental
               Facility..........................................................73

                         ARTICLE 5 AFFIRMATIVE COVENANTS


SECTION 5.01.  Financial Statements and Other Information........................73
SECTION 5.02.  Notices of Material Events........................................76
SECTION 5.03.  Existence; Conduct of Business....................................76
SECTION 5.04.  Payment of Obligations............................................77
SECTION 5.05.  Maintenance of Properties.........................................77
SECTION 5.06.  Insurance.........................................................77
SECTION 5.07.  Casualty and Condemnation.........................................77
SECTION 5.08.  Books and Records; Inspection and Audit Rights....................77
SECTION 5.09.  Compliance with Laws..............................................78
SECTION 5.10.  Use of Proceeds and Letters of Credit.............................78
SECTION 5.11.A Initial Collateral Date...........................................78
SECTION 5.11.B Collateral Event..................................................79
SECTION 5.12.  Information Regarding Collateral..................................81
SECTION 5.13.  Additional Subsidiaries...........................................82
SECTION 5.14.  Further Assurances................................................83
SECTION 5.15.  Concentration Accounts............................................84
SECTION 5.16.  Dissolution of CNG................................................84
SECTION 5.17.  Sale of Solutions and ATL.........................................84
SECTION 5.18.  Qualifying Issuances..............................................84

                          ARTICLE 6 NEGATIVE COVENANTS


SECTION 6.01.  Indebtedness; Certain Equity Securities...........................85
SECTION 6.02.  Liens.............................................................87
</Table>


                                       ii
<PAGE>


<Table>
<S>                                                                           <C>
SECTION 6.03.  Fundamental Changes...............................................89
SECTION 6.04.  Investments, Loans, Advances, Guarantees and Acquisitions.........89
SECTION 6.05.  Asset Sales.......................................................92
SECTION 6.06.  Sale and Leaseback Transactions...................................93
SECTION 6.07.  Restricted Payments; Certain Payments of Indebtedness.............94
SECTION 6.08.  Limitation on Capital Expenditures................................95
SECTION 6.09.  Transactions with Affiliates......................................96
SECTION 6.10.  Restrictive Agreements............................................96
SECTION 6.11.  Fiscal Year.......................................................97
SECTION 6.12.  Change in Business................................................97
SECTION 6.13.  Amendment of Material Documents...................................97
SECTION 6.14.  Designation of Unrestricted Subsidiaries..........................97
SECTION 6.15.  Total Net Debt to Contributed Capital Ratio.......................98
SECTION 6.16.  Minimum EBITDA....................................................98
SECTION 6.17.  Total Leverage Ratio..............................................98
SECTION 6.18.  Senior Leverage Ratio.............................................99
SECTION 6.19.  Interest Coverage Ratio...........................................99
SECTION 6.20.  Financial Covenant Non-Compliance Cure............................99

                           ARTICLE 7 EVENTS OF DEFAULT


SECTION 7.01.  Events of Default................................................100

                              ARTICLE 8 THE AGENTS


SECTION 8.01.  Appointment, Powers, Immunities..................................103
SECTION 8.02.  Reliance by Agents...............................................104
SECTION 8.03.  Delegation to Sub-Agents.........................................104
SECTION 8.04.  Resignation of Agents............................................104
SECTION 8.05.  Non-reliance on Agents or other Lenders..........................105
SECTION 8.06.  Syndication Agent, Incremental Facility Arrangers and Co-
               Documentation Agents.............................................105

                          ARTICLE 9 HOLDINGS GUARANTEE


SECTION 9.01.  The Guarantee....................................................105
SECTION 9.02.  Guarantee Unconditional..........................................106
SECTION 9.03.  Discharge Only Upon Payment in Full; Reinstatement in Certain
               Circumstances....................................................106
SECTION 9.04.  Waiver...........................................................107
SECTION 9.05.  Subrogation......................................................107
</Table>


                                       iii
<PAGE>


<Table>
<S>                                                                           <C>
SECTION 9.06.  Stay of Acceleration.............................................107
SECTION 9.07.  Successors and Assigns...........................................107

                            ARTICLE 10 MISCELLANEOUS


SECTION 10.01.  Notices.........................................................108
SECTION 10.02.  Waivers; Amendments.............................................108
SECTION 10.03.  Expenses; Indemnity; Damage Waiver..............................110
SECTION 10.04.  Successors and Assigns..........................................111
SECTION 10.05.  Survival........................................................115
SECTION 10.06.  Counterparts; Integration; Effectiveness........................115
SECTION 10.07.  Severability....................................................116
SECTION 10.08.  Right of Setoff.................................................116
SECTION 10.09.  Governing Law; Jurisdiction; Consent to Service of Process......116
SECTION 10.10.  WAIVER OF JURY TRIAL............................................117
SECTION 10.11.  Headings........................................................117
SECTION 10.12.  Confidentiality.................................................117
SECTION 10.13.  Interest Rate Limitation........................................118
</Table>




                                       iv
<PAGE>


SCHEDULE 2.01  -  COMMITMENTS
SCHEDULE 3.05  -  REAL PROPERTY
SCHEDULE 3.06  -  DISCLOSED MATTERS
SCHEDULE 3.12  -  SUBSIDIARIES
SCHEDULE 3.13  -  INSURANCE
SCHEDULE 6.01  -  EXISTING INDEBTEDNESS
SCHEDULE 6.02  -  EXISTING LIENS
SCHEDULE 6.04  -  EXISTING INVESTMENTS
SCHEDULE 6.09  -  EXISTING AFFILIATE AGREEMENTS
SCHEDULE 6.10  -  EXISTING RESTRICTIVE AGREEMENTS



EXHIBIT A    -  FORM OF ASSIGNMENT AND ACCEPTANCE
EXHIBIT B    -  FORM OF BORROWING REQUEST
EXHIBIT C-1  -  FORM OF OPINION OF SPECIAL COUNSEL TO
                     HOLDINGS, THE BORROWER AND THE
                     SUBSIDIARY LOAN PARTIES
EXHIBIT C-2  -  FORM OF OPINION OF THE GENERAL COUNSEL OF HOLDINGS
EXHIBIT D    -  FORM OF SUBSIDIARY GUARANTEE
EXHIBIT E    -  FORM OF REVOLVING NOTE
EXHIBIT F    -  FORM OF TERM NOTE
EXHIBIT G    -  FORM OF INTERCOMPANY NOTE
EXHIBIT H    -  FORM OF INTERCREDITOR AGREEMENT
EXHIBIT I    -  [INTENTIONALLY DELETED]
EXHIBIT J    -  FORM OF PROMISSORY NOTE
EXHIBIT K    -  FORM OF SECURITY AGREEMENT
EXHIBIT L    -  FORM OF INCREMENTAL TERM NOTE



                                       v
<PAGE>



         AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") dated as of
September 8, 1999 among Williams Communications, LLC, a Delaware limited
liability company, Williams Communications Group, Inc., a Delaware corporation,
the LENDERS party hereto, BANK OF AMERICA, N.A., as Administrative Agent, THE
CHASE MANHATTAN BANK, as Syndication Agent, and SALOMON SMITH BARNEY INC. and
LEHMAN BROTHERS, INC., as Joint Lead Arrangers with respect to the Incremental
Facility referred to herein.

         WHEREAS, Holdings, the Borrower, the lenders party thereto, Bank of
America, N.A., as Administrative Agent, The Chase Manhattan Bank, as Syndication
Agent and Salomon Smith Barney Inc. and Lehman Brothers, Inc., as Joint Lead
Arrangers with respect to the Incremental Facility referred to herein, have
entered into an Amendment No. 5 dated as of April 12, 2001 ("Amendment No. 5")
pursuant to which such parties have agreed to amend and restate the Existing
Agreement referred to therein as set forth herein;

         NOW, THEREFORE, the parties hereto agree as follows:


                                    ARTICLE 1

                                   DEFINITIONS

         SECTION 1.1. Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:

         "ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.

         "Additional Capital" means the sum of:

                  (a) $850 million;

                  (b) the aggregate Net Proceeds received by the Borrower from
         the issuance or sale of any Qualifying Equity Interests of Holdings,
         subsequent to the Amendment No. 4 Effective Date; and

                  (c) the aggregate Net Proceeds from the issuance or sale of
         Qualifying Holdings Debt subsequent to the Amendment No. 4 Effective
         Date convertible or exchangeable into Qualifying Equity Interests of
         Holdings, in each case upon conversion or exchange thereof into
         Qualifying Equity Interests of Holdings subsequent to the Amendment No.
         4 Effective Date;



                                       1
<PAGE>


provided, however, that the Net Proceeds from the issuance or sale of Equity
Interests or Debt described in clause (b) or (c) shall be excluded from any
computation of Additional Capital to the extent (1) utilized to make a
Restricted Payment or (2) such Equity Interests or Debt shall have been issued
or sold to the Borrower, a Subsidiary of the Borrower or a Plan.

         "Additional Incremental Commitment" has the meaning assigned to such
term in Section 2.20.

         "Additional Incremental Facility" has the meaning assigned to such term
in Section 2.20.

         "Additional Incremental Facility Agreement" has the meaning assigned to
such term in Section 2.20.

         "Additional Incremental Lender" has the meaning assigned to such term
in Section 2.20.

         "Additional Incremental Loan" means an Additional Incremental Revolving
Loan or an Additional Incremental Term Loan.

         "Additional Incremental Revolving Commitment" has the meaning assigned
to such term in Section 2.20.

         "Additional Incremental Revolving Loan" has the meaning assigned to
such term in Section 2.20.

         "Additional Incremental Term Commitment" has the meaning assigned to
such term in Section 2.20.

         "Additional Incremental Term Loan" has the meaning assigned to such
term in Section 2.20.

         "Adjusted EBITDA" means, for any period of four consecutive fiscal
quarters:

                  (i) if such period is a period ending on or after June 30,
         1999 and on or before September 30, 2001,

                           (A) an amount equal to (x)(1) EBITDA for the last
                           fiscal quarter in such period plus (2) ADP Interest
                           Expense for such fiscal quarter minus (3) gain for
                           such fiscal quarter attributable to Dark Fiber and
                           Capacity Dispositions multiplied by (y) four, plus

                           (B) Dark Fiber and Capacity Proceeds for such period;
                           and



                                       2
<PAGE>


                 (ii)    if such period is any other period,

                           (A) EBITDA for such period plus (y) ADP Interest
                           Expense for such period minus (z) gain for such
                           period attributable to Dark Fiber and Capacity
                           Dispositions plus

                           (B) Dark Fiber and Capacity Proceeds for such period.

         "Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.

         "Administrative Agent" means Bank of America, in its capacity as
administrative agent for the Lenders hereunder, and any successor in such
capacity.

         "Administrative Questionnaire" means an Administrative Questionnaire in
a form supplied by the Administrative Agent.

         "ADP" means the program set forth in the Operative Documents.

         "ADP Event of Default" has the meaning assigned to such term in the
Intercreditor Agreement.

         "ADP Interest Expense" means, for any period, the amount that would be
accrued for such period in respect of the Borrower's obligations under the ADP
that would constitute "interest expense" for such period if such obligations
were treated as Capital Lease Obligations.

         "ADP Obligations" means all obligations of Holdings or any Subsidiary
under the ADP.

         "ADP Outstandings" means, at any time, the amount of the Borrower's
obligations at such time in respect of the ADP that would be considered
"principal" if such obligations were treated as Capital Lease Obligations.

         "ADP Property" has the meaning assigned to the term "Property" in the
Participation Agreement.

         "Affiliate" means, with respect to a specified Person, (i) another
Person that directly, or indirectly through one or more intermediaries, Controls
(a "controlling Person"), is Controlled by or is under common Control with the
specified Person, (ii) any Person that holds, directly or indirectly, 10% or
more of the Equity Interests of the specified Person and (iii) any Person 10% or
more of the Equity Interests of which are held directly or indirectly by the
specified Person or a controlling Person.


                                       3
<PAGE>


         "Agents" means, collectively, the Administrative Agent, the Syndication
Agent and each Co-Documentation Agent.

         "Alternate Base Rate" means, for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.

         "Amendment No.4 Effective Date" means March 19, 2001.

         "Amendment No. 5" has the meaning set forth in the preamble.

         "Amendment No. 5 Effective Date" means the date of effectiveness of
Amendment No. 5.

         "Applicable Margin" means, for any day, (a) with respect to any Term
Loan or Revolving Loan, (i) the applicable rate per annum set forth below under
the caption "Eurodollar Spread" or "ABR Spread", as the case may be, based upon
the ratings by S&P and Moody's, respectively, applicable on such date to the
Facilities plus (ii) the applicable rate per annum set forth below under the
caption "Leverage Premium", unless the Total Leverage Ratio, as determined by
reference to the financial statements delivered to the Administrative Agent in
respect of the most recently ended fiscal quarter of the Borrower, is less than
6:00 to 1:00:

         (b) with respect to any Incremental Tranche A Loan, (i) the applicable
rate per annum set forth below under the caption "Eurodollar Spread" or "ABR
Spread", as the case may be, based upon the ratings by S&P and Moody's,
respectively, applicable on such date to the Facilities plus (ii) the applicable
rate per annum set forth below under the caption "Leverage Premium", unless the
Total Leverage Ratio, as determined by reference to the financial statements
delivered to the Administrative Agent in respect of the most recently ended
fiscal quarter of the Borrower, is less than 6:00 to 1:00:

<Table>
<Caption>
                   FACILITIES           EURODOLLAR        ABR        LEVERAGE
                     RATING               SPREAD        SPREAD        PREMIUM
                   ----------           ----------      ------       --------
<S>            <C>                     <C>             <C>          <C>

LEVEL I         BBB- and Baa3 or           1.50%         0.50%         0.25%
                     higher

LEVEL II           BB+ and Ba1            1.875%        0.875%         0.25%

LEVEL III          BB and Ba2              2.25%         1.25%         0.25%

LEVEL IV           BB- and Ba3             2.50%         1.50%         0.25%

LEVEL V          Lower than BB-
                or lower than Ba3          2.75%         1.75%         0.25%
</Table>



                                       4
<PAGE>

         and

         (c) with respect to any Additional Incremental Loan, the Applicable
Margin in respect thereof set forth in the applicable Additional Incremental
Facility Agreement.

         For purposes of the foregoing clauses (a) and (b), (i) if neither S&P
nor Moody's shall have in effect a rating for the Facilities (other than by
reason of the circumstances referred to in the last sentence of this
definition), then the Applicable Margin shall be the rate set forth in Level V,
(ii) if either S&P or Moody's, but not both S&P and Moody's, shall have in
effect a rating for the Facilities, then the Applicable Margin shall be based on
such rating, (iii) if the ratings established by S&P and Moody's for the
Facilities shall fall within different Levels, then the Applicable Margin shall
be based on the lower of the two ratings, (iv) if the ratings established by S&P
and Moody's for the Facilities shall fall within the same Level, then the
Applicable Margin shall be based on that Level and (v) if the ratings
established by S&P and Moody's for the Facilities shall be changed (other than
as a result of a change in the rating system of S&P or Moody's), such change
shall be effective as of the date on which it is first announced by the
applicable rating agency. Each change in the Applicable Margin shall apply
(other than with respect to the Leverage Premium or as described in the
immediately succeeding sentence or the immediately succeeding paragraph) during
the period commencing on the effective date of such change and ending on the
date immediately preceding the effective date of the next such change. If the
rating system of S&P or Moody's shall change, or if either such rating agency
shall cease to be in the business of rating corporate debt obligations, the
Borrower and the Lenders shall negotiate in good faith to amend this definition
to reflect such changed rating system or the unavailability of ratings from such
rating agency and, pending the effectiveness of any such amendment, the
Applicable Margin shall be determined by reference to the rating most recently
in effect prior to such change or cessation. Any such amendment shall be subject
to the provisions of Section 10.02(b).

         If the Borrower shall enter into any Additional Incremental Facility
Agreement, the Borrower, the Incremental Facility Arrangers and the
Administrative Agent, on behalf of the then current Lenders, shall evaluate in
good faith at such time whether to amend this definition of Applicable Margin
with respect to the Term Loans, the Revolving Loans and the Incremental Tranche
A Term Loans. Any such amendment shall be subject to the provisions of Section
10.02(b).

         "Applicable Percentage" means, with respect to any Revolving Lender,
the percentage of the total Revolving Commitments represented by such Lender's
Revolving Commitment. If the Revolving Commitments have terminated or expired,
the Applicable Percentages shall be determined based upon the Revolving
Commitments most recently in effect, giving effect to any assignments.


                                       5
<PAGE>


         "Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 10.04), and accepted by the Administrative Agent, in the
form of Exhibit A or any other form approved by the Administrative Agent.

         "ATL" means ATL-Algar Telecom Leste S.A., a Brazilian corporation.

         "Attributable Debt" means, on any date, in respect of any lease of
Holdings or any Restricted Subsidiary entered into as part of a Sale and
Leaseback Transaction subject to Section 6.06(ii), (i) if such lease is a
Capital Lease Obligation, the capitalized amount thereof that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP,
and (ii) if such lease is not a Capital Lease Obligation, the capitalized amount
of the remaining lease payments under such lease that would appear on a balance
sheet of such Person prepared as of such date in accordance with GAAP if such
lease were accounted for as a Capital Lease Obligation.

         "Bank of America" means Bank of America, N.A.

         "Board" means the Board of Governors of the Federal Reserve System of
the United States of America.

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

         "Borrowing" means (a) Loans of the same Class and Type, made, converted
or continued on the same date and, in the case of Eurodollar Loans, as to which
a single Interest Period is in effect, or (b) a Swingline Loan.

         "Borrowing Request" means a request by the Borrower for a Borrowing in
accordance with Section 2.03.

         "Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York, New York or Dallas, Texas are
authorized or required by law to remain closed; provided that, when used in
connection with a Eurodollar Loan, the term "Business Day" shall also exclude
any day on which banks are not open for dealings in dollar deposits in the
London interbank market.

         "Capital Expenditures" means, for any period, the additions to
property, plant and equipment and other capital expenditures of Holdings and the
Restricted Subsidiaries that are (or would be) set forth in a consolidated
statement of cash flows of Holdings and the Restricted Subsidiaries for such
period prepared in accordance with GAAP, other than any such capital
expenditures that constitute Investments permitted under Section 6.04 (other
than Section 6.04(i)); provided that any use during such period of the proceeds
of any such Investment made by the recipient thereof for additions to property,
plant and equipment and other capital expenditures, as described in this
definition, shall (unless


                                       6
<PAGE>


such use shall, itself, constitute an Investment permitted under Section 6.04
(other than Section 6.04(i)) constitute "Capital Expenditures".

         "Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.

         "Cash Equivalent Investments" means:

                   (1) Government Securities maturing, or subject to tender at
         the option of the holder thereof, within two years after the date of
         acquisition thereof;

                   (2) time deposits and certificates of deposit of (a) any
         commercial bank organized in the United States having capital and
         surplus in excess of $500,000,000 or (b) any branch located in the
         United States of any commercial bank organized under the law of any
         other country that is a member of the Organization for Economic
         Cooperation and Development having total assets in excess of
         $500,000,000, or its foreign currency equivalent at the time, in either
         case with a maturity date not more than one year from the date of
         acquisition;

                   (3) repurchase obligations with a term of not more than 30
         days for underlying securities of the types described in clause (1)
         above entered into with (a) any bank meeting the qualifications
         specified in clause (2) above or (b) any primary government securities
         dealer reporting to the Market Reports Division of the Federal Reserve
         Bank of New York;

                   (4) direct obligations issued by any state of the United
         States or any political subdivision of any such state or any public
         instrumentality thereof maturing, or subject to tender at the option of
         the holder of such obligation, within one year after the date of
         acquisition thereof; provided that, at the time of acquisition, the
         long-term debt of such state, political subdivision or public
         instrumentality has a rating of A, or higher, from S&P or A-2 or higher
         from Moody's or, if at any time neither S&P nor Moody's shaft be rating
         such obligations, then an equivalent rating from such other nationally
         recognized rating service as is acceptable to the Administrative Agent;

                  (5) commercial paper issued by the parent corporation of (a)
         any commercial bank organized in the United States having capital and
         surplus in excess of $500,000,000 or (b) any branch located in the
         United States of any commercial bank organized under the laws of any
         other country that is a member of the Organization for Economic
         Cooperation and Development having total


                                       7
<PAGE>


         assets in excess of $500,000,000, or its foreign currency equivalent at
         the time, and money market instruments and commercial paper issued by
         others having one of the three highest ratings obtainable from either
         S&P or Moody's, or, if at any time neither S&P nor Moody's shall be
         rating such obligations, then from such other nationally recognized
         rating service as is acceptable to the Administrative Agent and in each
         case maturing within one year after the date of acquisition;

                  (6) overnight bank deposits and bankers' acceptances at (a)
         any commercial bank organized in the United States having capital and
         surplus in excess of $500,000,000 or (b) any branch located in the
         United States of any commercial bank organized under the laws of any
         other country that is a member of the Organization for Economic
         Cooperation and Development having total assets in excess of
         $500,000,000 or its foreign currency equivalent at the time;

                  (7) deposits available for withdrawal on demand with (a) a
         commercial bank organized in the United States having capital and
         surplus in excess of $500,000,000 or (b) any branch located in the
         United States of any commercial bank organized under the laws of any
         other country that is a member of the Organization for Economic
         Cooperation and Development having total assets in excess of
         $500,000,000 or its foreign currency equivalent at the time; and

                  (8) investments in money market funds substantially all of
         whose assets comprise securities of the types described in clauses (1)
         through (7).

         "Change in Control" means:

         (a) the acquisition of ownership, directly or indirectly, beneficially
or of record, by any Person other than Holdings of any shares of capital stock
of the Borrower;

         (b) the acquisition of ownership, directly or indirectly, beneficially
or of record, by any Person or group (within the meaning of Section 13(d) or
14(d) of the Exchange Act and the rules of the Commission thereunder as in
effect on the date hereof) other than the Parent and its subsidiaries, of shares
representing more than 35% of either (i) the aggregate ordinary voting power
represented by the issued and outstanding Voting Stock of Holdings or (ii) the
issued and outstanding capital stock of Holdings;

         (c) other than as a result of the consummation of the Spin-Off, the
failure of the Parent and its subsidiaries to own, directly or indirectly, (i)
more than 75% (or, if (x) the Facilities are rated at least BBB- by S&P and Baa3
by Moody's and (y) the Parent shall have been released from its obligations
under the Parent Guarantee, 35%) of the aggregate ordinary voting power
represented by the issued and outstanding Voting Stock of Holdings or (ii) more
than 65% (or, if (x) the Facilities are rated at least BBB- by S&P and Baa3 by
Moody's and (y) the Parent shall have been released from its obligations under
the Parent Guarantee, 35%) of the issued and outstanding capital stock of
Holdings;


                                       8
<PAGE>


         (d) occupation of a majority of the seats (other than vacant seats) on
the board of directors of Holdings by Persons who were neither (i) nominated by
the board of directors of Holdings nor (ii) appointed by directors so nominated;
or

         (e) the acquisition of direct or indirect Control of Holdings by any
Person or group (other than, prior to the consummation of the Spin-Off, the
Parent).

         "Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender, any Swingline
Lender or any Issuing Bank (or, for purposes of Section 2.15(b), by any lending
office of such Lender, Swingline Lender or Issuing Bank or by such Lender's,
Swingline Lender's or Issuing Bank's holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.

         "Chase" means The Chase Manhattan Bank.

         "Class" means, when used in reference to any Loan or Borrowing, to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans,
Term Loans, Swingline Loans, Incremental Term Loans or Additional Incremental
Loans and, when used in reference to any Commitment or Facility, refers to
whether such Commitment or Facility is a Revolving Commitment or Facility, a
Term Commitment or Facility, an Incremental Commitment or Facility or an
Additional Incremental Commitment or Facility. The Additional Incremental Loans,
Borrowings thereof and Additional Incremental Commitments under each Additional
Incremental Facility shall constitute a separate Class from the Additional
Incremental Loans, Borrowings thereof and Additional Incremental Commitments
under each other Additional Incremental Facility, and if an Additional
Incremental Facility includes Additional Incremental Revolving Commitments and
Additional Incremental Term Commitments, such Additional Incremental Revolving
Commitments and Additional Incremental Term Commitments and the Additional
Incremental Revolving Loans and Borrowings thereof and the Additional
Incremental Term Loans and Borrowings thereof, respectively, thereunder shall
constitute separate Classes.

         "CNG" means CNG Computer Networking Group, Inc., a Delaware
corporation, and its successors and assigns.

         "Co-Documentation Agent" means each of Salomon Smith Barney Inc.,
Lehman Brothers, Inc. and Merrill Lynch & Co., Inc., in each case in its
capacity as a co-documentation agent hereunder.


                                       9
<PAGE>


         "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

         "Collateral" means any and all "Collateral", as defined in any
applicable Collateral Document.

         "Collateral Documents" means the Security Agreement and all security
agreements, pledge agreements, mortgages and other security agreements or
instruments or documents executed and delivered pursuant to Section 5.11B, 5.13
or 5.14.

         "Collateral Establishment Date" has the meaning assigned to such term
in Section 5.11B.

         "Collateral Event" means the failure of the Facilities to be rated at
least (i) BB- by S&P and (ii) Ba3 by Moody's.

         "Collateral Notice has the meaning assigned to such term in Section
5.11B.

         "Collateral Release Event" means the occurrence, after the occurrence
of a Collateral Event, of the earlier to occur of (i) the termination of the
Commitments, the payment in full of all obligations under the Loan Documents and
the expiration or termination of all Letters of Credit and (ii) the rating of
the Facilities by S&P of BB+ or greater and by Moody's of Ba1 or greater, in
each case after giving effect to the release of all Collateral.

         "Commission" means the United States Securities and Exchange
Commission.

         "Commitment" means a Revolving Commitment, a Term Commitment, an
Incremental Commitment, an Additional Incremental Commitment or any combination
thereof (as the context requires).

         "Commitment Fee Rate" means, (a) with respect to the Revolving
Commitments and the Term Commitments, a rate per annum equal to (x) 1.00% for
each day on which Usage is less than 33.3%, (y) 0.75% for each day on which
Usage is equal to or greater than 33.3% but less than 66.6% and (z) 0.50% for
each day on which Usage is equal to or greater than 66.6% and (b) with respect
to the Incremental Tranche A Commitments, 0.75% for each day. For purposes of
the foregoing, "Usage" means, on any date, the percentage obtained by dividing
(i) in the case of Revolving Commitments, (a) the aggregate Revolving Exposure
on such date less the aggregate principal amount of all Swingline Loans
outstanding on such date by (b) the aggregate outstanding Revolving Commitments
on such date and (ii) in the case of Term Commitments, (a) the aggregate
principal amount of all Term Loans outstanding on such date by (b) the sum of
the aggregate principal amount of all Term Loans outstanding on such date and
the aggregate unused Term Commitments on such date.

         "Commitment Fees" has the meaning assigned to such term in Section
2.12.


                                       10
<PAGE>


         "Consolidated Net Income" means, for any period, the net income or loss
of Holdings and the Restricted Subsidiaries (exclusive of the portion of net
income allocable to Persons that are not Restricted Subsidiaries, except to the
extent such amounts are received in cash by the Borrower or a Restricted
Subsidiary) for such period.

         "Consolidated Assets" means, at any date, the consolidated assets of
Holdings and the Restricted Subsidiaries.

         "Contributed Capital" means, at any date, (i) Total Net Debt at such
date plus (ii) without duplication, all cash proceeds received by Holdings on or
prior to such date from contributions to the capital, or purchases of common
equity securities, of Holdings, including, without limitation, the proceeds of
the Equity Issuance, and all other capital contributions made by the Parent and
its subsidiaries (other than Holdings and its Subsidiaries) to Holdings, but
only to the extent that proceeds of any of the foregoing are contributed by
Holdings to the Borrower.

         "Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have correlative meanings.

         "Dark Fiber and Capacity Proceeds" means, for any period, cash proceeds
received by Holdings and the Restricted Subsidiaries in respect of Dark Fiber
and Capacity Dispositions during such period.

         "Dark Fiber and Capacity Disposition" means a lease, sale, conveyance
or other disposition of fiber optic cable or capacity for a period constituting
all or substantially all of the expected useful life of either the fiber optic
cable (in the case of Dark Fiber Disposition) or optronic equipment generating
the capacity (in the case of Capacity Disposition) thereof.

         "Deemed Subsidiary Investment" has the meaning assigned to such term in
Section 6.14.

         "Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.

         "Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.

         "Disqualified Stock" of any Person means any Equity Interest of such
Person which, by its terms, or by the terms of any security into which it is
convertible or for which it is exchangeable, or upon the happening of any event,
matures or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the option of the holder thereof, in whole or in
part, on or prior to the first anniversary of the Term Maturity Date.


                                       11
<PAGE>


         "dollars" or "$" refers to lawful money of the United States of
America.

         "EBITDA" means, for any period,

                  (i Consolidated Net Income for such period,

          plus,

                  (ii to the extent deducted in determining Consolidated Net
         Income, the sum, without duplication, of (w) interest expense, (x)
         income tax expense, (y) depreciation and amortization expense and (z)
         non-cash extraordinary or non-recurring charges (if any), in each case
         recognized in such period;

          minus,

                  (iii to the extent included in Consolidated Net Income for
         such period, extraordinary or non-recurring gains (if any), in each
         case recognized in such period.

         "Effective Date" means September 8, 1999.

         "Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material, the health effects of Hazardous Materials or safety matters.

         "Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of Holdings or any Restricted Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.

         "Equity Interests" means shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person.


                                       12
<PAGE>


         "Equity Issuance" means the issuance and sale by Holdings of its common
stock (x) in an initial public offering or (y) to certain strategic investors
other than the Parent or any of its subsidiaries or Affiliates.

         "Equity Issuance Registration Statement" means Amendment No. 7 to the
Registration Statement on Form S-1 with respect to the Equity Issuance filed by
Holdings with the Commission on September 2, 1999.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

         "ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.

         "ERISA Event" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.

         "Eurodollar", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.

         "Event of Default" has the meaning assigned to such term in Article 7.

         "Excess Cash Flow" means, for any fiscal period, the sum (without
duplication) of:


                                       13
<PAGE>


                  (a) the Consolidated Net Income (or loss) of Holdings and the
         Restricted Subsidiaries for such period, adjusted to exclude any gains
         or losses attributable to Prepayment Events; plus

                  (b) depreciation, amortization, non-cash interest expense and
         other non-cash charges or losses deducted in determining Consolidated
         Net Income (or loss) for such period; plus

                  (c) the sum of (i) the amount, if any, by which Net Working
         Capital decreased during such period plus (ii) the amount, if any, by
         which the consolidated deferred revenues of Holdings and the Restricted
         Subsidiaries increased during such period plus (iii) the aggregate
         principal amount of Capital Lease Obligations and other Indebtedness
         incurred during such period to finance Capital Expenditures, to the
         extent that mandatory principal payments in respect of such
         Indebtedness would not be excluded from clause (f) below when made;
         minus

                  (d) the sum of (i) any non-cash gains included in determining
         Consolidated Net Income (or loss) for such period plus (ii) the amount,
         if any, by which Net Working Capital increased during such period plus
         (iii) the amount, if any, by which the consolidated deferred revenues
         of Holdings and the Restricted Subsidiaries decreased during such
         period; minus

                  (e) Capital Expenditures for such period; minus

                  (f) the aggregate principal amount of long-term Indebtedness
         (including pursuant to Capital Lease Obligations) repaid or prepaid by
         Holdings and the Restricted Subsidiaries during such period, excluding
         (i) Indebtedness in respect of Revolving Loans, Incremental Revolving
         Loans, Additional Incremental Revolving Loans and Letters of Credit,
         (ii) Term Loans, Incremental Term Loans and Additional Incremental Term
         Loans prepaid pursuant to Section 2.11(b) or (c), (iii) repayments or
         prepayments of Indebtedness financed by incurring other Indebtedness,
         to the extent that mandatory principal payments in respect of such
         other Indebtedness would not be excluded from this clause (f) when made
         and (iv) Indebtedness referred to in Sections 6.01(d), 6.01(f),
         6.01(g), 6.01(i), 6.01(j), 6.01(k) and 6.01(o).

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "Excluded Taxes" means, with respect to the Administrative Agent, any
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is a
resident or is organized or in which its principal


                                       14
<PAGE>


office is located or, in the case of any Lender, in which its applicable lending
office is located, (b) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction described in clause
(a) above and (c) in the case of a Foreign Lender (other than an assignee
pursuant to a request by the Borrower under Section 2.19(b)) or any Participant
that would be a Foreign Lender if it were a Lender, any withholding tax that (i)
is imposed on or with respect to amounts payable to such Foreign Lender or
Participant at the time such Foreign Lender becomes a party to this Agreement
(or designates a new lending office) or such Participant become a Participant,
except to the extent that such Foreign Lender (or its assignor, if any) or
Participant was entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts from the Borrower with respect to
such withholding tax pursuant to Section 2.17(a) or (ii) is attributable to such
Foreign Lender or Participant's failure to comply with Section 2.17(e).

         "Existing International Joint Ventures" means ATL, PowerTel Limited and
Telefonica Manquehue, S.A.

         "Facilities" means the Term Facility, the Revolving Facility, the
Incremental Facility and each Additional Incremental Facility.

         "Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.

         "Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of Holdings or the Borrower, as the
case may be.

         "First Incremental Borrowing Date" means the date on which the first
Borrowing under the Incremental Facility is made in accordance with Section
4.03.

         "Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.

         "Foreign Subsidiary" means any Subsidiary that is organized under the
laws of a jurisdiction other than the United States of America or any State
thereof or the District of Columbia, other than a Subsidiary that is (whether as
a matter of law, pursuant to an election by such Subsidiary or otherwise)
treated as a partnership in which any Subsidiary



                                       15
<PAGE>


that is not a Foreign Subsidiary is a partner or as a branch of any Subsidiary
that is not a Foreign Subsidiary for United States income tax purposes.

         "GAAP" means generally accepted accounting principles in the United
States of America.

         "Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.

         "Government Securities" means direct obligations of, or obligations
fully and unconditionally guaranteed or insured by, the United States of America
or any agency or instrumentality thereof for the payment of which obligations or
guarantee the full faith and credit of the United States is pledged and which
are not callable or redeemable at the issuer's option; provided that, for
purposes of the definition of "Cash Equivalents Investments" only, such
obligations shall not constitute Government Securities if they are redeemable or
callable at a price less than the purchase price paid by the Borrower or the
applicable other Restricted Subsidiary, together with all accrued and unpaid
interest, if any, on such Government Securities.

         "Granting Lender" has the meaning set forth in Section 10.04(b)(2).

         "Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.

         "Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of


                                       16
<PAGE>


any nature regulated pursuant to any Environmental Law as hazardous, toxic, a
pollutant or a contaminant.

         "Hedge Counterparty" means each Lender that is, and each affiliate of
any Lender that is, a counterparty under a Hedging Agreement entered into with
the Borrower or any other Restricted Subsidiary.

         "Hedging Agreement" means any interest rate protection agreement,
commodity price protection agreement or other interest or currency exchange rate
or commodity price hedging arrangement.

         "High Yield Notes" means the notes issued by Holdings (i) the terms of
which either (A) are substantially similar to the terms set forth in the Notes
Offering Registration Statement or (B) are otherwise approved by the
Administrative Agent and the Syndication Agent after consultation with the
Required Banks and (ii) no part of the principal of which is required to be paid
(upon maturity or by mandatory sinking fund, mandatory redemption, mandatory
prepayment or otherwise) prior to the date that is one year after the Term
Maturity Date.

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

         "Incremental Commitments" means the Incremental Tranche A Commitments.

         "Incremental Facility" means the Incremental Tranche A Facility.

         "Incremental Facility Arrangers" means Salomon Smith Barney Inc. and
Lehman Brothers, Inc., in their respective capacities as joint lead arrangers of
the Incremental Facility.

         "Incremental Lenders" means the Incremental Tranche A Lenders.

         "Incremental Term Loans" means the Incremental Tranche A Term Loans.

         "Incremental Tranche A Amortization Date" means December 31, 2002.

         "Incremental Tranche A Commitments" means with respect to each
Incremental Tranche A Lender, the commitment, if any, of such Lender to make
Incremental Tranche A Term Loans hereunder during the Incremental Tranche A Term
Loan Availability Period, expressed as an amount representing the maximum
principal amount of the Incremental Tranche A Term Loans to be made by such
Lender hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 10.04. The initial
amount of each Lender's Incremental Tranche A Term Commitment is set forth on
Schedule 2.01(b), or in the Assignment and Acceptance


                                       17
<PAGE>


pursuant to which such Lender shall have assumed its Incremental Tranche A Term
Commitment, as applicable. The initial aggregate amount of the Incremental
Tranche A Lenders' Incremental Tranche A Term Commitments is $450,000,000.

         "Incremental Tranche A Commitment Termination Date" means the date that
is the earlier of (i) 180 days after the Amendment No. 5 Effective Date and (ii)
the date of termination of the Incremental Tranche A Commitments.

         "Incremental Tranche A Facility" means the Incremental Tranche A
Commitments and the Incremental Tranche A Term Loans hereunder.

         "Incremental Tranche A Lenders" means a Lender with an Incremental
Tranche A Commitment or an outstanding Incremental Tranche A Term Loan.

         "Incremental Tranche A Maturity Date" means September 8, 2006.

         "Incremental Tranche A Term Loan" means a Loan made pursuant to Section
2.01(b)(i).

         "Incremental Tranche A Term Loan Availability Period" means the period
from and including the First Incremental Borrowing Date to but excluding the
earlier of (i) the Incremental Tranche A Commitment Termination Date and (ii)
the date of termination of the Incremental Tranche A Commitments.

         "Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
under conditional sale or other title retention agreements relating to property
acquired by such Person, (d) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding (i) current accounts
payable incurred in the ordinary course of business and (ii) payment obligations
of such Person to the owner of assets used in a Telecommunications Business for
the use thereof pursuant to a lease or other similar arrangement with respect to
such assets or a portion thereof entered into in the ordinary course of
business), (e) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on property owned or acquired by such Person, whether or not the
Indebtedness secured thereby has been assumed, (f) all Guarantees by such Person
of Indebtedness of others, (g) all (x) Capital Lease Obligations of such Person
(provided that Capital Lease Obligations in respect of fiber optic cable
capacity arising in connection with exchanges of such capacity shall constitute
Indebtedness only to the extent of the amount of such Person's liability in
respect thereof net (but not less than zero) of such Person's right to receive
payments obtained in exchange therefor) and (y) ADP Outstandings, if any, of
such Person, (h) all obligations, contingent or otherwise, of such Person as an
account party in respect of letters of credit and letters of guaranty, (i) all
obligations, contingent or otherwise, of such


                                       18
<PAGE>


Person in respect of bankers' acceptances, (j) any Disqualified Stock and (k)
all obligations under any Hedging Agreements or Permitted Specified Security
Hedging Transactions. The Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result
of such Person's ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such Person is
not liable therefor. Indebtedness of the Borrower and the other Subsidiaries
shall exclude any Indebtedness of Holdings that would otherwise constitute
Indebtedness of the Borrower or any such Subsidiary only under clause (e) above
and solely by virtue of a Lien created under the Loan Documents in accordance
with Section 5.11B(d), and Indebtedness of Holdings and the Subsidiaries shall
exclude any Indebtedness of the Parent that would otherwise constitute
Indebtedness of Holdings or any Subsidiary only under clause (e) above and
solely by virtue of a Lien created under the Loan Documents in accordance with
Section 5.11B(d).

         "Indemnified Taxes" means Taxes other than Excluded Taxes.

         "Information Memorandum" means the Confidential Information Memorandum
dated August 1999 relating to the Parent, Holdings, the Borrower and the
Transactions.

         "Initial Collateral Date" means the first date on which the Parent
ceases to own at least a majority of the outstanding securities having ordinary
voting power of Holdings, whether as a result of the consummation of the
Spin-Off or otherwise.

         "Intercreditor Agreement" means the Intercreditor Agreement,
substantially in the form of Exhibit H hereto, among the Lenders, the Parent,
Holdings and the Borrower.

         "Interest Coverage Ratio" means, at any date, the ratio of (i) the
amount equal to (A) EBITDA plus (B) ADP Interest Expense minus (C) gains
attributable to Dark Fiber and Capacity Dispositions plus (D) Dark Fiber and
Capacity Proceeds to (ii) Interest Expense, in each case for the period of four
consecutive fiscal quarters most recently ended on or prior to such date.

         "Interest Election Request" means a request by the Borrower to convert
or continue a Revolving Borrowing or Term Borrowing in accordance with Section
2.07.

         "Interest Expense" means, for any period, the cash interest expense of
Holdings and the Restricted Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP plus ADP Interest Expense for such
period, net of interest income for such period.

         "Interest Payment Date" means (a) with respect to any ABR Loan (other
than a Swingline Loan), the last day of each March, June, September and
December, (b) with respect to any Eurodollar Loan, the last day of the Interest
Period applicable to the Borrowing of which such Loan is a part and, in the case
of a Eurodollar Borrowing with


                                       19
<PAGE>


an Interest Period of more than three months' duration, each day prior to the
last day of such Interest Period that occurs at intervals of three months'
duration after the first day of such Interest Period, and (c) with respect to
any Swingline Loan, the day that such Loan is required to be repaid.

         "Interest Period" means with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three, or six months
(or if corresponding funding is available to each Lender of the applicable
Class, twelve months) thereafter, as the Borrower may elect; provided, that (i)
if any Interest Period would end on a day other than a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day and
(ii) any Interest Period that commences on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
last calendar month of such Interest Period) shall end on the last Business Day
of the last calendar month of such Interest Period. For purposes hereof, the
date of a Borrowing initially shall be the date on which such Borrowing is made
and thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.

         "Issuing Bank" means each of Bank of America and Chase, each in its
capacity as an issuer of Letters of Credit hereunder, and its successors in such
capacity as provided in Section 2.05(i). Each Issuing Bank may, in its
discretion, arrange for one or more Letters of Credit to be issued by affiliates
of the Issuing Bank, in which case the term "Issuing Bank" shall include any
such affiliate with respect to Letters of Credit issued by such affiliate.

         "Investment" has the meaning assigned to such term in Section 6.04.

         "LC Disbursement" means a payment made by an Issuing Bank pursuant to a
Letter of Credit.

         "LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Revolving Lender at any
time shall be its Applicable Percentage of the total LC Exposure at such time.

         "Lenders" means the Persons listed on Schedule 2.01, any Additional
Incremental Lender that shall become a Lender pursuant to Section 2.20 and any
other Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance. Unless the context otherwise requires, the term
"Lenders" includes the Swingline Lenders and the Additional Incremental Lenders.


                                       20
<PAGE>


         "Leverage Target Date" means the first date on or after March 31, 2002
on which the Total Leverage Ratio for the fiscal quarter (or fiscal year, as the
case may be) most recently ended and with respect to which Holdings and the
Borrower shall have delivered the financial statements required to be delivered
by them with respect to such fiscal quarter (or fiscal year, as the case may be)
pursuant to Section 5.01(a) or 5.01(b) does not exceed 3.5:1.0.

         "Letter of Credit" means any letter of credit issued pursuant to this
Agreement.

         "LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate (rounded
upwards, if necessary, to the next 1/16 of 1%) at which dollar deposits of
$5,000,000 and for a maturity comparable to such Interest Period are offered by
the principal London office of the Administrative Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.

         "Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.

         "Loan Documents" means this Agreement, the Parent Guarantee, the
Subsidiary Guarantee, the Intercreditor Agreement, any Additional Incremental
Facility Agreement and the Collateral Documents (if any).

         "Loan Parties" means Holdings, the Borrower and the Subsidiary Loan
Parties.

         "Loan Party Guarantees" means the Subsidiary Guarantee.

         "Loans" means the loans made by the Lenders to the Borrower pursuant to
this Agreement.


                                       21
<PAGE>


         "Mark-to-Market Valuation" means, at any date with respect to any
Hedging Agreement or Permitted Specified Security Hedging Transaction, all net
obligations under such Hedging Agreement or Permitted Specified Security Hedging
Transaction in an amount equal to (i) if such Hedging Agreement or Permitted
Specified Security Hedging Transaction has been closed out, the termination
value thereof or (ii) if such Hedging Agreement or Permitted Specified Security
Hedging Transaction has not been closed out, the mark-to-market value thereof
determined on the basis of readily available quotations provided by any
recognized dealer in Hedging Agreements or other transactions similar to such
Hedging Agreement or Permitted Specified Security Hedging Transaction."

         "Material Adverse Change" means any event, development or circumstance
that has had or could reasonably be expected to have a Material Adverse Effect.

         "Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
Holdings and its Subsidiaries taken as a whole, (b) the ability of any Loan
Party to perform any of its obligations under any Loan Document or (c) the
rights of or benefits available to the Lenders under any Loan Document.

         "Material Indebtedness" means Indebtedness (other than the Loans and
Letters of Credit) of any one or more of Holdings and the Restricted
Subsidiaries in an aggregate principal amount exceeding $25,000,000. For
purposes of determining Material Indebtedness, the "principal amount" of the
obligations of Holdings or any Restricted Subsidiary in respect of any Hedging
Agreement or Permitted Specified Security Hedging Transaction at any time shall
be the maximum aggregate amount (giving effect to any netting agreements) that
Holdings or such Restricted Subsidiary would be required to pay if such Hedging
Agreement or Permitted Specified Security Hedging Transaction were terminated at
such time.

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

         "Mortgage" means a mortgage, deed of trust, assignment of leases and
rents, leasehold mortgage or other security document granting a Lien on any
Mortgaged Property to secure the Obligations.

         "Mortgage Establishment Date" has the meaning assigned to such term in
Section 5.11B(b).

         "Mortgaged Property" means each parcel of real property and the
improvements thereto owned by a Loan Party with respect to which a Mortgage is
granted pursuant to Section 5.11B(b).

         "Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.


                                       22
<PAGE>


         "Net Proceeds" means, with respect to any event (a) the cash proceeds
received in respect of such event including (i) any cash received in respect of
any non-cash proceeds, but only as and when received, (ii) in the case of a
casualty, insurance proceeds, and (iii) in the case of a condemnation or similar
event, condemnation awards and similar payments, net of (b) the sum of (i) all
reasonable fees and out-of-pocket expenses paid by Holdings and the Restricted
Subsidiaries to third parties (other than Affiliates) in connection with such
event, (ii) in the case of a sale or other disposition of an asset (including
pursuant to a casualty or condemnation), the amount of all payments required to
be made by Holdings and the Restricted Subsidiaries as a result of such event to
repay Indebtedness (other than Loans) secured by such asset or otherwise subject
to mandatory prepayment as a result of such event, and (iii) the amount of all
taxes paid (or reasonably estimated to be payable) by Holdings and the
Restricted Subsidiaries, and the amount of any reserves established by Holdings
and the Restricted Subsidiaries to fund contingent liabilities reasonably
estimated to be payable, in each case during the year that such event occurred
or the next succeeding year and that are directly attributable to such event (as
determined reasonably and in good faith by the chief financial officer of
Holdings).

         "Net Working Capital" means, at any date, (a) the consolidated current
assets of Holdings and the Restricted Subsidiaries as of such date (excluding
cash and Cash Equivalent Investments) minus (b) the consolidated current
liabilities of Holdings and the Restricted Subsidiaries as of such date
(excluding current liabilities in respect of Indebtedness). Net Working Capital
at any date may be a positive or negative number. Net Working Capital increases
when it becomes more positive or less negative and decreases when it becomes
less positive or more negative.

         "Notes Offering" means the public offering and sale of the High Yield
Notes.

         "Notes Offering Registration Statement" means Amendment No. 6 to the
Registration Statement on Form S-1 with respect to the Notes Offering filed by
Holdings with the Commission on September 2, 1999.

         "Obligations" means (i) obligations under the Loan Documents, including
(x) all principal of and interest (including, without limitation, Post-Petition
Interest) on any Loan under, or any Note issued pursuant to, or any
reimbursement obligation under any Letter of Credit under, the Credit Agreement
and (y) all other amounts payable under the Loan Documents and (ii) obligations
of any Loan Party under any Hedging Agreement with any Lender or any affiliate
of any Lender, including, without limitation, a conditional obligation to make a
future payment under an outstanding Hedging Agreement.

         "Operative Documents" has the meaning set forth in the Participation
Agreement.

         "Other Financing Documents" means all agreements, instruments and other
documents entered into or related to the Equity Issuance and the Notes Offering.


                                       23
<PAGE>


         "Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.

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

         "Parent Indemnity" means the Indemnification Agreement dated as of
September 1, 1999 between the Parent and Holdings.

         "Participation Agreement" means the Amended and Restated Participation
Agreement dated as of September 2, 1998, as amended from time to time, among the
Borrower, State Street Bank and Trust Company of Connecticut, National
Association, as trustee, the Noteholders and Certificate Holders named therein,
State Street Bank and Trust Company, as collateral agent, and Citibank, N.A., as
agent, and the other agents, arrangers and managing agents party thereto.

         "PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.

         "Permitted Encumbrances" means:

         (a)      Liens imposed by law for taxes that are not yet due or are
                  being contested in compliance with Section 5.04;

         (b)      carriers', warehousemen's, mechanics', materialmen's,
                  repairmen's and other like Liens imposed by law, arising in
                  the ordinary course of business and securing obligations that
                  are not overdue by more than 45 days or are being contested in
                  compliance with Section 5.04;

         (c)      pledges and deposits made in the ordinary course of business
                  in compliance with workers' compensation, unemployment
                  insurance and other social security laws or regulations;

         (d)      deposits to secure the performance of bids, trade contracts,
                  leases, statutory obligations, surety and appeal bonds,
                  performance bonds and other obligations of a like nature, in
                  each case in the ordinary course of business;

         (e)      judgment liens in respect of judgments that do not constitute
                  an Event of Default under clause (k) of Section 7.01; and

         (f)      easements, zoning restrictions, rights-of-way and similar
                  encumbrances on real property imposed by law or arising in the
                  ordinary course of business that do not secure any monetary
                  obligations and do not materially detract



                                       24
<PAGE>


                  from the value of the affected property or interfere with the
                  ordinary conduct of business of Holdings or any Restricted
                  Subsidiary;

provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.

         "Permitted Receivables Disposition" means any transfer (by way of sale,
pledge or otherwise) by the Borrower or any Restricted Subsidiary to any other
Person (including a Receivables Subsidiary) of accounts receivable and other
rights to payment (whether constituting accounts, chattel paper, instruments,
general intangibles or otherwise and including the right to payment of interest
or finance charges) and related contract and other rights and property
(including all general intangibles, collections and other proceeds relating
thereto, all security therefor (and the property subject thereto), all
guarantees and other agreements or arrangements of whatsoever character from
time to time supporting such right to payment, and all other rights, title and
interest in goods relating to a sale which gave rise to such right of payment)
in connection with a Permitted Receivables Financing.

         "Permitted Receivables Financing" means any receivables securitization
program or other type of accounts receivable financing transaction by the
Borrower or any of its Restricted Subsidiaries in an aggregate amount not to
exceed $250,000,000 on terms reasonably satisfactory to all the Incremental
Facility Arrangers (if any) and the Administrative Agent.

         "Permitted Specified Security Hedging Transactions" means options,
collars, forwards and other similar transactions (including, without limitation,
prepaid forward transactions, collar/loan transactions and other similar
transactions) with respect to any Specified Security entered into by the
Borrower or any of its Subsidiaries to monetize the value of and/or hedge
against changes in the market price of such Specified Security."

         "Permitted Telecommunications Asset Disposition"means the transfer,
conveyance, sale, lease or other disposition of an interest in or capacity on
(1) optical fiber and/or conduit and any related equipment, technology or
software used in a Segment of the Borrower's and the Restricted Subsidiaries'
communications network, other than in the ordinary course of business; provided
that after giving effect to such disposition, the Borrower and the Restricted
Subsidiaries would retain the right to use at least the minimum retained
capacity set forth below:

         (i)      with respect to any Segment constructed by, for or on behalf
                  of the Borrower or any Subsidiary or Affiliate, (x) 24 optical
                  fibers per route mile on such Segment as deployed at the time
                  of such Permitted Telecommunications Asset Disposition or (y)
                  12 optical fibers and one empty conduit per route mile on such
                  Segment as deployed at the time of such Permitted
                  Telecommunications Asset Disposition; and


                                       25
<PAGE>


         (ii)     with respect to any Segment purchased or leased from third
                  parties, the lesser of (x) 50% of the optical fibers per route
                  mile originally purchased or leased on such Segment, (y) 24
                  optical fibers per route mile on such Segment as deployed at
                  the time of such Permitted Telecommunications Asset
                  Disposition or (z) 12 optical fibers and one empty conduit per
                  route mile on such Segment as deployed at the time of such
                  Permitted Telecommunications Asset Disposition; or

(2) single strand fiber used in a Segment of the Borrower's and the Restricted
Subsidiaries' communications network, other than in the ordinary course of
business; provided that after giving effect to such disposition, the Borrower
and the Restricted Subsidiaries would not eliminate all capacity between the
endpoint cities connected by any fiber of the Borrower or its Restricted
Subsidiaries.

         "Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.

         "Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.

         "Post-Petition Interest" means any interest that accrues after the
commencement of any case, proceeding or action relating to the bankruptcy,
reorganization or insolvency of the Borrower (or would accrue but for the
operation of applicable bankruptcy, reorganization or insolvency laws), whether
or not such interest is allowed or allowable as a claim in any such case,
proceeding or other action.

         "Prepayment Event" means:

         (a)      any sale, transfer or other disposition (including pursuant to
                  a Sale and Leaseback Transaction) of any property or asset of
                  Holdings or any Restricted Subsidiary, other than Dark Fiber
                  and Capacity Dispositions and dispositions permitted under
                  clauses (a) through (d) and (f) through (i) of Section 6.05
                  and except as contemplated by Sections 5.17 and 5.18; or

         (b)      any casualty or other insured damage to, or any taking under
                  power of eminent domain or by condemnation or similar
                  proceeding of, any property or asset of Holdings or any
                  Subsidiary, but only to the extent that the Net Proceeds
                  therefrom have not been applied to repair, restore or replace
                  such property or asset or purchase similar property or assets
                  within 360 days after such event; or


                                       26
<PAGE>


         (c)      the incurrence by Holdings, the Borrower or any Subsidiary of
                  any Indebtedness, other than Indebtedness permitted under
                  Section 6.01.

         "Prepayment Portion" means in respect of any prepayment to be made
pursuant to Section 2.11(b) or 2.11(c), a fraction, the numerator of which is
the aggregate principal amount of Term Loans, Additional Incremental Term Loans
and Incremental Term Loans of any Class subject to prepayment under such Section
on account of Excess Cash Flow or the applicable type of Prepayment Event, as
the case may be (whether or not such Loans are actually to be prepaid on account
of such Prepayment Event or Excess Cash Flow), and the denominator of which is
the sum of such aggregate principal amount and the aggregate Revolving
Commitments and Additional Incremental Revolving Commitments of any Class
subject to reduction pursuant to Section 2.08(f) or (g) on account of Excess
Cash Flow or the applicable type of Prepayment Event, as the case may be
(whether or not such Commitments are actually to be reduced on account of such
Prepayment Event or Excess Cash Flow).

         "Prime Rate" means the rate of interest per annum publicly announced
from time to time by the Administrative Agent as its prime rate in effect at its
principal office in Dallas, Texas; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.

         "Projections" has the meaning set forth in Section 3.04(d).

         "Qualifying Borrower Indebtedness" means, unsecured Indebtedness of the
Borrower to Holdings that (i) does not require the payment of any principal or
cash interest prior to the first anniversary of the Term Maturity Date, (ii) is
not redeemable by, or convertible or exchangeable for securities of the Borrower
or any of its Subsidiaries that are redeemable by, the holder thereof, and not
subject to any required sinking fund or other similar payment, prior to the
first anniversary of the Term Maturity Date, (iii) is subordinated to the
Obligations pursuant to subordination provisions at least as favorable to the
holders of the Obligations as the provisions set forth in Exhibit J hereto and
(iv) includes no covenants, events of default or acceleration provisions other
than a customary bankruptcy default and acceleration provision.

         "Qualifying Equity Interest" means, with respect to Holdings or the
Borrower, Equity Interests of Holdings or the Borrower, as the case may be, that
(i) are not mandatorily redeemable or redeemable at the option of the holder
thereof, (ii) are not convertible into or exchangeable for debt securities of
Holdings or any Restricted Subsidiary, Equity Interests in any Restricted
Subsidiary or Equity Interests that are not Qualifying Equity Interests of
Holdings, (iii) are not required to be repurchased or redeemed by Holdings or
any Restricted Subsidiary and (iv) do not require the payment of cash dividends,
in each of the foregoing cases, prior to the date that is one year after the
Term Maturity Date.


                                       27
<PAGE>


         "Qualifying Holdings Debt" means unsecured debt of Holdings (other than
the High Yield Notes) (i) no part of the principal of which is required to be
paid (upon maturity or by mandatory sinking fund, mandatory redemption,
mandatory prepayment or otherwise) prior to the date that is one year after the
Term Maturity Date, (ii) the payment of the principal of and interest on which
and other payment obligations of Holdings in respect of which are subordinated
to the prior payment in full in cash of the principal of and interest (including
Post-Petition Interest) on the Loans and all other obligations under the Loan
Documents and (iii) the terms and conditions of which are reasonably
satisfactory to the Required Lenders.

         "Qualifying Issuances" means (i) any issuance of Qualifying Equity
Interests of Holdings, (ii) any issuance of unsecured Indebtedness described in
clauses (a) or (b) of the definition thereof of Holdings or the Borrower, and
(iii) any Sale and Leaseback Transaction by the Borrower or a Restricted
Subsidiary the subject property of which is the building under construction as
of the Amendment No. 4 Effective Date and adjacent to One Williams Center,
together with the parking garage adjacent thereto, or any one or more of three
corporate jets identified by the Borrower to the Lenders prior to the Amendment
No. 4 Effective Date, so long as the terms and conditions of any such
Indebtedness or Sale and Leaseback Transaction shall have been approved by all
the Incremental Facility Arrangers (if any) and the Administrative Agent prior
to the issuance thereof.

         "Receivables Subsidiary" means any wholly-owned Unrestricted Subsidiary
(regardless of the form thereof) of the Borrower formed solely for the purpose
of, and which engages in no other activities except those necessary for,
effecting Permitted Receivables Financings.

         "Reduction Portion" means, in respect of any reduction of Revolving
Commitments or Additional Incremental Revolving Commitments to be made pursuant
to Section 2.08(f) or (g), a fraction, the numerator of which is the aggregate
Revolving Commitments and Additional Incremental Revolving Commitments of any
Class subject to reduction under such Section on account of Excess Cash Flow or
the applicable type of Prepayment Event, as the case may be (whether or not such
Commitments are actually to be reduced on account of such Prepayment Event or
Excess Cash Flow), and the denominator of which is the sum of such aggregate
Commitments and the aggregate principal amount of Term Loans, Additional
Incremental Term Loans and Incremental Term Loans of any Class subject to
prepayment under Section 2.11(b) or 2.11(c) on account of Excess Cash Flow or
the applicable type of Prepayment Event, as the case may be (whether or not such
Loans are actually to be prepaid on account of such Prepayment Event or Excess
Cash Flow).

         "Register" has the meaning set forth in Section 10.04.


                                       28
<PAGE>


         "Related Parties" means, with respect to any specified Person, such
Person's affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's affiliates.

         "Reorganization" means the contribution to the Borrower by the Parent
and its subsidiaries (other than Holdings and the Subsidiaries) of its material
subsidiaries that hold interests in international communications projects (other
than Algar Telecom S.A. (formerly known as Lightel S.A.) and by Holdings of all
of its material subsidiaries (other than the Borrower and its subsidiaries), in
each case not previously held, directly or indirectly, by the Borrower.

         "Required Lenders" means, at any time, Lenders having outstanding
Revolving Exposures, Additional Incremental Revolving Loans, Term Loans,
Incremental Term Loans, Additional Incremental Term Loans and unused Commitments
representing more than 50% of the sum of the total outstanding Revolving
Exposures, Additional Incremental Revolving Loans, Term Loans, Incremental Term
Loans, Additional Incremental Term Loans and unused Commitments at such time.

         "Restricted Payment" means any dividend or other distribution (whether
in cash, securities or other property) with respect to any shares of any class
of capital stock of Holdings, the Borrower or any Subsidiary, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such shares of capital stock of
Holdings, the Borrower or any Subsidiary or any option, warrant or other right
to acquire any such shares of capital stock of Holdings, the Borrower or any
Subsidiary.

         "Restricted Subsidiary" means the Borrower and each other Subsidiary
(other than any Foreign Subsidiary) of Holdings that has not been designated as
an Unrestricted Subsidiary pursuant to and in compliance with Section 6.14. On
the Effective Date, all Subsidiaries (other than (i) each Structured Note Trust
and (ii) any Foreign Subsidiary) of Holdings are Restricted Subsidiaries.

         "Revolving Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Revolving Maturity Date and
the date of termination of the Revolving Commitments.

         "Revolving Commitment" means, with respect to each Lender, the
commitment, if any, of such Lender to make Revolving Loans and to acquire
participations in Letters of Credit and Swingline Loans hereunder, expressed as
an amount representing the maximum aggregate amount of such Lender's Revolving
Exposure hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 10.04. The amount of
each Lender's Revolving Commitment as of


                                       29
<PAGE>


the Amendment No. 5 Effective Date is set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Revolving Commitment, as applicable. The initial aggregate amount of the
Lenders' Revolving Commitments is $525,000,000.

         "Revolving Commitment Reduction Date" means September 30, 2002.

         "Revolving Exposure" means, with respect to any Lender at any time, the
sum of the outstanding principal amount of such Lender's Revolving Loans and its
LC Exposure and Swingline Exposure at such time.

         "Revolving Facility" means the Revolving Commitments and the Revolving
Loans hereunder.

         "Revolving Lender" means a Lender with a Revolving Commitment or, if
the Revolving Commitments have terminated or expired, a Lender with Revolving
Exposure.

         "Revolving Loan" means a Loan made pursuant to clause (b) of Section
2.01.

         "Revolving Maturity Date" means the sixth anniversary of the Effective
Date.

         "Sale and Leaseback Transaction" has the meaning set forth in Section
6.06.

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

         "Security Agreement" means the security agreement substantially in the
form of Exhibit K hereto among the Borrower, each Restricted Subsidiary and the
Administrative Agent entered into as of the Initial Collateral Date, as amended
from time to time.

         "Segment" means (i) with respect to the Borrower's and the other
Restricted Subsidiaries' intercity network, the through-portion of such network
between two local networks and (ii) with respect to a local network of the
Borrower and the other Restricted Subsidiaries, the entire through-portion of
such network, excluding the spurs which branch off the through-portion.

         "Senior Debt" means, at any date, without duplication, all Indebtedness
(other than Qualifying Borrower Indebtedness permitted under Section 6.01(p)) of
the Borrower and the other Restricted Subsidiaries that are subsidiaries of the
Borrower, determined on a consolidated basis at such date and the ADP
Outstandings at such date; provided that, for purposes of this definition, (i)
Indebtedness in respect of Hedging Agreements shall be equal to (A) the
aggregate net Mark-to-Market Valuation of all Hedging Agreements of the Borrower
and the Restricted Subsidiaries that are subsidiaries of the Borrower then
outstanding, to the extent that such aggregate net Mark-to-Market Valuation
constitutes a net obligation of the Borrower and such Restricted Subsidiaries
and (B) zero, if such


                                       30
<PAGE>


aggregate net Mark-to-Market Valuation does not constitute such a net obligation
and (ii) Indebtedness in respect of Permitted Specified Security Hedging
Transactions shall be equal to (A) an amount equal to the Mark-to-Market
Valuation of such Permitted Specified Security Hedging Transaction less the fair
market value of the Specified Securities and related contract rights securing
such Permitted Specified Security Hedging Transaction, if such amount is greater
than zero and (B) zero, if such amount is not greater than zero."

         "Senior Leverage Ratio" means, at any date, the ratio of (i) Senior Net
Debt at such date, to (ii) Adjusted EBITDA, for the period of four fiscal
quarters most recently ended on or prior to such date.

         "Senior Net Debt" means, at any date, Senior Debt at such date minus
the aggregate amount of all cash and Cash Equivalent Investments of the Borrower
and the other Restricted Subsidiaries that are subsidiaries of the Borrower
(excluding any cash and Cash Equivalent Investments that are blocked or
restricted so that they may not be used for general corporate purposes at such
date) in excess of $10,000,000 at such date.

         "Solutions" means Williams Communications Solutions, LLC, a Delaware
corporation, and its successors and assigns.

         "SPC" has the meaning set forth in Section 10.04(b)(2).

         "Specified Hedging Agreement" has the meaning set forth in Section
9.01.

         "Specified Indebtedness" has the meaning set forth in Section 6.07(b).

         "Specified Security" means publicly traded equity securities of actual
or prospective customers or vendors of the Borrower and its subsidiaries
acquired by the Borrower and its subsidiaries in connection with (or pursuant to
warrants, options or rights acquired in connection with) actual or prospective
commercial agreements with such customers or vendors; provided that securities
of the Borrower or any of its subsidiaries or Affiliates shall not constitute
Specified Securities.

         "Spin-Off" means the distribution by Parent to its shareholders of all
or substantially all of the capital stock of Holdings held by Parent
substantially on the terms described by the Borrower to the Lenders prior to the
Amendment No. 4 Effective Date.

         "Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such


                                       31
<PAGE>


Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency
funding and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under such Regulation D or any comparable regulation. The
Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.

         "Structured Note Bridge Indebtedness" means the Indebtedness permitted
to be incurred by Holdings pursuant to Section 6.01(t).

         "Structured Note Financing" means the issuance by the Structured Note
Trust of notes for cash Net Proceeds of up to $1,500,000,000 substantially on
the terms and conditions described by the Borrower in the "Term Sheet for
Structured Note" included as an attachment to the Borrower's Amendment Request
distributed to the Lenders on or prior to March 7, 2001 or otherwise approved by
all the Incremental Facility Arrangers (if any) and the Administrative Agent
prior to the issuance thereof.

         "Structured Note Trust" means WCG Note Trust and WCG Note Corp., Inc.,
each of which is an Unrestricted Subsidiary created for the purpose of
consummating the Structured Note Financing and conducting no activities other
than the consummation of the Structured Note Financing and activities incidental
thereto.

         "subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.

         "Subsidiary" means any subsidiary of Holdings. For purposes of the
representations and warranties made herein on the Effective Date, the term
"Subsidiary" includes each of the Borrower and the other Restricted
Subsidiaries.

         "Subsidiary Designation" has the meaning set forth in Section 6.14.

         "Subsidiary Guarantee" means the Subsidiary Guarantee, substantially in
the form of Exhibit D, made by the Subsidiary Loan Parties in favor of the
Administrative Agent for the benefit of the Lenders, and any Supplements
thereto.


                                       32
<PAGE>


         "Subsidiary Loan Party" means any Restricted Subsidiary (other than the
Borrower) that is not a Foreign Subsidiary; provided that no Receivables
Subsidiary shall be a Subsidiary Loan Party for any purpose under the Loan
Documents.

         "Swingline Exposure" means, at any time, the aggregate principal amount
of all Swingline Loans outstanding at such time. The Swingline Exposure of any
Lender at any time shall be its Applicable Percentage of the total Swingline
Exposure at such time.

         "Swingline Lenders" means Bank of America and Chase, each in its
capacity as lender of Swingline Loans hereunder.

         "Swingline Loan" means a Loan made pursuant to Section 2.04.

         "Syndication Agent" means Chase, in its capacity as syndication agent
hereunder.

         "Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.

         "Telecommunications Assets" means:

         (a)      any property (other than cash or Cash Equivalent Investments)
                  to be owned or used by the Borrower or any other Restricted
                  Subsidiary and used in the Telecommunications Business; and

         (b)      Equity Interests of a Person that becomes a Restricted
                  Subsidiary as a result of the acquisition of such Equity
                  Interests by the Borrower or any other Restricted Subsidiary
                  from any Person other than an Affiliate of Holdings or the
                  Borrower; provided that such Person is primarily engaged in
                  the Telecommunications Business.

         "Telecommunications Business" means the business of:

         (a)      transmitting, or providing services relating to the
                  transmission of, voice, video or data through owned or leased
                  transmission facilities or the right to use such facilities;

         (b)      constructing, acquiring, creating, developing, operating,
                  managing or marketing communications networks, related network
                  transmission equipment, software and other devices for use in
                  a communications business;

         (c)      computer outsourcing, data center management, computer systems
                  integration, reengineering of computer software for any
                  purpose, including, without limitation, for the purposes of
                  porting computer software from one


                                       33
<PAGE>


                  operating environment or computer platform to another or to
                  address issues commonly referred to as "Year 2000 issues";

         (d)      constructing, managing or operating fiber optic
                  telecommunications networks and leasing capacity on those
                  networks to third parties;

         (e)      the sale, resale, installation or maintenance of
                  communications systems or equipment; or

         (f)      evaluating, participating in or pursuing any other activity or
                  opportunity that is primarily related to those identified in
                  (a), (b), (c), (d) or (e) above;

provided that the determination of what constitutes a Telecommunications
Business shall be made in good faith by the Board of Directors of Holdings.

         "Term Amortization Date" means September 30, 2002.

         "Term Commitment" means, with respect to each Lender, the commitment,
if any, of such Lender to make Term Loans hereunder during the Term Loan
Availability Period, expressed as an amount representing the maximum principal
amount of the Term Loans to be made by such Lender hereunder, as such commitment
may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 10.04. The amount of each Lender's Term Commitment as of the
Amendment No. 5 Effective Date is set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Term Commitment, as applicable. The initial aggregate amount of the Lenders'
Term Commitments is $525,000,000.

         "Term Commitment Termination Date" means September 8, 2000.

         "Term Facility" means the Term Commitments and the Term Loans
hereunder.

         "Term Lender" means a Lender with a Term Commitment or an outstanding
Term Loan.

         "Term Loan" means a Loan made pursuant to Section 2.01(a)(i).

         "Term Loan Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Term Commitment Termination
Date and the date of termination of the Term Commitments.

         "Term Maturity Date" means September 30, 2006.

         "Total Debt" means, at any date, without duplication, the sum of all
Indebtedness of Holdings and the Restricted Subsidiaries, determined on a
consolidated basis at such


                                       34
<PAGE>


date, and the ADP Outstandings at such date, provided that, for purposes of this
definition, (i) Indebtedness in respect of Hedging Agreements shall be equal to
(A) the aggregate net Mark-to-Market Valuation of all Hedging Agreements of
Holdings and the Restricted Subsidiaries then outstanding, to the extent that
such aggregate net Mark-to-Market Valuation constitutes a net obligation of the
Borrower and such Restricted Subsidiaries and (B) zero, if such aggregate net
Mark-to-Market Valuation does not constitute such a net obligation and (ii)
Indebtedness in respect of Permitted Specified Security Hedging Transactions
shall be equal to (A) an amount equal to the Market-to-Market Valuation of such
Permitted Specified Security Hedging Transaction less the fair market value of
the Specified Securities and related contract rights securing such Permitted
Specified Security Hedging Transaction, if such amount is greater than zero and
(B) zero, if such amount is not greater than zero.

         "Total Leverage Ratio" means, at any date, the ratio of (i) Total Net
Debt at such date to (ii) Adjusted EBITDA for the period of four fiscal quarters
most recently ended on or prior to such date.

         "Total Net Debt" means, at any date, Total Debt at such date, minus the
aggregate amount of all cash and Cash Equivalent Investments of Holdings and the
Restricted Subsidiaries (excluding any cash and Cash Equivalent Investments that
are blocked or restricted so that they may not be used for general corporate
purposes at such date) in excess of $10,000,000 at such date.

         "Total Net Debt to Contributed Capital Ratio" means, at any date, the
ratio of (i) Total Net Debt at such date to (ii) Contributed Capital at such
date.

         "Trading Subsidiary" has the meaning assigned to such term in Section
6.03(c).

         "Transactions" means the execution, delivery and performance by each
Loan Party of the Loan Documents to which it is to be a party, the borrowing of
Loans, the use of the proceeds thereof and the issuance of Letters of Credit
hereunder.

         "Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to an Adjusted LIBO Rate or the Alternate
Base Rate.

         "Unrestricted Subsidiary" means (i) any Subsidiary (other than the
Borrower) that is designated by the Board of Directors of Holdings as an
Unrestricted Subsidiary in accordance with Section 6.14, and (ii) each
Structured Note Trust.

         "Voting Stock" means, with respect to any Person, capital stock issued
by such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, whether or not the right so to
vote has been suspended by the happening of such a contingency.


                                       35
<PAGE>


         "Weighted Average Life to Maturity" means, on any date and with respect
to the Revolving Commitments, the Term Loans, any Additional Incremental
Revolving Commitments of any Class, any Incremental Term Loans, any Additional
Incremental Term Loans of any Class or any other Indebtedness or commitments to
provide financing, an amount equal to (i) the sum, for each scheduled repayment
of Term Loans, Additional Incremental Term Loans or Incremental Term Loans of
such Class or of such Indebtedness, as the case may be, to be made after such
date, or each scheduled reduction of Revolving Commitments or Additional
Incremental Revolving Commitments of such Class or other commitments to provide
financing, as the case may be, to be made after such date, of the amount of such
scheduled repayment or reduction multiplied by the number of days from such date
to the date of such scheduled prepayment or reduction divided by (ii) the
aggregate principal amount of such Term Loans, Additional Incremental Term Loans
or Incremental Term Loans or of such Indebtedness, as the case may be, or such
Revolving Commitments or Additional Incremental Revolving Commitments or other
commitments to provide financing, as the case may be.

         "Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.

         SECTION 1.2. Classification of Loans and Borrowings. For purposes of
this Agreement, Loans may be classified and referred to by Class (e.g., a
"Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type
(e.g., a "Eurodollar Revolving Loan"). Borrowings also may be classified and
referred to by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a
"Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving
Borrowing").

         SECTION 1.3. Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same


                                       36
<PAGE>


meaning and effect and to refer to any and all tangible and intangible assets
and properties, including cash, securities, accounts and contract rights.

         SECTION 1.4. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.







                                       37
<PAGE>


                                    ARTICLE 2

                                   THE CREDITS

         SECTION 2.1. Commitments. Subject to the terms and conditions set forth
herein, (a) each Lender agrees (i) to make Term Loans to the Borrower from time
to time during the Term Loan Availability Period in a principal amount not
exceeding its Term Commitment, if any, (ii) to make Revolving Loans to the
Borrower from time to time during the Revolving Availability Period in an
aggregate principal amount that will not result in such Lender's Revolving
Exposure exceeding such Lender's Revolving Commitment, if any, (iii) to make
Additional Incremental Term Loans to the Borrower under any Additional
Incremental Facility during the period or on the date set forth in the
applicable Additional Incremental Facility Agreement in a principal amount not
exceeding its Additional Incremental Commitment in respect of such Additional
Incremental Facility, if any, and (iv) to make Additional Incremental Revolving
Loans to the Borrower under any Additional Incremental Facility during the
period set forth in the applicable Additional Incremental Facility Agreement in
a principal amount not exceeding at any time its Additional Incremental
Revolving Commitment in respect of such Additional Incremental Facility, if any,
(b) each Incremental Tranche A Lender agrees to make Incremental Tranche A Term
Loans to the Borrower from time to time during the Incremental Tranche A Term
Loan Availability Period in a principal amount not exceeding its Incremental
Tranche A Commitment, provided that the initial Borrowing under the Incremental
Tranche A Facility shall be in an aggregate amount not less than $225,000,000
and shall occur on the First Incremental Borrowing Date. Within the foregoing
limits and subject to the terms and conditions set forth herein, the Borrower
may borrow, prepay and reborrow Revolving Loans and Additional Incremental
Revolving Loans. Amounts repaid in respect of Term Loans, Incremental Term Loans
or Additional Incremental Term Loans may not be reborrowed.

         SECTION 2.2. Loans and Borrowings. (a) Each Loan (other than a
Swingline Loan) shall be made as part of a Borrowing consisting of Loans of the
same Class and Type made by the Lenders ratably in accordance with their
respective Commitments of the applicable Class. The failure of any Lender to
make any Loan required to be made by it shall not relieve any other Lender of
its obligations hereunder; provided that the Commitments of the Lenders are
several and no Lender shall be responsible for any other Lender's failure to
make Loans as required.

         (b) Subject to Section 2.14, each Revolving Borrowing, Term Borrowing,
Additional Incremental Revolving Borrowing, Additional Incremental Term
Borrowing and Incremental Term Borrowing shall be comprised entirely of ABR
Loans or Eurodollar Loans as the Borrower may request in accordance herewith.
Each Swingline Loan shall be an ABR Loan. Each Lender at its option may make any
Eurodollar Loan by causing any domestic or foreign branch or affiliate of such
Lender to make such Loan; provided that any exercise of such option shall not
affect the obligation of the Borrower to repay such Loan in accordance with the
terms of this Agreement.

         (c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing (w) if a Revolving Borrowing shall be in an aggregate
amount that is an


                                       38
<PAGE>


integral multiple of $1,000,000 and not less than $10,000,000, (x) if a Term
Borrowing shall be in an aggregate amount that is an integral multiple of
$1,000,000 and not less than $50,000,000 (y) if an Incremental Term Borrowing
shall be in an aggregate amount that is an integral multiple of $1,000,000 and
not less than $10,000,000 or (z) if an Additional Incremental Term Borrowing or
an Additional Incremental Revolving Borrowing shall be in aggregate amounts that
are permitted under the applicable Incremental Facility Agreement. At the time
that each ABR Borrowing is made, such Borrowing (w) if a Revolving Borrowing
shall be in an aggregate amount that is an integral multiple of $1,000,000 and
not less than $5,000,000, (x) if a Term Borrowing shall be in an aggregate
amount that is an integral multiple of $1,000,000 and not less than $50,000,000
(y) if an Incremental Term Borrowing shall be in an aggregate amount that is an
integral multiple of $1,000,000 and not less than $10,000,000 or (z) if an
Additional Incremental Term Borrowing or an Additional Incremental Revolving
Borrowing shall be in aggregate amounts that are permitted under the applicable
Incremental Facility Agreement; provided that (i) an ABR Revolving Borrowing or
ABR Additional Incremental Revolving Borrowing may be in an aggregate amount
that is equal to the entire unused balance of the total Revolving Commitments or
Additional Incremental Revolving Commitments of the applicable Class, as the
case may be, (ii) an ABR Revolving Borrowing may be in an aggregate amount that
is required to finance the reimbursement of an LC Disbursement as contemplated
by Section 2.05(e) and (iii) an ABR Term Borrowing, ABR Incremental Term
Borrowing or ABR Additional Incremental Term Borrowing may be in an aggregate
amount that is equal to the entire unused balance of the total Term Commitments,
Incremental Term Commitments, Additional Incremental Term Commitments of the
applicable Class, as the case may be. Each Swingline Loan shall be in an amount
that is an integral multiple of $1,000,000 and not less than $5,000,000.
Borrowings of more than one Type and Class may be outstanding at the same time;
provided that there shall not at any time be more than a total of 10 Eurodollar
Borrowings outstanding.

         (d) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request, or to elect to convert or continue, any
Borrowing if the Interest Period requested with respect thereto would end after
the Revolving Maturity Date, the Term Maturity Date, the Incremental Tranche A
Maturity Date or the maturity date set forth in the applicable Additional
Incremental Facility Agreement, as applicable.

         SECTION 2.3. Requests for Borrowings. To request a Borrowing (other
than a Swingline Borrowing), the Borrower shall notify the Administrative Agent
of such request by telephone (a) in the case of a Eurodollar Borrowing, not
later than 11:00 a.m., Dallas, Texas time, three Business Days before the date
of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than
11:00 a.m., Dallas, Texas time, one Business Day before the date of the proposed
Borrowing; provided that any such notice of an ABR Revolving Borrowing to
finance the reimbursement of an LC Disbursement as contemplated by Section
2.05(e) may be given not later than 10:00 a.m., Dallas, Texas time, on the date
of the proposed Borrowing. Each such telephonic Borrowing Request


                                       39
<PAGE>


shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Borrowing Request
substantially in the form of Exhibit B hereto and signed by the Borrower. Each
such telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.02:

                  (i) whether the requested Borrowing is to be a Revolving
         Borrowing, Term Borrowing, Incremental Tranche A Term Borrowing,
         Additional Incremental Revolving Borrowing or Additional Incremental
         Term Borrowing and, in the case of Additional Incremental Revolving
         Borrowings and Additional Incremental Term Borrowings, the Additional
         Incremental Facility under which such Borrowing is to be made;

                  (ii) the aggregate amount of such Borrowing;

                  (iii) the date of such Borrowing, which shall be a Business
         Day;

                  (iv) whether such Borrowing is to be an ABR Borrowing or a
         Eurodollar Borrowing;

                  (v) in the case of a Eurodollar Borrowing, the initial
         Interest Period to be applicable thereto, which shall be a period
         contemplated by the definition of the term "Interest Period"; and

                  (vi) the location and number of the Borrower's account to
         which funds are to be disbursed, which shall comply with the
         requirements of Section 2.06.

         If no election as to the Type of Borrowing is specified, then the
requested Borrowing shall be an ABR Borrowing. If no Interest Period is
specified with respect to any requested Eurodollar Borrowing, then the Borrower
shall be deemed to have selected an Interest Period of one month's duration.
Promptly following receipt of a Borrowing Request in accordance with this
Section, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender's Loan to be made as part of the
requested Borrowing.

         SECTION 2.4. Swingline Loans. (a) Subject to the terms and conditions
set forth herein, the Swingline Lenders each agree to make Swingline Loans to
the Borrower from time to time during the Revolving Availability Period, in an
aggregate principal amount at any time outstanding that will not result in (i)
the aggregate principal amount of outstanding Swingline Loans of either
Swingline Lender exceeding $25,000,000 or (ii) the sum of the total Revolving
Exposures exceeding the total Revolving Commitments; provided that neither
Swingline Lender shall be required to make a Swingline Loan to refinance an
outstanding Swingline Loan. Within the foregoing limits and subject to the terms
and conditions set forth herein, the Borrower may borrow, prepay and reborrow
Swingline Loans.


                                       40
<PAGE>


         (b) To request a Swingline Loan, the Borrower shall notify the
Administrative Agent of such request by telephone (confirmed by telecopy), not
later than 12:00 noon, Dallas, Texas time, on the day of a proposed Swingline
Loan and shall advise the Administrative Agent as to which Swingline Lender the
Borrower desires to provide such Swingline Loan. Each such notice shall be
irrevocable and shall specify the requested date (which shall be a Business Day)
and amount of the requested Swingline Loan. The Administrative Agent will
promptly advise the Swingline Lender indicated by the Borrower in such notice of
any such notice received from the Borrower. The applicable Swingline Lender
shall make such Swingline Loan available to the Borrower by means of a credit to
the general deposit account of the Borrower with such Swingline Lender (or, in
the case of a Swingline Loan made to finance the reimbursement of an LC
Disbursement as provided in Section 2.05(e), by remittance to the applicable
Issuing Bank) by 3:00 p.m., Dallas, Texas time, on the requested date of such
Swingline Loan.

         (c) The applicable Swingline Lender may by written notice given to the
Administrative Agent not later than 10:00 a.m., Dallas, Texas time, on any
Business Day require the Revolving Lenders to acquire participations on such
Business Day in all or a portion of its Swingline Loans outstanding. Such notice
shall specify the aggregate amount of Swingline Loans in which Revolving Lenders
will participate. Promptly upon receipt of such notice, the Administrative Agent
will give notice thereof to each Revolving Lender, specifying in such notice
such Lender's Applicable Percentage of such Swingline Loan or Loans. Each
Revolving Lender hereby absolutely and unconditionally agrees, upon receipt of
notice as provided above, to pay to the Administrative Agent, for the account of
the applicable Swingline Lender, such Lender's Applicable Percentage of such
Swingline Loan or Loans. Each Revolving Lender acknowledges and agrees that its
obligation to acquire participations in Swingline Loans pursuant to this
paragraph is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or reduction or termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever. Each
Revolving Lender shall comply with its obligation under this paragraph by wire
transfer of immediately available funds, in the same manner as provided in
Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall
apply, mutatis mutandis, to the payment obligations of the Revolving Lenders),
and the Administrative Agent shall promptly pay to the applicable Swingline
Lender the amounts so received by it from the Revolving Lenders. The
Administrative Agent shall notify the Borrower of any participations in any
Swingline Loan acquired pursuant to this paragraph, and thereafter payments in
respect of such Swingline Loan shall be made to the Administrative Agent and not
to the applicable Swingline Lender. Any amounts received by a Swingline Lender
from the Borrower (or other party on behalf of the Borrower) in respect of a
Swingline Loan made by such Swingline Lender after receipt by such Swingline
Lender of the proceeds of a sale of participations therein shall be promptly
remitted to the Administrative Agent; any such amounts received by the
Administrative Agent shall be promptly remitted by the Administrative Agent to
the Revolving Lenders that shall have made their payments


                                       41
<PAGE>


pursuant to this paragraph and to the applicable Swingline Lender, as their
interests may appear. The purchase of participations in a Swingline Loan
pursuant to this paragraph shall not relieve the Borrower of any default in the
payment thereof.

         SECTION 2.5. Letters of Credit. (a) General. Subject to the terms and
conditions set forth herein, the Borrower may request the issuance of Letters of
Credit for its own account, in a form reasonably acceptable to the
Administrative Agent and the applicable Issuing Bank, at any time and from time
to time during the Revolving Availability Period. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Borrower to, or entered into by the Borrower with, the Issuing
Bank relating to any Letter of Credit, the terms and conditions of this
Agreement shall control.

         (b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing
Bank from whom the Borrower is requesting such Letter of Credit and to the
Administrative Agent (reasonably in advance of the requested date of issuance,
amendment, renewal or extension) a notice requesting the issuance of a Letter of
Credit, or identifying the Letter of Credit to be amended, renewed or extended,
and specifying the date of issuance, amendment, renewal or extension (which
shall be a Business Day), the date on which such Letter of Credit is to expire
(which shall comply with Section 2.05(c)), the amount of such Letter of Credit,
the name and address of the beneficiary thereof and such other information as
shall be necessary to prepare, amend, renew or extend such Letter of Credit. If
requested by the applicable Issuing Bank, the Borrower also shall submit a
letter of credit application on such Issuing Bank's standard form in connection
with any request for a Letter of Credit. A Letter of Credit shall be issued,
amended, renewed or extended only if (and upon issuance, amendment, renewal or
extension of each Letter of Credit the Borrower shall be deemed to represent and
warrant that), after giving effect to such issuance, amendment, renewal or
extension (i) the LC Exposure shall not exceed $350,000,000 and (ii) the total
Revolving Exposures shall not exceed the total Revolving Commitments.

         (c) Expiration Date. Each Letter of Credit shall expire at or prior to
the close of business on the earlier of (i) the date one year after the date of
the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension), provided that a
Letter of Credit may include customary "evergreen" provisions and (ii) the date
that is five Business Days prior to the Revolving Maturity Date.

         (d) Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the applicable Issuing Bank or the Lenders, the
applicable Issuing Bank hereby grants


                                       42
<PAGE>


to each Revolving Lender, and each Revolving Lender hereby acquires from such
Issuing Bank, a participation in such Letter of Credit equal to such Lender's
Applicable Percentage of the aggregate amount available to be drawn under such
Letter of Credit. In consideration and in furtherance of the foregoing, each
Revolving Lender hereby absolutely and unconditionally agrees to pay to the
Administrative Agent, for the account of such Issuing Bank, such Lender's
Applicable Percentage of each LC Disbursement made by such Issuing Bank and not
reimbursed by the Borrower on the date due as provided in paragraph Section
2.05(e), or of any reimbursement payment required to be refunded to the Borrower
for any reason. Each Lender acknowledges and agrees that its obligation to
acquire participations pursuant to this paragraph in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.

         (e) Reimbursement. If an Issuing Bank shall make any LC Disbursement in
respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement
by paying to the Administrative Agent an amount equal to such LC Disbursement
not later than 1:00 p.m., Dallas, Texas time, on the date that such LC
Disbursement is made, if the Borrower shall have received notice of such LC
Disbursement prior to 9:30 a.m., Dallas, Texas time, on such date, or, if such
notice has not been received by the Borrower prior to such time on such date,
then not later than 1:00 p.m., Dallas, Texas time, on (i) the Business Day that
the Borrower receives such notice, if such notice is received prior to 9:30
a.m., Dallas, Texas time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt; provided that,
if such LC Disbursement is not less than $5,000,000, the Borrower may, subject
to the conditions to borrowing set forth herein, request in accordance with
Section 2.03 or 2.04 that such payment be financed with an ABR Revolving
Borrowing or Swingline Loan in an equivalent amount and, to the extent so
financed, the Borrower's obligation to make such payment shall be discharged and
replaced by the resulting ABR Revolving Borrowing or Swingline Loan. If the
Borrower fails to make such payment when due, the Administrative Agent shall
notify each Revolving Lender of the applicable LC Disbursement, the payment then
due from the Borrower in respect thereof and such Lender's Applicable Percentage
thereof. Promptly following receipt of such notice, each Revolving Lender shall
pay to the Administrative Agent its Applicable Percentage of the payment then
due from the Borrower, in the same manner as provided in Section 2.06 with
respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis
mutandis, to the payment obligations of the Revolving Lenders), and the
Administrative Agent shall promptly pay to the applicable Issuing Bank the
amounts so received by it from the Revolving Lenders. Promptly following receipt
by the Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the
applicable Issuing Bank or, to the extent that Revolving Lenders have


                                       43
<PAGE>

made payments pursuant to this paragraph to reimburse the Issuing Bank, then to
such Lenders and the applicable Issuing Bank as their interests may appear. Any
payment made by a Revolving Lender pursuant to this paragraph to reimburse the
applicable Issuing Bank for any LC Disbursement (other than the funding of ABR
Revolving Loans or a Swingline Loan as contemplated above) shall not constitute
a Loan and shall not relieve the Borrower of its obligation to reimburse such LC
Disbursement.

         (f) Obligations Absolute. The Borrower's obligation to reimburse LC
Disbursements as provided in paragraph Section 2.05(e) shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by an Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower's obligations hereunder. Neither
the Administrative Agent, the Lenders nor either Issuing Bank, nor any of their
Related Parties, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank; provided that the foregoing shall not be construed to excuse an
Issuing Bank from liability to the Borrower to the extent of any direct damages
(as opposed to consequential damages, claims in respect of which are hereby
waived by the Borrower to the extent permitted by applicable law) suffered by
the Borrower that are caused by the Issuing Bank's failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or wilful misconduct on the part of an
Issuing Bank (as finally determined by a court of competent jurisdiction), each
Issuing Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented which appear on their
face to be in substantial compliance with the terms of a Letter of Credit, the
Issuing Bank may, in its sole discretion, either accept and make payment upon
such documents without responsibility for further investigation, regardless of
any notice or information to the contrary, or refuse to accept and make payment
upon such documents if such documents are not in strict compliance with the
terms of such Letter of Credit.


                                       44
<PAGE>


         (g) Disbursement Procedures. The applicable Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit. The applicable Issuing
Bank shall promptly notify the Administrative Agent and the Borrower by
telephone (confirmed by telecopy) of such demand for payment and whether the
Issuing Bank has made or will make an LC Disbursement thereunder; provided that
any failure to give or delay in giving such notice shall not relieve the
Borrower of its obligation to reimburse such Issuing Bank and the Revolving
Lenders with respect to any such LC Disbursement.

         (h) Interim Interest. If an Issuing Bank shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans;
provided that, if the Borrower fails to reimburse such LC Disbursement when due
pursuant to Section 2.05(e), then Section 2.13(c) shall apply. Interest accrued
pursuant to this paragraph shall be for the account of the applicable Issuing
Bank, except that interest accrued on and after the date of payment by any
Revolving Lender pursuant to Section 2.05(e) to reimburse the applicable Issuing
Bank shall be for the account of such Lender to the extent of such payment.

         (i) Replacement of the Issuing Bank. An Issuing Bank may be replaced at
any time by written agreement among the Borrower, the Administrative Agent, the
replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent
shall notify the Lenders of any such replacement of an Issuing Bank. At the time
any such replacement shall become effective, the Borrower shall pay all unpaid
fees accrued for the account of the replaced Issuing Bank pursuant to Section
2.12(b). From and after the effective date of any such replacement, (i) the
successor Issuing Bank shall have all the rights and obligations of an Issuing
Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed
to refer to such successor, to any other Issuing Bank or to any previous Issuing
Bank, or to such successor, all other Issuing Banks and all previous Issuing
Banks, as the context shall require. After the replacement of an Issuing Bank
hereunder, the replaced Issuing Bank shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Bank under this
Agreement with respect to Letters of Credit issued by it prior to such
replacement, but shall not be required to issue additional Letters of Credit.

         (j) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Lenders with LC Exposure representing greater
than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, the Borrower shall deposit in an account with the
Administrative Agent, in the name of


                                       45
<PAGE>


the Administrative Agent and for the benefit of the Lenders, an amount in cash
equal to 105% of the LC Exposure as of such date plus any accrued and unpaid
interest thereon; provided that the obligation to deposit such cash collateral
shall become effective immediately, and such deposit shall become immediately
due and payable, without demand or other notice of any kind, upon the occurrence
of any Event of Default with respect to the Borrower described in Section
7.01(h) or 7.01(i). Each such deposit shall be held by the Administrative Agent
as collateral for the payment and performance of the obligations of the Borrower
under this Agreement. The Administrative Agent shall have exclusive dominion and
control, including the exclusive right of withdrawal, over such account. Other
than any interest earned on the investment of such deposits, which investments
shall be made at the option and sole discretion of the Administrative Agent and
at the Borrower's risk and expense, such deposits shall not bear interest.
Interest or profits, if any, on such investments shall accumulate in such
account. Moneys in such account shall be applied by the Administrative Agent to
reimburse the applicable Issuing Bank for LC Disbursements for which it has not
been reimbursed and, to the extent not so applied, shall be held for the
satisfaction of the reimbursement obligations of the Borrower for the LC
Exposure at such time or, if the maturity of the Loans has been accelerated (but
subject to the consent of Revolving Lenders with LC Exposure representing
greater than 50% of the total LC Exposure), be applied to satisfy other
obligations of the Borrower under this Agreement. If the Borrower is required to
provide an amount of cash collateral hereunder as a result of the occurrence of
an Event of Default, such amount (to the extent not applied as aforesaid) shall
be returned to the Borrower within three Business Days after all Events of
Default have been cured or waived.

         SECTION 2.6. Funding of Borrowings. (a) Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 1:00 p.m., Dallas, Texas time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders; provided that Swingline Loans shall be made as provided
in Section 2.04. The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower maintained with the Administrative Agent in Dallas,
Texas and designated by the Borrower in the applicable Borrowing Request;
provided that ABR Revolving Loans made to finance the reimbursement of an LC
Disbursement as provided in Section 2.05(e) shall be remitted by the
Administrative Agent to the applicable Issuing Bank.

         (b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with Section 2.06(a) and may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount. In such event, if a Lender has not in fact made its share of the
applicable Borrowing available to the Administrative Agent,


                                       46
<PAGE>


then the applicable Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount with interest
thereon, for each day from and including the date such amount is made available
to the Borrower to but excluding the date of payment to the Administrative
Agent, at (i) in the case of such Lender, the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation or (ii) in the case of the
Borrower, the interest rate applicable to ABR Loans. If such Lender pays such
amount to the Administrative Agent, then such amount shall constitute such
Lender's Loan included in such Borrowing.

         SECTION 2.7. Interest Elections. (a) Each Revolving Borrowing,
Additional Incremental Revolving Borrowing, Term Borrowing, Incremental Term
Borrowing and Additional Incremental Term Borrowing initially shall be of the
Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing
to a different Type or to continue such Borrowing and, in the case of a
Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section. The Borrower may elect different options with respect to different
portions of a Borrowing, in which case each such portion shall be allocated
ratably among the Lenders holding the Loans comprising such Borrowing, and the
Loans comprising each such portion shall be considered a separate Borrowing.
This Section shall not apply to Swingline Borrowings, which may not be converted
or continued.

         (b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
Borrower.

         (c) Each telephonic and written Interest Election Request shall specify
the following information in compliance with Section 2.02 and Section 2.07(f):

                  (i) the Borrowing to which such Interest Election Request
         applies and, if different options are being elected with respect to
         different portions thereof, the portions thereof to be allocated to
         each resulting Borrowing (in which case the information to be specified
         pursuant to clauses (iii) and (iv) below shall be specified for each
         resulting Borrowing);

                  (ii) the effective date of the election made pursuant to such
         Interest Election Request, which shall be a Business Day;


                                       47
<PAGE>


                  (iii) whether the resulting Borrowing is to be an ABR
         Borrowing or a Eurodollar Borrowing; and

                  (iv) if the resulting Borrowing is a Eurodollar Borrowing, the
         Interest Period to be applicable thereto after giving effect to such
         election, which shall be a period contemplated by the definition of the
         term "Interest Period".

         If any such Interest Election Request requests a Eurodollar Borrowing
but does not specify an Interest Period, then the Borrower shall be deemed to
have selected an Interest Period of one month's duration.

         (d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each applicable Lender of the details thereof
and of such Lender's portion of each resulting Borrowing.

         (e) If the Borrower fails to deliver a timely Interest Election Request
with respect to a Eurodollar Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing, then, so long as an Event of Default is
continuing (i) no outstanding Borrowing may be converted to or continued as a
Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be
converted to an ABR Borrowing at the end of the Interest Period applicable
thereto.

         (f) A Borrowing of any Class may not be converted to or continued as a
Eurodollar Borrowing if after giving effect thereto (i) the Interest Period
therefor would commence before and end after a date on which any principal of
the Loans of such Class is scheduled to be repaid and (ii) the sum of the
aggregate principal amount of outstanding Eurodollar Borrowings of such Class
with Interest Periods ending on or prior to such scheduled repayment date plus
the aggregate principal amount of outstanding ABR Borrowings of such Class would
be less than the aggregate principal amount of Loans of such Class required to
be repaid on such scheduled repayment date.

         SECTION 2.8. Termination and Reduction of Commitments. (a) Unless
previously terminated, (i) the Term Commitments shall terminate on the Term
Commitment Termination Date, (ii) the Revolving Commitments shall terminate on
the Revolving Maturity Date, (iii) the Incremental Tranche A Commitments shall
terminate on the Incremental Tranche A Commitment Termination Date and (iv) the
Additional Incremental Commitments of any Class shall terminate on the date set
forth in the applicable Additional Incremental Facility Agreement.

         (b) Subject to adjustment pursuant to Section 2.08(h), the Revolving
Commitments outstanding on the Revolving Commitment Reduction Date shall be


                                       48
<PAGE>


automatically and permanently reduced in 12 consecutive installments on the last
day of each fiscal quarter (except with respect to the final reduction, which
shall be on the Revolving Maturity Date) set forth below in the percentage
amounts (expressed as a percentage of the aggregate amount of Revolving
Commitments outstanding on the Revolving Commitment Reduction Date) set forth
opposite such quarterly scheduled reduction date (or the Revolving Maturity
Date) below; provided that the final installment shall reduce the remaining
outstanding Revolving Commitments to zero on the Revolving Maturity Date and the
payment made in respect thereof shall equal the sum of (x) the then aggregate
unpaid principal amount of all Revolving Loans plus (y) all other unpaid amounts
owing in respect of Revolving Loans, which payment shall be due and payable not
later than the Revolving Maturity Date:

<Table>
<Caption>
            Scheduled Reduction Date            Commitment Reduction
            ------------------------            --------------------
<S>                                            <C>

                4th Quarter 2002                       5.00%
                1st Quarter 2003                       5.00%
                2nd Quarter 2003                       5.00%
                3rd Quarter 2003                       5.00%

                4th Quarter 2003                       7.50%
                1st Quarter 2004                       7.50%
                2nd Quarter 2004                       7.50%
                3rd Quarter 2004                       7.50%

                4th Quarter 2004                      12.50%
                1st Quarter 2005                      12.50%
                2nd Quarter 2005                      12.50%
             Revolving Maturity Date                  12.50%

</Table>

         (c) Subject to adjustment pursuant to Section 2.08(h), the Additional
Incremental Revolving Commitments of any Class shall be automatically and
permanently reduced on the scheduled dates, and in the scheduled amounts, if
any, set forth in the applicable Additional Incremental Facility Agreement.

         (d) The Borrower may at any time terminate, or from time to time
reduce, the Commitments of any Class; provided that (i) each reduction of the
Commitments of any Class shall be in an amount that is an integral multiple of
$1,000,000 and not less than $10,000,000, (ii) the Borrower shall not terminate
or reduce the Revolving Commitments if, after giving effect to any concurrent
prepayment of the Revolving Loans in accordance with Section 2.11, the sum of
the Revolving Exposures would exceed the total Revolving Commitments and (iii)
the Borrower shall not terminate or reduce the Additional Incremental Revolving
Commitments of any Class if, after giving effect to any concurrent prepayment of
Additional Incremental Revolving Loans of such Class in accordance with


                                       49
<PAGE>


Section 2.11, the aggregate principal amount of outstanding Additional
Incremental Revolving Loans of such Class would exceed the total Additional
Incremental Revolving Commitments of such Class.

         (e) The Borrower shall notify the Administrative Agent of any election
to terminate or reduce the Commitments under Section 2.08(d) at least three
Business Days prior to the effective date of such termination or reduction,
specifying such election and the effective date thereof. Promptly following
receipt of any notice, the Administrative Agent shall advise the Lenders of the
contents thereof. Each notice delivered by the Borrower pursuant to this Section
shall be irrevocable; provided that a notice of termination of the Revolving
Commitments or the Additional Incremental Revolving Commitments of any Class
delivered by the Borrower may state that such notice is conditioned upon the
effectiveness of other credit facilities, in which case such notice may be
revoked by the Borrower (by notice to the Administrative Agent on or prior to
the specified effective date) if such condition is not satisfied. Any
termination or reduction of the Commitments of any Class shall be permanent.
Each reduction of the Commitments of any Class shall be made ratably among the
Lenders in accordance with their respective Commitments of such Class.

         (f) In the event and on each occasion that any Net Proceeds in excess
of $5,000,000 are received by or on behalf of Holdings or any Subsidiary in
respect of any Prepayment Event, there shall be a pro rata reduction of
Revolving Commitments, Term Borrowings, Incremental Tranche A Borrowings and, if
provided for in the applicable Additional Incremental Facility Agreement,
Additional Incremental Revolving Commitments and Additional Incremental Term
Borrowings as provided in this Section 2.08(f) and in Section 2.11(b). In such
event, the Revolving Commitments and, if provided for in the applicable
Additional Incremental Facility Agreement, Additional Incremental Revolving
Commitments shall, on the third Business Day after such Net Proceeds are
received, be automatically and permanently reduced in an aggregate amount equal
to the product of 100% (or, in the case of any Prepayment Event referred to in
clause (c) of the definition of Prepayment Event, if, on the date on which any
reduction would otherwise be made in respect of such Prepayment Event either (i)
the Facilities shall be rated not lower than BBB- by S&P and Baa3 by Moody's or
(ii) the Total Leverage Ratio as of such date is less than 3.5 to 1.0, 50%) of
such Net Proceeds and the Reduction Portion in respect of such Prepayment Event;
provided that, in the case of any event described in clause (a) or (c) of the
definition of Prepayment Event, if the Borrower shall deliver to the
Administrative Agent a certificate of a Financial Officer to the effect that the
Borrower intends to apply the Net Proceeds from such event (or a portion thereof
specified in such certificate) to invest in the Telecommunications Business of
the Borrower and the other Restricted Subsidiaries within 360 days of the
receipt thereof and certifying that no Default has occurred and is continuing,
then no reduction shall be required pursuant to this paragraph in respect of the
Net Proceeds in respect of such event (or the portion of such Net Proceeds
specified in such certificate, if applicable) except to the extent of any such
Net Proceeds therefrom that have not been so


                                       50
<PAGE>


applied by the end of such period, at which time a reduction shall be required
in accordance with this paragraph (f).

         (g) Following the end of each fiscal year of the Borrower, commencing
with the fiscal year ending December 31, 2002, the Revolving Commitments and, if
provided for in the applicable Additional Incremental Facility Agreement,
Additional Incremental Revolving Commitments shall be automatically and
permanently reduced in an aggregate amount equal to the product of 50% of Excess
Cash Flow for such fiscal year and the Reduction Portion in respect of such
Excess Cash Flow; provided that if, on the date on which any reduction would
otherwise be made pursuant to this Section 2.08(g), either (i) the Facilities
shall be rated not lower than BBB- by S&P and Baa3 by Moody's or (ii) the Total
Leverage Ratio as of such date is less than 3.5 to 1.0, no such reduction shall
be required pursuant to this Section 2.08(g). Each reduction pursuant to this
paragraph shall be made on the date on which financial statements are delivered
pursuant to Section 5.01 with respect to the fiscal year for which Excess Cash
Flow is being calculated (and in any event within 90 days after the end of such
fiscal year).

         (h) Any reduction of the Revolving Commitments, other than a reduction
pursuant to Section 2.08(a) or 2.08(b) above, shall be applied to reduce the
subsequent scheduled reductions of Revolving Commitments to be made pursuant to
Section 2.08(a) or 2.08(b) above in reverse chronological order. Any reduction
of the Additional Incremental Revolving Commitments of any Class, other than a
reduction pursuant to Section 2.08(a) or 2.08(c) above, shall be applied to
reduce the subsequent scheduled reductions of Additional Incremental Revolving
Commitments of such Class to be made pursuant to Section 2.08(a) or 2.08(c) as
set forth in the applicable Additional Incremental Facility Agreement.

         SECTION 2.9. Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay (i) to the Administrative Agent for the
account of each applicable Lender the then unpaid principal amount of each
Revolving Loan of such Lender on the Revolving Maturity Date, (ii) to the
Administrative Agent for the account of each applicable Lender the then unpaid
principal amount of each Term Loan of such Lender as provided in Section 2.10,
(iii) to the Administrative Agent for the account of each applicable Incremental
Lender the then unpaid principal amount of each Incremental Tranche A Term Loan
of such Incremental Lender as set forth in Section 2.10, (iv) to the
Administrative Agent for the account of each applicable Lender the then unpaid
principal amount of each Additional Incremental Loan of any Class of such Lender
as set forth in the applicable Additional Incremental Facility Agreement and (v)
to each Swingline Lender the then unpaid principal amount of each Swingline Loan
made by it on the earlier of the Revolving Maturity Date and the first date
after such Swingline Loan is made that is the 15th or last day of a calendar
month and is at least two Business Days after such Swingline Loan is made.


                                       51
<PAGE>


         (b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.

         (c) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Class and Type thereof
and the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender's share thereof.

         (d) The entries made in the accounts maintained pursuant to Section
2.09(b) and 2.09(c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.

         (e) No promissory notes evidencing Loans hereunder will be issued
unless a Lender requests that a promissory note be issued to it to evidence its
Loans of any Class. In such event, the Borrower shall prepare, execute and
deliver to such Lender a promissory note payable to the order of such Lender
(or, if requested by such Lender, to such Lender and its registered assigns) and
in a form approved by the Administrative Agent. Thereafter, the Loans evidenced
by such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 10.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).

         SECTION 2.10. Amortization of Term Loans and Incremental Term Loans.
(a) Subject to adjustment pursuant to Section 2.10(e), the Borrower shall repay
Term Borrowings outstanding on the Term Amortization Date in 16 consecutive
installments of principal, each of which will be due and payable on the last day
of each fiscal quarter (except with respect to the final installment, which
shall be on the Term Maturity Date) set forth below in the percentage amounts
(expressed as a percentage of the aggregate amount of Term Loans outstanding on
the Term Commitment Termination Date) set forth opposite such quarterly
installment date (or the Term Maturity Date) below; provided that the final
installment shall equal the sum of (x) the then aggregate unpaid principal
amount of all Term Loans plus (y) all other unpaid amounts owing in respect of
Term Loans and shall be due and payable not later than the Term Maturity Date:



                                       52
<PAGE>


<Table>
<Caption>
                  Payment Date                           Amount
                  ------------                           ------
<S>                                                     <C>

                4th Quarter 2002                         3.75%
                1st Quarter 2003                         3.75%
                2nd Quarter 2003                         3.75%
                3rd Quarter 2003                         3.75%

                4th Quarter 2003                         6.25%
                1st Quarter 2004                         6.25%
                2nd Quarter 2004                         6.25%
                3rd Quarter 2004                         6.25%

                4th Quarter 2004                         7.50%
                1st Quarter 2005                         7.50%
                2nd Quarter 2005                         7.50%
                3rd Quarter 2005                         7.50%

                4th Quarter 2005                         7.50%
                1st Quarter 2006                         7.50%
                2nd Quarter 2006                         7.50%
               Term Maturity Date                        7.50%
</Table>

         (b) Subject to adjustment pursuant to Section 2.10(e), the Borrower
shall repay Incremental Tranche A Borrowings outstanding on the Incremental
Tranche A Amortization Date in 16 consecutive installments of principal, each of
which will be due and payable on the last day of each fiscal quarter (except
with respect to the final installment, which shall be on the Incremental Tranche
A Maturity Date) set forth below in the percentage amounts (expressed as a
percentage of the aggregate amount of Incremental Tranche A Term Loans
outstanding on the Incremental Tranche A Commitment Termination Date) set forth
opposite such quarterly installment date (or the Incremental Tranche A Maturity
Date) below; provided that the final installment shall equal the sum of (x) the
then aggregate unpaid principal amount of all Incremental Tranche A Term Loans
plus (y) all other unpaid amounts owing in respect of the Incremental Tranche A
Term Loans, and shall be due and payable not later than the Incremental Tranche
A Maturity Date:



                                       53
<PAGE>

<Table>
<Caption>
                  Payment Date                                Amount
                  ------------                                ------
<S>                                                         <C>

                4th Quarter 2002                              3.75%
                1st Quarter 2003                              3.75%
                2nd Quarter 2003                              3.75%
                3rd Quarter 2003                              3.75%

                4th Quarter 2003                              6.25%
                1st Quarter 2004                              6.25%
                2nd Quarter 2004                              6.25%
                3rd Quarter 2004                              6.25%

                4th Quarter 2004                              7.50%
                1st Quarter 2005                              7.50%
                2nd Quarter 2005                              7.50%
                3rd Quarter 2005                              7.50%

                4th Quarter 2005                              7.50%
                1st Quarter 2006                              7.50%
                2nd Quarter 2006                              7.50%
               Incremental Tranche
                 A Maturity Date                              7.50%
</Table>

         (c) Subject to adjustment pursuant to Section 2.10(e), the Borrower
shall repay Additional Incremental Term Borrowings of any Class on the scheduled
dates, and in the scheduled amounts, if any, set forth in the applicable
Additional Incremental Facility Agreement.

         (d) To the extent not previously paid, all Term Loans shall be due and
payable on the Term Maturity Date, all Revolving Loans shall be due and payable
on the Revolving Maturity Date, all Incremental Tranche A Term Loans shall be
due and payable on the Incremental Tranche A Maturity Date and all Additional
Incremental Loans of any Class shall be due and payable on the final maturity
date set forth in the applicable Additional Incremental Facility Agreement.

         (e) Any prepayment of a Term Borrowing or an Incremental Term Borrowing
shall be applied to reduce the subsequent scheduled repayments of Term
Borrowings or Incremental Term Borrowings, respectively to be made pursuant to
this Section in reverse chronological order. Any prepayment of an Additional
Incremental Term Borrowing of any Class shall be applied to reduce the
subsequent scheduled repayment of Additional Incremental Term Borrowings of such
Class to be made pursuant to this Section as set forth in the applicable
Additional Incremental Facility Agreement.

         (f) Prior to any repayment of any Term Borrowings or Incremental Term
Borrowings hereunder or any Additional Incremental Term Borrowings of any Class,
the Borrower shall select the Borrowing or Borrowings of such Class to be repaid
and shall notify the Administrative Agent by telephone (confirmed by telecopy)
of such selection not later than 11:00 a.m., Dallas, Texas time, three Business
Days before the scheduled date of such repayment; provided that each repayment
of Term Borrowings or Incremental Term Borrowings or any Additional Incremental
Term Borrowings of any Class shall be applied to repay any outstanding ABR Term
Borrowings or ABR


                                       54
<PAGE>


Incremental Term Borrowings or ABR Additional Incremental Term Borrowings of
such Class before any other Borrowings of such Class. Each repayment of a
Borrowing shall be applied ratably to the Loans included in the repaid
Borrowing. Repayments of Term Borrowings, Incremental Term Borrowings and
Additional Incremental Term Borrowings shall be accompanied by accrued interest
on the amount repaid.

         SECTION 2.11. Prepayment of Loans. (a) The Borrower shall have the
right at any time and from time to time to prepay any Borrowing in whole or in
part, subject to the requirements of this Section. All prepayments shall be made
without premium or penalty other than, to the extent applicable, amounts payable
under Section 2.16.

         (b) In the event and on each occasion that any Net Proceeds in excess
of $5,000,000 are received by or on behalf of Holdings or any Subsidiary in
respect of any Prepayment Event, there shall be a pro rata reduction of
Revolving Commitments, Term Borrowings, Incremental Tranche A Borrowings, and if
provided for in the applicable Additional Incremental Facility Agreement,
Additional Incremental Revolving Commitments and Additional Incremental Term
Borrowings as provided in this Section 2.11(b) and in Section 2.08(f). In such
event, the Borrower shall, within three Business Days after such Net Proceeds
are received, prepay Term Borrowings, Incremental Tranche A Borrowings and, if
provided for in the applicable Additional Incremental Facility Agreement,
Additional Incremental Term Borrowings in an aggregate amount equal to the
product of 100% (or, in the case of any Prepayment Event referred to in clause
(c) of the definition of Prepayment Event, if, on the date on which any
prepayment would otherwise be made in respect of such Prepayment Event either
(i) the Facilities shall be rated not lower than BBB- by S&P and Baa3 by Moody's
or (ii) the Total Leverage Ratio as of such date is less than 3.5 to 1.0, 50%)
of such Net Proceeds and the Prepayment Portion in respect of such Prepayment
Event (such product, the "Prepayment Amount"); provided that, in the case of any
event described in clause (a) or (c) of the definition of Prepayment Event, if
the Borrower shall deliver to the Administrative Agent a certificate of a
Financial Officer to the effect that the Borrower intends to apply the Net
Proceeds from such event (or a portion thereof specified in such certificate) to
invest in the Telecommunications Business of the Borrower and the other
Restricted Subsidiaries within 360 days of the receipt thereof and certifying
that no Default has occurred and is continuing, then no prepayment shall be
required pursuant to this paragraph in respect of the Net Proceeds in respect of
such event (or the portion of such Net Proceeds specified in such certificate,
if applicable) except to the extent of any such Net Proceeds therefrom that have
not been so applied by the end of such period, at which time a prepayment shall
be required in accordance with this paragraph (b).

         (c) Following the end of each fiscal year of the Borrower, commencing
with the fiscal year ending December 31, 2002, the Borrower shall prepay Term
Borrowings, Incremental Tranche A Borrowings and, if provided for in the
applicable Additional Incremental Facility Agreement, Additional Incremental
Term Borrowings in an aggregate amount equal to the product of (i) 50% of Excess
Cash Flow for such fiscal


                                       55
<PAGE>


year and (ii) the Prepayment Portion in respect of such Excess Cash Flow (such
product, the "Excess Cash Flow Prepayment Amount"); provided that if, on the
date on which any prepayment would otherwise be made pursuant to this Section
2.11(c), either (i) the Facilities shall be rated not lower than BBB- by S&P and
Baa3 by Moody's or (ii) the Total Leverage Ratio as of such date is less than
3.5 to 1.0, no such prepayment shall be required pursuant to this Section
2.11(c). Each prepayment pursuant to this paragraph shall be made on or before
the date on which financial statements are delivered pursuant to Section 5.01
with respect to the fiscal year for which Excess Cash Flow is being calculated
(and in any event within 90 days after the end of such fiscal year).

         (d) If, on any date, the aggregate Revolving Exposures of all Lenders
exceeds the aggregate Revolving Commitments of all Lenders, or the aggregate
principal amount of the Additional Incremental Revolving Loans of any Class of
all Lenders exceeds the aggregate Additional Incremental Revolving Commitments
of such Class of all Lenders, the Borrower shall immediately prepay Revolving
Loans or Additional Incremental Revolving Loans of such Class, as the case may
be (and, to the extent that any such excess remains after all Revolving Loans
have been prepaid, deposit cash collateral with the Administrative Agent to
secure outstanding LC Exposure), in an amount equal to such excess.

         (e) Prior to any optional or mandatory prepayment of Borrowings
hereunder, the Borrower shall select the Borrowing or Borrowings to be prepaid
and shall specify such selection in the notice of such prepayment pursuant to
Section 2.11(f); provided that each prepayment of Borrowings of any Class shall
be applied to prepay ABR Borrowings of such Class before any other Borrowings of
such Class.

         (f) The Borrower shall notify the Administrative Agent (and, in the
case of prepayment of a Swingline Loan, the applicable Swingline Lender) by
telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., Dallas, Texas
time, three Business Days before the date of prepayment, (ii) in the case of
prepayment of an ABR Borrowing, not later than 11:00 a.m., Dallas, Texas time,
one Business Day before the date of prepayment or (iii) in the case of
prepayment of a Swingline Loan, not later than 12:00 noon, Dallas, Texas time,
on the date of prepayment. Each such notice shall be irrevocable and shall
specify the prepayment date, the principal amount of each Borrowing or portion
thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably
detailed calculation of the amount of such prepayment; provided that, if a
notice of optional prepayment is given in connection with a conditional notice
of termination of the Revolving Commitments or any Additional Incremental
Revolving Commitments as contemplated by Section 2.08, then such notice of
prepayment may be revoked if such notice of termination is revoked in accordance
with Section 2.08. Promptly following receipt of any such notice (other than a
notice relating solely to Swingline Loans), the Administrative Agent shall
advise the Lenders of the contents thereof. Each partial prepayment of any
Borrowing shall be in an amount that would be


                                       56
<PAGE>


permitted in the case of an advance of a Borrowing of the same Type as provided
in Section 2.02, except as necessary to apply fully the required amount of a
mandatory prepayment. Each prepayment of a Borrowing shall be applied ratably to
the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by
accrued interest to the extent required by Section 2.13.

         SECTION 2.12. Fees. (a) The Borrower agrees to pay to the
Administrative Agent (i) in the case of Revolving Commitments and Term
Commitments for the account of each Lender fees for each day during the period
from and including the Effective Date to but excluding the date on which such
Commitment terminates at a rate equal to the applicable Commitment Fee Rate for
such day, (ii) in the case of Incremental Tranche A Commitments for the account
of each Incremental Tranche A Lender fees for each day during the period from
and including the Amendment No. 5 Effective Date but excluding the Incremental
Tranche A Commitment Termination Date at a rate equal to the applicable
Commitment Fee Rate for such day and (iii) in the case of any Additional
Incremental Facility Commitment, the rate set forth in the applicable Additional
Incremental Facility Agreement for such day, in each case on the unused amount
of each Commitment of such Lender on such day (collectively, the "COMMITMENT
FEES"). Accrued Commitment Fees shall be payable in arrears on the last day of
March, June, September and December of each year and on the date on which the
applicable Commitments terminate, commencing on the first such date to occur
after the date hereof. All Commitment Fees shall be computed on the basis of a
year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). For purposes of computing
commitment fees with respect to Revolving Commitments, a Revolving Commitment of
a Lender shall be deemed to be used to the extent of the outstanding Revolving
Loans and LC Exposure of such Lender (and the Swingline Exposure of such Lender
shall be disregarded for such purpose).

         (b) The Borrower agrees to pay (i) to the Administrative Agent for the
account of each Revolving Lender a participation fee with respect to its
participations in Letters of Credit for each day during the period from and
including the Effective Date to but excluding the later of the date on which
such Lender's Revolving Commitment terminates and the date on which such Lender
ceases to have any LC Exposure, which fee shall accrue at a rate equal to the
Applicable Margin on Eurodollar Revolving Loans for such day on the amount of
such Lender's LC Exposure on such day (excluding any portion thereof
attributable to unreimbursed LC Disbursements) and (ii) to the applicable
Issuing Bank a fronting fee in respect of Letters of Credit issued by such
Issuing Bank for each day during the period from and including the Effective
Date to but excluding the later of the date of termination of the Revolving
Commitments and the date on which there ceases to be any LC Exposure in respect
of Letters of Credit issued by such Issuing Bank, which shall accrue at the rate
or rates per annum separately agreed upon between the Borrower and such Issuing
Bank on the amount of the LC Exposure on such day (excluding any portion thereof
attributable to unreimbursed LC Disbursements) in respect of Letters of Credit
issued by such Issuing Bank, as well as the Issuing Bank's standard


                                       57
<PAGE>


fees with respect to the issuance, amendment, renewal or extension of any Letter
of Credit or processing of drawings thereunder. Participation fees and fronting
fees accrued through and including the last day of March, June, September and
December of each year shall be payable on the third Business Day following such
last day, commencing on the first such date to occur after the Effective Date;
provided that all such fees shall be payable on the date on which the Revolving
Commitments terminate and any such fees accruing after the date on which the
Revolving Commitments terminate shall be payable on demand. Any other fees
payable to an Issuing Bank pursuant to this paragraph shall be payable within 10
days after demand. All participation fees and fronting fees shall be computed on
the basis of a year of 360 days and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day).

         (c) The Borrower agrees to pay to the Administrative Agent, for its own
account, fees in the amounts and at the times separately agreed upon between the
Borrower and the Administrative Agent.

         (d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the applicable
Issuing Bank, in the case of fees payable to it) for distribution, in the case
of Commitment Fees and participation fees, to the Lenders entitled thereto. Fees
paid shall not be refundable under any circumstances.

         SECTION 2.13. Interest. (a) The Loans comprising each ABR Borrowing
shall bear interest at the Alternate Base Rate plus (i) in the case of any ABR
Borrowing under the Revolving Facility, the Term Facility or the Incremental
Facility (including each Swingline Loan), the ABR Spread and, if applicable to
any loan (other than an Incremental Term Loan), the Leverage Premium (each as
set forth in "Applicable Margin") and (ii) in the case of any ABR Borrowing
under any Additional Incremental Facility, the Applicable Margin for ABR
Borrowings set forth in the applicable Additional Incremental Facility
Agreement.

         (b) The Loans comprising each Eurodollar Borrowing shall bear interest
at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
plus (i) in the case of any Eurodollar Borrowing under the Revolving Facility,
the Term Facility or the Incremental Facility, the Eurodollar Spread and, if
applicable to any loan (other than an Incremental Term Loan), the Leverage
Premium (each as set forth in "Applicable Margin") and (ii) in the case of any
Eurodollar Borrowing under any Additional Incremental Facility, the Applicable
Margin for Eurodollar Borrowings set forth in the applicable Additional
Incremental Facility Agreement.

         (c) Notwithstanding the foregoing, if any principal of or interest on
any Loan or any fee or other amount payable by the Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case


                                       58
<PAGE>


of overdue principal of any ABR Loan under the Revolving Facility, the Term
Facility or the Incremental Facility, 2% plus the highest Applicable Margin for
ABR Loans plus the ABR, (ii) in the case of overdue principal of any Eurodollar
Loan under the Revolving Facility, the Term Facility or the Incremental
Facility, the higher of (x) 2% plus the highest Applicable Margin for Eurodollar
Loans plus the Adjusted LIBO Rate applicable to such Eurodollar Loan on the day
before payment was due and (y) the sum of 2% plus the highest Applicable Margin
for ABR Loans plus the ABR, (iii) in the case of overdue principal of or overdue
interest on any Additional Incremental Loan of any Class, the rate set forth in
the applicable Additional Incremental Facility Agreement and (iv) in the case of
any other amount, 2% plus the rate applicable to ABR Revolving Loans as provided
in Section 2.13(a).

         (d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and, in the case of Revolving Loans, upon
termination of the Revolving Commitments; provided that (i) interest accrued
pursuant to Section 2.13(c) shall be payable on demand, (ii) in the event of any
repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving
Loan prior to the end of the Revolving Availability Period), accrued interest on
the principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.

         (e) All interest hereunder shall be computed on the basis of a year of
360 days, except that interest computed by reference to the Alternate Base Rate
at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate or
Adjusted LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.

         SECTION 2.14. Alternate Rate of Interest. If prior to the commencement
of any Interest Period for a Eurodollar Borrowing:

         (a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or

         (b) the Administrative Agent is advised by the Required Lenders that
the Adjusted LIBO Rate for such Interest Period will not adequately and fairly
reflect the cost to such Lenders (or Lender) of making or maintaining their
Loans (or its Loan) included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the


                                       59
<PAGE>


Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.

         SECTION 2.15. Increased Costs.

         (a) If any Change in Law shall:

                  (i) impose, modify or deem applicable any reserve, special
         deposit or similar requirement against assets of, deposits with or for
         the account of, or credit extended by, any Lender (except any such
         reserve requirement reflected in the Adjusted LIBO Rate), Swingline
         Lender or Issuing Bank; or

                  (ii) impose on any Lender, Swingline Lender or Issuing Bank or
         the London interbank market any other condition affecting this
         Agreement or Eurodollar Loans made by such Lender or any Letter of
         Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost (other than
Taxes) to such Lender of making or maintaining any Eurodollar Loan (or of
maintaining its obligation to make any such Loan) or to increase the cost to
such Lender, Swingline Lender or Issuing Bank of participating in, issuing or
maintaining any Letter of Credit or to reduce the amount of any sum received or
receivable by such Lender, Swingline Lender or Issuing Bank hereunder (whether
of principal, interest or otherwise), then the Borrower will pay to such Lender,
Swingline Lender or Issuing Bank, as the case may be, such additional amount or
amounts as will compensate such Lender, Swingline Lender or Issuing Bank, as the
case may be, for such additional costs incurred or reduction suffered.

         (b) If any Lender, Swingline Lender or Issuing Bank determines that any
Change in Law regarding capital requirements has or would have the effect of
reducing the rate of return on such Lender's, Swingline Lender's or Issuing
Bank's capital or on the capital of such Lender's, Swingline Lender's or Issuing
Bank's holding company, if any, as a consequence of this Agreement or the Loans
made by, or participations in Letters of Credit held by, such Lender or
Swingline Lender, or the Letters of Credit issued by such Issuing Bank, to a
level below that which such Lender, Swingline Lender or Issuing Bank or such
Lender's, Swingline Lender's or Issuing Bank's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's,
Swingline Lender's or Issuing Bank's policies and the policies of such Lender's,
Swingline Lender's or Issuing Bank's holding company with respect to capital
adequacy), then from time to time the Borrower will pay to such Lender,
Swingline Lender or Issuing Bank, as the case may be, such additional amount or
amounts as will compensate such Lender, Swingline Lender or Issuing Bank or such
Lender's, Swingline Lender's or Issuing Bank's holding company for any such
reduction suffered.


                                       60
<PAGE>


         (c) A certificate of a Lender, Swingline Lender or Issuing Bank setting
forth the amount or amounts necessary to compensate such Lender, Swingline
Lender or Issuing Bank or its holding company, as the case may be, as specified
in Section 2.15(a) or 2.15(b) shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender or such
Issuing Bank, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.

         (d) Failure or delay on the part of any Lender, Swingline Lender or
Issuing Bank to demand compensation pursuant to this Section shall not
constitute a waiver of such Lender's, Swingline Lender's or Issuing Bank's right
to demand such compensation; provided that the Borrower shall not be required to
compensate a Lender, Swingline Lender or Issuing Bank pursuant to this Section
for any increased costs or reductions incurred more than 120 days prior to the
date that such Lender, Swingline Lender or Issuing Bank, as the case may be,
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender's, Swingline Lender's or Issuing Bank's
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 120-day period referred to above shall be extended to include the period of
retroactive effect thereof.

         SECTION 2.16. Break Funding Payments. In the event of (a) the payment
of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under Section
2.11(f) and is revoked in accordance therewith), or (d) the assignment of any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by the Borrower pursuant to Section 2.19, then,
in any such event, the Borrower shall compensate each Lender for the loss, cost
and expense attributable to such event. In the case of a Eurodollar Loan, such
loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the rate that would have been applicable to such Loan,
for the period from the date of such event to the last day of the then current
Interest Period therefor (or, in the case of a failure to borrow, convert or
continue, for the period that would have been the Interest Period for such
Loan), over (ii) the amount of interest which would accrue on such principal
amount for such period at the interest rate which such Lender would bid were it
to bid, at the commencement of such period, for dollar deposits of a comparable
amount and period from other banks in the eurodollar market. A certificate of
any Lender setting forth any amount or amounts that such Lender is entitled to
receive pursuant to this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender the amount
shown as due on any such certificate within 10 days after receipt thereof.


                                       61
<PAGE>


         SECTION 2.17. Taxes. (a) Any and all payments by or on account of any
obligation of the Borrower hereunder or under any other Loan Document shall be
made free and clear of and without deduction for any Indemnified Taxes or Other
Taxes; provided that if the Borrower shall be required to deduct any Indemnified
Taxes or Other Taxes from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) the
Administrative Agent, Lender or Issuing Bank (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower shall pay
the full amount deducted to the relevant Governmental Authority in accordance
with applicable law.

         (b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

         (c) The Borrower shall indemnify the Administrative Agent, each Lender
and Issuing Bank, within 15 days after the date of receipt of a written demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by
the Administrative Agent, such Lender or such Issuing Bank, as the case may be,
on or with respect to any payment by or on account of any obligation of the
Borrower hereunder or under any other Loan Document (including Indemnified Taxes
or Other Taxes imposed or asserted on or attributable to amounts payable under
this Section) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrower by a Lender or Issuing Bank, or by the
Administrative Agent on its own behalf or on behalf of a Lender or Issuing Bank,
shall be conclusive absent manifest error.

         (d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.

         (e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), on or prior to the first payment by the
Borrower under this Agreement to such Foreign Lender or Participant and from
time to time thereafter as prescribed by applicable law, such properly completed
and executed documentation prescribed by applicable law or


                                       62
<PAGE>


reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate.

         (f) If any Lender determines, in its sole discretion, that it has
received a refund of any Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 2.17, it shall pay over such refund
to the Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower under this Section 2.17 with respect to
the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Lender without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund); provided, however,
that the Borrower, upon request of such Lender, agrees to repay the amount paid
over to the Borrower (plus any penalties, interest or other charges imposed by
the relevant Governmental Authority) to the Lender in the event such Lender is
required to repay such refund to such Governmental Authority. Nothing contained
in this Section 2.17(f) shall require any Lender to make available its tax
returns (or any other information relating to its taxes which it deems
confidential) to the Borrower or any other Person.

         (g) Notwithstanding anything expressed or implied to the contrary in
this Agreement or any other Loan Document (including any schedule or exhibit to
any of the foregoing), this Section 2.17 (and Section 10.04 insofar as it
relates to this Section 2.17) shall constitute the complete and exclusive
understanding of the parties in respect of all matters relating to any Taxes
(including interest thereon, additions thereto and penalties in connection
therewith).

         SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs. (a) The Borrower shall make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal, interest, fees
or reimbursement of LC Disbursements, or of amounts payable under Section 2.15,
2.16 or 2.17, or otherwise) prior to 1:00 p.m., Dallas, Texas time, on the date
when due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at Dallas, Texas,
except that payments pursuant to Sections 2.15, 2.16, 2.17 and 10.03 shall be
made directly to the Persons entitled thereto and payments pursuant to other
Loan Documents shall be made to the Persons specified therein. The
Administrative Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment under any Loan Document shall be due on a day
that is not a Business Day, the date for payment shall be extended to the next
succeeding Business Day (unless, in the case of payments in respect of
Eurodollar Loans, such next succeeding Business Day would fall in the next
calendar month, in which case such payment shall be due on the next preceding
Business Day), and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension. All payments under
each Loan Document shall be made in dollars.


                                       63
<PAGE>


         (b) If at any time insufficient funds are received by and available to
the Administrative Agent to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (ii) second, towards payment of principal
and unreimbursed LC Disbursements then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties.

         (c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans (other than Swingline Loans) or participations in
LC Disbursements or Swingline Loans resulting in such Lender receiving payment
of a greater proportion of the aggregate amount of its Loans (other than
Swingline Loans) and participations in LC Disbursements and Swingline Loans and
accrued interest thereon than the proportion received by any other Lender, then
the Lender receiving such greater proportion shall purchase (for cash at face
value) participations in the Loans (other than Swingline Loans) and
participations in LC Disbursements and Swingline Loans of other Lenders to the
extent necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans (other than Swingline Loans) and
participations in LC Disbursements and Swingline Loans; provided that (i) if any
such participations are purchased and all or any portion of the payment giving
rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement (including without limitation pursuant to Section 2.11)
or any payment obtained by a Lender as consideration for the assignment of or
sale of a participation in any of its Loans or participations in LC
Disbursements to any assignee or participant, other than to the Borrower or any
Subsidiary or Affiliate thereof (as to which the provisions of this paragraph
shall apply). The Borrower consents to the foregoing and agrees, to the extent
it may effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.

         (d) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or an Issuing Bank hereunder that the
Borrower will not make such payment, the Administrative Agent may assume that
the Borrower has made such


                                       64
<PAGE>


payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders or the applicable Issuing Bank or Banks,
as the case may be, the amount due. In such event, if the Borrower has not in
fact made such payment, then each of the Lenders or Issuing Banks, as the case
may be, severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender or Issuing Bank with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent, at the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation.

         (e) If any Lender shall fail to make any payment required to be made by
it pursuant to Section 2.04(c), 2.05(d) or 2.05(e), 2.06(b), 2.18(d) or
10.03(c), then the Administrative Agent may, in its discretion (notwithstanding
any contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender's
obligations under such Sections until all such unsatisfied obligations are fully
paid.

         SECTION 2.19. Mitigation Obligations; Replacement of Lenders. (a) If
any Lender requests compensation under Section 2.15, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.17, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.

          (b) If any Lender requests compensation under Section 2.15, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 10.04), all its interests, rights and obligations under this Agreement
to an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Borrower
shall have received the prior written consent of the Administrative Agent (and,
if a Revolving Commitment is being assigned, the Issuing Bank and Swingline
Lender), which consent shall not unreasonably be withheld, (ii) such Lender
shall have received payment of an amount equal to the outstanding principal of
its Loans and participations in LC Disbursements


                                       65
<PAGE>


and Swingline Loans, accrued interest thereon, accrued fees and all other
amounts payable to it hereunder, from the assignee (to the extent of such
outstanding principal and accrued interest and fees) or the Borrower (in the
case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.15 or payments required
to be made pursuant to Section 2.17, such assignment will result in a reduction
in such compensation or payments. A Lender shall not be required to make any
such assignment and delegation if, prior thereto, (i) as a result of a waiver by
such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply or (ii) such Lender elects to
withdraw its request.

         SECTION 2.20. Additional Incremental Facilities and Commitments. (a) At
any time prior to December 31, 2002, and so long as no Default or Event of
Default shall have occurred and be continuing or would result therefrom, the
Borrower may request, on one or more occasions, by notice to the Administrative
Agent and the Incremental Facility Arrangers, that one or more Lenders (and/or
one or more other Persons which shall become Lenders as provided in Section
2.20(d) below) provide one or more additional facilities (each, an "Additional
Incremental Facility"), each of which shall provide for commitments (the
"Additional Incremental Commitments") in an aggregate amount of not less than
$100,000,000 and all of which Additional Incremental Facilities shall provide
for Additional Incremental Commitments in an aggregate amount not in excess of
$500,000,000; provided that no Lender shall have any obligation to provide any
Additional Incremental Commitment and any Lender (or any other Person which
becomes a Lender pursuant to Section 2.20(d) below) may provide Additional
Incremental Commitments without the consent of any other Lender.

         (b) The maturity date, scheduled amortization and commitment
reductions, mandatory prepayments and commitment reductions, interest rate,
minimum borrowings and prepayments, commitment fees and other amounts payable in
respect of any Additional Incremental Facility, and certain agent
determinations, shall be as set forth in an agreement (an "Additional
Incremental Facility Agreement") among the Loan Parties, the Administrative
Agent, each Incremental Facility Arranger (but only if it is acting in the
capacity of joint lead arranger with respect to such Additional Incremental
Facility) and the Lenders and other Persons agreeing to provide Additional
Incremental Commitments thereunder; provided that any term Incremental Loans
(the "Additional Incremental Term Loans") shall have a Weighted Average Life to
Maturity of no less than the Weighted Average Life to Maturity of the Term Loans
then outstanding and any revolving Incremental Commitment (the "Additional
Incremental Revolving Commitments" and any loans made pursuant thereto, the
"Additional Incremental Revolving Loans") shall have a Weighted Average Life to
Maturity of not less than the Weighted Average Life to Maturity of the Revolving
Commitments then outstanding.

         (c) [Intentionally deleted]


                                       66
<PAGE>


         (d) The effectiveness of any Additional Incremental Facility to be
created under this Section 2.20, and the obligation of any Lender or other
Person providing any Additional Incremental Commitment thereunder to make any
Additional Incremental Loans pursuant thereto, is subject to, in addition to the
conditions set forth in Article 4, the satisfaction of each of the following
conditions: each Loan Party, the Administrative Agent, each Incremental Facility
Arranger (but only if it is acting in the capacity of joint lead arranger with
respect to such Additional Incremental Facility) and each Lender or other Person
providing Additional Incremental Commitments thereunder (each, an "Additional
Incremental Lender") shall have executed and delivered to the Administrative
Agent an Additional Incremental Facility Agreement with respect to such
Additional Incremental Facility, (x) the Administrative Agent shall have
received, and (y) the Administrative Agent shall have received for the
respective accounts of any other agents and the Additional Incremental Lenders,
all fees and other amounts payable by the Borrower in respect of such Additional
Incremental Facility on or prior to such date of effectiveness and the
Administrative Agent (or its counsel) shall have received such documents and
certificates, and such legal opinions, as the Administrative Agent and the
Incremental Facility Arrangers or their counsel shall reasonably request,
including documents, certificates and legal opinions relating to the
organization, existence and good standing of each Loan Party, the authorization
of such Additional Incremental Facility and other legal matters relating to the
Loan Parties or the Loan Documents (including the applicable Additional
Incremental Facility Agreement). The Administrative Agent shall notify each
Lender as to the effectiveness of each Additional Incremental Facility
hereunder.


                                    ARTICLE 3

                         REPRESENTATIONS AND WARRANTIES

         Each of Holdings and the Borrower represents and warrants to the
Lenders that:

         SECTION 3.1. Organization; Powers. Each of Holdings and the Restricted
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.

         SECTION 3.2. Authorization; Enforceability. The Transactions to be
entered into by each Loan Party are within such Loan Party's corporate powers
and have been duly authorized by all necessary corporate and, if required,
stockholder action. This Agreement has been duly executed and delivered by each
of Holdings and the Borrower and constitutes, and each other Loan Document to
which any Loan Party is to be a party,


                                       67
<PAGE>


when executed and delivered by such Loan Party, will constitute, a legal, valid
and binding obligation of Holdings, the Borrower or such Loan Party (as the case
may be), enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.

         SECTION 3.3. Governmental Approvals; No Conflicts. The Transactions (a)
do not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority, except such as have been obtained
or made and are in full force and effect and except filings necessary to perfect
Liens created under the Loan Documents (if any), (b) will not violate any
applicable law or regulation or the charter, by-laws or other organizational
documents of Holdings or any Restricted Subsidiary or any order of any
Governmental Authority, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon Holdings or any Restricted
Subsidiary or any of their respective assets, or give rise to a right thereunder
to require any payment to be made by Holdings or any Restricted Subsidiary, and
(d) will not result in the creation or imposition of any Lien on any asset of
Holdings or any Restricted Subsidiary, except Liens created under the Loan
Documents (if any).

         SECTION 3.4. Financial Condition; No Material Adverse Change. (a)
Holdings has heretofore furnished to the Lenders Holdings' consolidated balance
sheet and statements of operations, stockholders equity and cash flows as of and
for the fiscal years ended December 31, 1998, December 31, 1999 and December 31,
2000, reported on by Ernst & Young LLP, independent public accountants. Such
financial statements present fairly, in all material respects, the financial
position and results of operations and cash flows of Holdings and the
Subsidiaries as of such dates and for such periods in accordance with GAAP.

         (b) Holdings has heretofore furnished to the Lenders its pro forma
consolidated balance sheet as of December 31, 2000 and projected pro forma
statements of operations and cash flows for the fiscal year ended December 31,
2001, prepared giving effect to (x) the Transactions under the Incremental
Facility and the Structured Note Financing and (y) the transactions described in
clause (x) and, in addition, the sale of its Williams Communications Solutions
business unit, as if such events had occurred on such date or on the first day
of such fiscal year, as the case may be. Such projected pro forma consolidated
balance sheets and statements of operations and cash flows (i) have been
prepared in good faith based on the same assumptions used to prepare the pro
forma financial statements included in the Information Memorandum (which
assumptions are believed by Holdings and the Borrower to be reasonable), (ii)
are based on the best information available to Holdings and the Borrower after
due inquiry, (iii) accurately reflect all adjustments necessary to give effect
to the Transactions under the Incremental Facility and the Structured Note
Financing and, in the case of one such set of financial statements, the sale of
its Williams Communications Solutions business unit, and (iv) present fairly, in
all material respects, the pro forma financial position of Holdings and


                                       68
<PAGE>


the Subsidiaries as of such date and for such periods as if the Transactions,
the Structured Note Financing and, in the case of one such set of financial
statements, the sale of its Williams Communications Solutions business unit had
occurred on such date or at the beginning of such period, as the case may be.

         (c) Except as disclosed in the financial statements referred to above
or the notes thereto or in the Information Memorandum and except for the
Disclosed Matters, after giving effect to the Transactions, none of Holdings or
any Restricted Subsidiary has, as of the Effective Date, any material contingent
liabilities, unusual material long-term commitments or unrealized material
losses.

         (d) The projections delivered to the Lenders on the Amendment No. 5
Effective Date (the "Projections") were based on assumptions believed by the
Borrower and Holdings in good faith to be reasonable when made and as of their
date represented the Borrower's and Holdings' good faith estimate of future
performance of Holdings and the Subsidiaries and of the Borrower and its
consolidated subsidiaries.

         (e) Since December 31, 2000, there has been no Material Adverse Change.

         SECTION 3.5. Properties. (a) Each of Holdings and the Restricted
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business (including its Mortgaged
Properties, if any), except for minor defects in title that do not interfere
with its ability to conduct its business as currently conducted or to utilize
such properties for their intended purposes. None of the properties and assets
of Holdings or any Restricted Subsidiary is subject to any Lien other than
Permitted Encumbrances, Liens created by the Collateral Documents (if any) and
other Liens permitted under Section 6.02.

         (b) Each of Holdings and the Subsidiaries owns, or is licensed to use,
all trademarks, trade names, copyrights, patents and other intellectual property
material to its business, and the use thereof by Holdings and the Subsidiaries
does not infringe upon the rights of any other Person, except for any such
infringements that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.

         (c) Schedule 3.05 sets forth the address of each real property that is
owned or leased by Holdings, the Borrower or any other Loan Party (other than
the Parent) as of the Effective Date after giving effect to the Transactions.

         SECTION 3.6. Litigation and Environmental Matters. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of Holdings or the Borrower,
threatened against or affecting Holdings or any Subsidiary (i) as to which there
is a reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected,


                                       69
<PAGE>

individually or in the aggregate, to result in a Material Adverse Effect (other
than the Disclosed Matters) or (ii) that involve any of the Loan Documents or
the Transactions.

         (b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, neither Holdings nor any
Subsidiary (i) has failed to comply with any Environmental Law or to obtain,
maintain or comply with any permit, license or other approval required under any
Environmental Law, (ii) has become subject to any Environmental Liability, (iii)
has received written notice of any claim with respect to any Environmental
Liability or (iv) knows of any basis for any violations of any Environmental Law
or any release, threatened release or exposure to any Hazardous Materials that
is likely to form the basis of any Environmental Liability.

         (c) Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.

         SECTION 3.7. Compliance with Laws and Agreements. Each of Holdings and
the Subsidiaries is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.

         SECTION 3.8. Investment and Holding Company Status. Neither Holdings
nor any Restricted Subsidiary is (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.

         SECTION 3.9. Taxes. Each of Holdings and the Subsidiaries has timely
filed or caused to be filed (or the Parent has filed or caused to be filed) all
Tax returns and reports required to have been filed and has paid or caused to be
paid (or the Parent has paid or caused to be paid) all Taxes required to have
been paid by or with respect to it, except (a) Taxes that are being contested in
good faith by appropriate proceedings and for which Holdings or such Subsidiary,
as applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.

         SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting


                                       70
<PAGE>


such amounts, exceed by more than $25,000,000 the fair market value of the
assets of such Plan, and the present value of all accumulated benefit
obligations of all underfunded Plans (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $25,000,000 the fair market value of the assets of all such underfunded
Plans.

         SECTION 3.11. Disclosure. Holdings and the Borrower have disclosed to
the Lenders all agreements, instruments and corporate or other restrictions to
which Holdings or any Restricted Subsidiary is subject, and all other matters
known to any of them, that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect. Neither the Information
Memorandum nor any of the other reports, financial statements, certificates or
other information furnished by or on behalf of any Loan Party to any Agent or
any Lender in connection with the negotiation of this Agreement or any other
Loan Document or delivered hereunder or thereunder (as modified or supplemented
by other information so furnished) contains any material misstatement of fact or
omits to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided that, with respect to projected financial information, Holdings and the
Borrower represent only that such information was prepared in good faith based
upon assumptions believed to be reasonable at the time.

         SECTION 3.12. Subsidiaries. Schedule 3.12 sets forth the name of, and
the direct or indirect ownership interest of Holdings or the Borrower in, each
Subsidiary and identifies each Subsidiary that is a Subsidiary Loan Party, in
each case as of the Effective Date.

         SECTION 3.13. Insurance. Schedule 3.13 sets forth a description of all
insurance maintained by or on behalf of Holdings and the Restricted Subsidiaries
as of the Effective Date. As of the Effective Date, all premiums in respect of
such insurance have been paid.

         SECTION 3.14. Labor Matters. As of the Effective Date, there are no
strikes, lockouts or slowdowns against Holdings or any Restricted Subsidiary
pending or, to the knowledge of Holdings or the Borrower, threatened. The hours
worked by and payments made to employees of Holdings and the Restricted
Subsidiaries have not been in violation of the Fair Labor Standards Act or any
other applicable Federal, state, local or foreign law dealing with such matters.
All payments due from Holdings or any Restricted Subsidiary, or for which any
claim may be made against Holdings or any Restricted Subsidiary, on account of
wages and employee health and welfare insurance and other benefits, have been
paid or accrued as a liability on the books of Holdings or such Restricted
Subsidiary. The consummation of the Transactions and the Reorganization has not
and will not give rise to any right of termination or right of renegotiation on
the part of any union under any collective bargaining agreement by which
Holdings or any Restricted Subsidiary is bound.


                                       71
<PAGE>


         SECTION 3.15. Solvency. Immediately after the consummation of the
Transactions to occur on the Effective Date and immediately following the making
of each Loan made on the Effective Date and after giving effect to the
application of the proceeds of such Loans, (a) the fair value of the assets of
each Loan Party will exceed its debts and liabilities, subordinated, contingent
or otherwise; (b) the present fair saleable value of the property of each Loan
Party will be greater than the amount that will be required to pay the probable
liability of its debts and other liabilities, subordinated, contingent or
otherwise, as such debts and other liabilities become absolute and matured; (c)
each Loan Party will be able to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured; and (d) each Loan Party will not have unreasonably small capital with
which to conduct the business in which it is engaged as such business is now
conducted and is proposed to be conducted following the Effective Date.

         SECTION 3.16. No Burdensome Restrictions. No contract, lease, agreement
or other instrument to which Holdings or any Restricted Subsidiary is a party or
by which any of their property is bound or affected, no charge, corporate
restriction, judgment, decree or order and no provision of applicable law or
governmental regulation could reasonably be expected to have Material Adverse
Effect.

         SECTION 3.17. Representations in Loan Documents True and Correct. As of
the dates when made and as of the Effective Date, each representation and
warranty of Holdings or any Restricted Subsidiary party thereto contained in any
Loan Document is true and correct.


                                    ARTICLE 4

                                   CONDITIONS

         SECTION 4.1. Effective Date. [Intentionally deleted]

         SECTION 4.2. Each Credit Event. The obligation of each Lender to make a
Loan on the occasion of any Borrowing, and of each Issuing Bank to issue, amend,
renew or extend any Letter of Credit, is subject to the satisfaction of the
following conditions:

         (a) The representations and warranties of each Loan Party set forth in
the Loan Documents (excluding Section 3.04(b)) shall be true and correct on and
as of the date of such Borrowing or the date of issuance, amendment, renewal or
extension of such Letter of Credit, as applicable.

         (b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Default shall have occurred and be continuing.


                                       72
<PAGE>


         Each Borrowing and each issuance, amendment, renewal or extension of a
Letter of Credit shall be deemed to constitute a representation and warranty by
Holdings and the Borrower on the date thereof as to the matters specified in
Sections 4.02(a), 4.02(b) and 4.03.

         SECTION 4.3. First Incremental Borrowing Date with Respect to the
Incremental Facility. The obligation of each Incremental Lender to make a Loan
on the occasion of the First Incremental Borrowing Date is subject to the
satisfaction of the following conditions (in addition to the conditions set
forth in Section 4.02):

         (a) The Spin-Off shall have been consummated.

         (b) The Initial Collateral Date shall have occurred (or shall occur on
the date of such Borrowing) and, prior to the making of any Loan on the occasion
of such Borrowing, Holdings and the Borrower shall have complied with all of the
provisions of Section 5.11A.

         (c) The First Incremental Borrowing Date shall be no later than the
date that is 180 days after the date of Amendment No. 5 Effective Date.

         (d) The Administrative Agent shall have received a certificate, in form
and substance reasonably satisfactory to the Administrative Agent, from the
Financial Officer of each of Holdings and the Borrower, certifying as to
compliance of the matters specified in Sections 4.03(a) and 4.03(b).


                                    ARTICLE 5

                              AFFIRMATIVE COVENANTS

         Until the Commitments have expired or been terminated and the principal
of and interest on each Loan and all fees payable hereunder shall have been paid
in full and all Letters of Credit shall have expired or terminated and all LC
Disbursements shall have been reimbursed, each of Holdings and the Borrower
covenants and agrees with the Lenders that:

         SECTION 5.1. Financial Statements and Other Information. Holdings and
the Borrower will furnish to the Administrative Agent and each Lender:

         (a) (i) within 90 days after the end of each fiscal year of Holdings,
its audited consolidated balance sheets and related audited consolidated
statements of operations, stockholders' equity and cash flows as of the end of
and for such fiscal year (including segment reporting with respect to each of
Holdings' and the Subsidiaries' business segments consistent with that provided
in the Notes Offering Registration Statement),


                                       73
<PAGE>


setting forth in each case in comparative form the figures for the previous
fiscal year, all reported on by Ernst & Young LLP or other independent public
accountants of recognized national standing (without a "going concern" or like
qualification or exception and without any qualification or exception as to the
scope of such audit) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and results of
operations of Holdings and the Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, (ii) within 90 days after the end of
each fiscal year of the Borrower, its audited consolidated balance sheets and
related audited consolidated statements of operations, stockholders' equity and
cash flows as of the end of and for such fiscal year (including segment
reporting with respect to each of the Borrower's and its consolidated
subsidiaries' business segments consistent with that provided with respect to
the Borrower's and its consolidated subsidiaries' business segments in the Notes
Offering Registration Statement), setting forth in each case in comparative form
the figures for the previous fiscal year, all reported on by Ernst & Young LLP
or other independent public accountants of recognized national standing (without
a "going concern" or like qualification or exception and without any
qualification or exception as to the scope of such audit) to the effect that
such consolidated financial statements present fairly in all material respects
the financial condition and results of operations of the Borrower and its
consolidated subsidiaries on a consolidated basis in accordance with GAAP
consistently applied and (iii) within 90 days after the end of each fiscal year
of Holdings and the Borrower, (x) supplemental unaudited balance sheets and
related unaudited statements of operations, stockholders' equity and cash flows
as of the end of and for such fiscal year, setting forth in tabular form in each
case the figures for the previous year, for the Borrower and Holdings and the
consolidating adjustments with respect thereto and (y) segment reporting of
EBITDA and Adjusted EBITDA with respect to each business segment of Holdings and
the Subsidiaries and the Borrower and its consolidated subsidiaries consistent
with the business segments reported on in the Notes Offering Registration
Statement;

         (b) (i) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of Holdings, unaudited consolidated and
consolidating balance sheets and related consolidated and consolidating
statements of operations, stockholders' equity and cash flows of Holdings and
the Subsidiaries as of the end of and for such fiscal quarter and the then
elapsed portion of the fiscal year, setting forth in each case in comparative
form the figures for the corresponding period or periods of the previous fiscal
year (or in the case of the balance sheet, as of the end of the previous fiscal
year) (including segment reporting with respect to each of Holdings' and the
Subsidiaries' business segments consistent with that provided in the Notes
Offering Registration Statement and also including segment reporting of EBITDA
and Adjusted EBITDA), all certified by a Financial Officer of Holdings as
presenting fairly in all material respects the financial condition and results
of operations of Holdings and the Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes and (ii) within 45 days after the end
of each of the first three fiscal quarters of each fiscal year of the Borrower,
unaudited consolidated


                                       74
<PAGE>


balance sheets and related statements of operations, stockholders' equity and
cash flows of the Borrower and its consolidated subsidiaries as of the end of
and for such fiscal quarter and the then elapsed portion of the fiscal year,
setting forth in each case in comparative form the figures for the corresponding
period or periods of the previous fiscal year (or, in the case of the balance
sheet, as of the end of the previous fiscal year) (including segment reporting
with respect to each of the Borrower's and its consolidated subsidiaries'
business segments consistent with that provided with respect to the Borrower's
and its consolidated subsidiaries' business segments in the Notes Offering
Registration Statement and also including segment reporting of EBITDA and
Adjusted EBITDA), all certified by a Financial Officer of the Borrower as
presenting fairly in all material respects the financial condition and results
of operations of the Borrower and its consolidated subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;

         (c) concurrently with any delivery of financial statements under
Section 5.01(a) or 5.01(b) above, a certificate of a Financial Officer of the
Borrower (i) certifying as to whether a Default has occurred and, if a Default
has occurred, specifying the details thereof and any action taken or proposed to
be taken with respect thereto, (ii) setting forth in reasonable detail
calculations demonstrating (x) compliance with Section 6.08 and Sections 6.15
through 6.19, including, if applicable, calculations showing capital
contributions made by the Parent pursuant to Section 6.20 and the resulting
effects on the Borrower's compliance with Section 6.08 and Sections 6.15 through
6.19 and (y) Additional Capital at such date, including detail as to the sources
and uses of Additional Capital since June 30, 1999 and (iii) stating whether any
change in GAAP or in the application thereof has occurred since the date of
Holdings' audited financial statements referred to in Section 3.04 and, if any
such change has occurred, specifying the effect of such change on the financial
statements accompanying such certificate;

         (d) concurrently with any delivery of financial statements under clause
5.01(a) above, a certificate of the accounting firm that reported on such
financial statements stating whether they obtained knowledge during the course
of their examination of such financial statements of any Default (which
certificate may be limited to the extent required by accounting rules or
guidelines);

         (e) as soon as practicable after approval by the Board of Directors of
the Parent and in any event not later than 120 days after the commencement of
each fiscal year of the Borrower, a consolidated and consolidating budget of
Holdings for such fiscal year and a consolidated budget of the Borrower for such
fiscal year (including projected consolidated (and, in the case of Holdings,
consolidating) balance sheets, related consolidated (and, in the case of
Holdings, consolidating) statements of projected operations and cash flow as of
the end of and for such fiscal year and segment information with respect to each
of Holdings' and the Subsidiaries' and the Borrower's and its consolidated
subsidiaries' business segments consistent with the categories of information
provided with respect to Holdings' and the Subsidiaries' business segments


                                       75
<PAGE>


in the Notes Offering Registration Statement, together with projected EBITDA and
Adjusted EBITDA for such segments) and, promptly when available, any significant
revisions of such budget;

         (f) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
Holdings or any Restricted Subsidiary with the Commission, or any Governmental
Authority succeeding to any or all of the functions of the Commission, or with
any national securities exchange, or distributed by Holdings to its shareholders
generally, as the case may be, except to the extent any such report, proxy
statement or other material is available electronically on a publicly-accessible
website; and

         (g) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of Holdings
or any Restricted Subsidiary, or compliance with the terms of any Loan Document,
as the Administrative Agent or any Lender may reasonably request.

         SECTION 5.2. Notices of Material Events. Upon knowledge thereof,
Holdings or the Borrower will furnish to the Administrative Agent and each
Lender prompt written notice of the following:

         (a) the occurrence of any Default;

         (b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting Holdings,
the Borrower or any Affiliate thereof that could reasonably be expected to
result in a Material Adverse Effect;

         (c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
a Material Adverse Effect;

         (d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.

         Each notice delivered under this Section shall be accompanied by a
statement of a Financial Officer or other executive officer of the Borrower
setting forth the details of the event or development requiring such notice and
any action taken or proposed to be taken with respect thereto.

         SECTION 5.3. Existence; Conduct of Business. Each of Holdings and the
Borrower will, and will cause each other Restricted Subsidiary to, (i) continue
to engage in business of the same general type as now conducted and (ii) do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect its legal existence and the rights, licenses, permits, privileges,
franchises, patents, copyrights, trademarks


                                       76
<PAGE>


and trade names material to the conduct of its business; provided that the
foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 6.03.

         SECTION 5.4. Payment of Obligations. Each of Holdings and the Borrower
(i) will, and will cause each other Restricted Subsidiary to, pay its
Indebtedness and other material obligations, including tax liabilities, before
the same shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
Holdings, the Borrower or such other Restricted Subsidiary has set aside on its
books adequate reserves with respect thereto in accordance with GAAP, (c) such
contest effectively suspends collection of the contested obligation and the
enforcement of any Lien securing such obligation and (d) the failure to make
payment pending such contest could not reasonably be expected to result in a
Material Adverse Effect and (ii) shall not breach, or permit any other
Restricted Subsidiary to breach, in any material respect, or permit to exist any
material default under, the terms of any material lease, commitment, contract,
instrument or obligation to which it is a party, or by which its properties or
assets are bound, except where the failure to do the foregoing would not in the
aggregate have a Material Adverse Effect.

         SECTION 5.5. Maintenance of Properties. Each of Holdings and the
Borrower will, and will cause each other Restricted Subsidiary to, keep and
maintain all property material to the conduct of its business in good working
order and condition, ordinary wear and tear excepted.

         SECTION 5.6. Insurance. Holdings and the Borrower will, and will cause
each other Restricted Subsidiary to, maintain, with financially sound and
reputable insurance companies, insurance in such amounts and against such risks
as are customarily maintained by companies engaged in the same or similar
businesses operating in the same or similar locations.

         SECTION 5.7. Casualty and Condemnation. The Borrower will (a) furnish
to the Administrative Agent and the Lenders prompt written notice of any
casualty or other insured damage to any portion of any of Holdings' and the
Restricted Subsidiaries' property or assets or the commencement of any action or
proceeding for the taking of any of Holdings' and the Restricted Subsidiaries'
property or assets or any part thereof or interest therein under power of
eminent domain or by condemnation or similar proceeding (in each case with a
value in excess of $10,000,000) and (b) ensure that the Net Proceeds of any such
event (whether in the form of insurance proceeds, condemnation awards or
otherwise) are applied, to the extent such Net Proceeds have not been utilized
to repair, restore or replace such property or assets or to acquire other
Telecommunications Assets within 360 days after such event, to prepay Loans and
reduce Commitments as provided in Sections 2.11(b) and 2.08(f), respectively.

         SECTION 5.8. Books and Records; Inspection and Audit Rights. Each of
Holdings and the Borrower will, and will cause each other Restricted Subsidiary
to, keep proper


                                       77
<PAGE>


books of record and account in which materially full, true and correct entries
are made of all dealings and transactions in relation to its business and
activities. Each of Holdings and the Borrower will, and will cause each other
Restricted Subsidiary to, permit any representatives designated by the
Administrative Agent or any Lender at the expense of the Administrative Agent or
Lender, as the case may be, or, if an Event of Default shall have occurred and
be continuing, at the expense of the Borrower, upon reasonable prior notice, to
visit and inspect its properties, to examine and make extracts from its books
and records, and to discuss its affairs, finances and condition with its
officers and independent accountants, all at such reasonable times and as often
as reasonably requested, subject to Section 10.12.

         SECTION 5.9. Compliance with Laws. Each of Holdings and the Borrower
will, and will cause each other Subsidiary to, comply with all laws, rules,
regulations and orders of any Governmental Authority applicable to it or its
property (including, without limitation, Environmental Laws and ERISA and the
rules and regulations thereunder), except where the necessity of compliance
therewith is contested in good faith by appropriate action and such failure to
comply, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.

         SECTION 5.10. Use of Proceeds and Letters of Credit. (a) The proceeds
of Loans will be used (i) for working capital requirements and general corporate
purposes of the Borrower and the other Restricted Subsidiaries and (ii) to pay
the fees and expenses associated with the Facilities.

          (b) No part of the proceeds of any Loan will be used, whether directly
or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board, including Regulations U and X.

         SECTION 5.11A. Initial Collateral Date. On the Initial Collateral Date,
Holdings and the Borrower hereby agree that they will, and will cause each other
Restricted Subsidiary to:

         (a) Deliver to the Administrative Agent duly executed counterparts of
the Security Agreement, together with the following:

                  (i) duly executed counterparts of each supplemental agreement
                  required to be executed and delivered by the terms of the
                  Security Agreement (including, without limitation, any Patent
                  Security Agreement, and Trademark Security Agreement and any
                  Control Agreement, in each case as defined in the Security
                  Agreement);

                  (ii) stock certificates representing any or all of the
                  outstanding shares of capital stock or other Equity Interests
                  of the Borrower and each Restricted Subsidiary and stock
                  powers and instruments of transfer, endorsed in blank, with
                  respect to such stock certificates;


                                       78
<PAGE>


                  (iii) any or all documents and instruments, including Uniform
                  Commercial Code financing statements, required by law or
                  reasonably requested by the Administrative Agent to be filed,
                  registered or recorded to create or perfect the Liens intended
                  to be created under the Security Agreement; and

                  (iv) a completed perfection certificate dated the Initial
                  Collateral Date, in form and substance reasonably satisfactory
                  to the Administrative Agent and the Incremental Facility
                  Arrangers and signed by an executive officer or Financial
                  Officer of Holdings, together with all attachments
                  contemplated thereby, including the results of a search of the
                  Uniform Commercial Code (or equivalent) filings made with
                  respect to the Loan Parties in the jurisdictions contemplated
                  by such perfection certificate and copies of the financing
                  statements (or similar documents) disclosed by such search and
                  evidence reasonably satisfactory to the Administrative Agent
                  and the Incremental Facility Arrangers that the Liens
                  indicated by such financing statements (or similar documents)
                  are permitted by Section 6.02 or have been released.

         (b) Deliver to the Administrative Agent a favorable written opinion
(addressed to the Agents, the Issuing Banks, the Swingline Lenders and the
Lenders and dated the Initial Collateral Date) of each of (i) counsel for
Holdings, the Borrower and each Subsidiary Loan Party reasonably acceptable to
the Administrative Agent and the Incremental Facility Arrangers, (ii) the
general counsel of Holdings and (iii) local counsel in the jurisdictions where
the Borrower is incorporated and where its chief executive office is located
and, in the case of each such opinion required by this paragraph, covering such
matters relating to the Loan Parties, the Loan Documents, the Collateral and the
Transactions as the Administrative Agent (or its counsel), the Incremental
Facility Arrangers (or its counsel) or the Required Lenders shall reasonably
request.

         SECTION 5.11B. Collateral Event. If a Collateral Event shall have
occurred and be continuing, the Administrative Agent, the Incremental Facility
Arrangers or the Required Lenders may by written notice to the Borrower (a
"Collateral Notice"), request, and Holdings and the Borrower hereby agree that
they will, and will cause each other Restricted Subsidiary to, within 30 days of
the Borrowers' receipt of such Collateral Notice (such thirtieth day, a
"Collateral Establishment Date"):

         (a) Subject to subsection (d) of this Section 5.11B, deliver to the
Administrative Agent duly executed counterparts of the Security Agreement (to
the extent not previously delivered pursuant to Section 5.11A) and each other
Collateral Document reasonably requested by the Administrative Agent, the
Incremental Facility Arrangers or the Required Lenders, in form and substance
satisfactory to the Administrative Agent, the Incremental Facility Arrangers or
the Required Lenders, signed on behalf of Holdings, the Borrower and each
Subsidiary Loan Party requested by the Administrative Agent, the Incremental
Facility Arrangers or the Required Lenders, together with (to the extent not
previously delivered pursuant to Section 5.11A) such of the following as shall
have been so requested:


                                       79
<PAGE>


                (i) stock certificates representing any or all of the
                outstanding shares of capital stock of the Borrower and each
                other Subsidiary of Holdings owned by or on behalf of any Loan
                Party as of such Collateral Establishment Date (except that
                stock certificates representing shares of common stock of a
                Foreign Subsidiary may be limited to 66% of the outstanding
                shares of common stock of such Foreign Subsidiary) and stock
                powers and instruments of transfer, endorsed in blank, with
                respect to such stock certificates;

                (ii) any or all documents and instruments, including Uniform
                Commercial Code financing statements, required by law or
                reasonably requested by the Administrative Agent to be filed,
                registered or recorded to create or perfect the Liens intended
                to be created under the Collateral Documents; and

                (iii) a completed perfection certificate dated such Collateral
                Establishment Date, in form and substance reasonably
                satisfactory to the Administrative Agent and the Incremental
                Facility Arrangers and signed by an executive officer or
                Financial Officer of Holdings, together with all attachments
                contemplated thereby, including the results of a search of the
                Uniform Commercial Code (or equivalent) filings made with
                respect to the Loan Parties in the jurisdictions contemplated by
                such perfection certificate and copies of the financing
                statements (or similar documents) disclosed by such search and
                evidence reasonably satisfactory to the Administrative Agent and
                the Incremental Facility Arrangers that the Liens indicated by
                such financing statements (or similar documents) are permitted
                by Section 6.02 or have been released.

         (b) If requested by the Administrative Agent, the Incremental Facility
Arrangers or the Required Lenders, on or before the thirtieth day following any
Collateral Establishment Date or such later day as shall be acceptable to the
Administrative Agent, the Incremental Facility Arrangers or the Required Lenders
(a "Mortgage Establishment Date"), Holdings and the Borrower shall, and shall
cause each other Restricted Subsidiary to, deliver to the Administrative Agent
(i) counterparts of a Mortgage with respect to each Mortgaged Property as to
which such request is made, in each case signed on behalf of the record owner of
such Mortgaged Property, (ii) a policy or policies of title insurance issued by
a nationally recognized title insurance company, insuring the Lien of each such
Mortgage as a valid first Lien on the Mortgaged Property described therein, free
of any other Liens except as permitted by Section 6.02, together with such
endorsements, coinsurance and reinsurance as the Collateral Agent, the
Incremental Facility Arrangers or the Required Lenders may reasonably request,
and (iii) such surveys, abstracts and appraisals as may be required pursuant to
such Mortgages or as the Administrative Agent, the Incremental Facility
Arrangers or the Required Lenders may reasonably request.


                                       80
<PAGE>


         (c) On or before any Collateral Establishment Date or Mortgage
Establishment Date, Holdings and the Borrower shall deliver a favorable written
opinion (addressed to the Agents, the Incremental Facility Arrangers, the
Issuing Banks, the Swingline Lenders and the Lenders and dated on or prior to
such Collateral Establishment Date or Mortgage Establishment Date) of each of
(i) counsel for Holdings, the Borrower and each Subsidiary Loan Party reasonably
acceptable to the Administrative Agent, (ii) the general counsel of Holdings and
(iii) local counsel in each jurisdiction where any Collateral or Mortgaged
Property is located and, in the case of each such opinion required by this
paragraph, covering such matters relating to the Loan Parties, the Loan
Documents, the Collateral and the Transactions as the Administrative Agent (or
its counsel), the Incremental Facility Arrangers (or its counsel) or the
Required Lenders shall reasonably request.

         (d) Anything in this Agreement to the contrary notwithstanding, the
Liens created under any Collateral Document may also secure, to the extent, but
only to the extent, required under the indentures and other documents governing
such Indebtedness (without taking into account any general exceptions to any
such requirements contained in any such indentures and other documents), equally
and ratably with some or all of the Obligations, the obligations of the Parent
and Holdings under any public Indebtedness of either of them that, by its terms,
requires that such Indebtedness be equally and ratably secured by such Liens.

         (e) None of the Borrower, Holdings or any Restricted Subsidiary of
Holdings shall be required to grant to the Administrative Agent or any Lender,
pursuant to the provisions of this Section 5.11B, a Lien on any of the following
assets: (i) voting Equity Interests of any Foreign Subsidiary representing in
excess of 66% of the outstanding voting Equity Interests of such Foreign
Subsidiary, (ii) any ADP Property to the extent such ADP Property secures any
ADP Obligation and (iii) any other asset subject to a security interest
permitted by clauses (iv), (v), (viii), or (ix) of Section 6.02 but only, in the
case of any asset described in clauses (ii) or (iii), to the extent the granting
of such Lien is prohibited by the terms of the agreement pursuant to which such
security interest has been granted.

         SECTION 5.12. Information Regarding Collateral. (a) (i) The Borrower
will furnish to the Administrative Agent prompt written notice of any change (A)
in any Loan Party's corporate name or in any trade name used to identify it in
the conduct of its business or in the ownership of its properties, (B) in the
location of any Loan Party's chief executive office, its principal place of
business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility), (C)
in any Loan Party's identity or corporate structure or (D) in any Loan Party's
Federal Taxpayer Identification Number; (ii) Holdings and the Borrower will not,
and will not permit any other Restricted Subsidiary to, effect or permit any
change referred to in the preceding sentence unless all filings have been made
under the Uniform Commercial Code or otherwise that are required in order for
the Administrative Agent to continue at


                                       81
<PAGE>


all times following such change to have a valid, legal and perfected security
interest in all the Collateral; and (iii) Holdings and the Borrower will, and
will cause each other Restricted Subsidiary to, promptly notify the
Administrative Agent if any material portion of the Collateral owned by it is
damaged or destroyed.

         (b) At the time of the delivery of annual financial statements with
respect to the preceding fiscal year pursuant to Section 5.01(a), the Borrower
shall also deliver to the Administrative Agent a certificate of a Financial
Officer or the chief legal officer of the Borrower (i) setting forth the
information required pursuant to the perfection certificate or confirming that
there has been no change in such information since the date of the perfection
certificate most recently delivered or the date of the most recent certificate
delivered pursuant to this Section and (ii) certifying that all Uniform
Commercial Code financing statements (including fixture filings, as applicable)
or other appropriate filings, recordings or registrations, including all
refilings, rerecordings and reregistrations, containing a description of the
Collateral have been filed of record in each governmental, municipal or other
appropriate office in each jurisdiction identified pursuant to Section 5.12 to
the extent necessary to protect and perfect the security interests under the
Collateral Documents for a period of not less than 18 months after the date of
such certificate (except as noted therein with respect to any continuation
statements to be filed within such period).

         SECTION 5.13. Additional Subsidiaries. (a) If any additional Subsidiary
is formed or acquired, Holdings and the Borrower will notify the Administrative
Agent and the Lenders thereof and if such Subsidiary is a Subsidiary Loan Party,
(i) cause such Subsidiary, within ten Business Days after such Subsidiary Loan
Party is formed or acquired, to become a party to the Subsidiary Guarantee as an
additional guarantor thereunder and to the Security Agreement as a "Lien
Grantor" thereunder, (ii) deliver all stock certificates representing the
capital stock or other Equity Interests of such Subsidiary to the Administrative
Agent, together with stock powers and instruments of transfer, endorsed in
blank, with respect to such certificates and (iii) take all actions required
under the Security Agreement to perfect, register and/or record the Liens
granted by it thereunder and the Lien on such capital stock or other Equity
Interests or as may be reasonably requested by the Administrative Agent, the
Incremental Facility Arrangers or the Required Lenders.

         (b) If a Collateral Establishment Date has occurred and any Collateral
Event is then continuing, such Subsidiary is a Subsidiary Loan Party and the
Administrative Agent, the Incremental Facility Arrangers or the Required Lenders
so request in writing, Holdings and the Borrower shall (i) within 30 days after
such Subsidiary is formed or acquired, cause such Subsidiary to become a party
to such Collateral Documents (in addition to the Security Agreement) as the
Administrative Agent, the Incremental Facility Arrangers or the Required Lenders
shall request and promptly take such actions as the Administrative Agent, the
Incremental Facility Arrangers or the Required Lenders shall reasonably request
to create and perfect Liens on such of such Subsidiary's assets (in accordance
with the standards set forth in Section 5.11B(a)) as the Administrative Agent,


                                       82
<PAGE>


the Incremental Facility Arrangers or the Required Lenders shall so request to
secure its obligations under the Subsidiary Guarantee, and (ii) within 60 days
after such Subsidiary is formed or acquired, cause such Subsidiary to enter into
such Mortgage or Mortgages as the Administrative Agent, the Incremental Facility
Arrangers or the Required Lenders shall so request with respect to any or all
material real property owned by such Subsidiary to secure some or all of its
obligations under the Subsidiary Guarantee and to take such actions (including,
without limitation, actions of the type referred to in Section 5.11B(a)) with
respect thereto as the Administrative Agent, the Incremental Facility Arrangers
or the Required Lenders shall reasonably request.

         (c) None of the Borrower, Holdings or any Subsidiary Loan Party shall
be required to grant to the Administrative Agent or any Lender, pursuant to the
provisions of this Section 5.13, a Lien on any of the following assets: (i)
voting Equity Interests of any Foreign Subsidiary representing in excess of 66%
of the outstanding voting Equity Interests of such Foreign Subsidiary, (ii) any
ADP Property to the extent such ADP Property secures any ADP Obligation and
(iii) any other asset subject to a security interest permitted by clauses (iv),
(v), (viii), or (ix) of Section 6.02 but only, in the case of any asset
described in clauses (ii) or (iii), to the extent the granting of such Lien is
prohibited by the terms of the agreement pursuant to which such security
interest has been granted.

         SECTION 5.14. Further Assurances. (a) On any date each of Holdings and
the Borrower will, and will cause each Subsidiary Loan Party to, execute any and
all further documents, financing statements, agreements and instruments, and
take all such further actions (including the filing and recording of financing
statements, fixture filings, mortgages, deeds of trust and other documents),
which may be required under any applicable law, or which the Administrative
Agent, the Incremental Facility Arrangers or the Required Lenders may reasonably
request, to effectuate the transactions contemplated by the Loan Documents or to
grant, preserve, protect or perfect the Liens created or intended to be created
by the Collateral Documents required to be in effect on such date or the
validity or priority of any such Lien, all at the expense of the Loan Parties.
Holdings and the Borrower also agree to provide to the Administrative Agent,
from time to time upon request, evidence reasonably satisfactory to the
Administrative Agent as to the perfection and priority of the Liens created or
intended to be created by the Collateral Documents required to be in effect on
such date.

         (b) If any material assets (including any real property or improvements
thereto or any interest therein) are acquired by Holdings, the Borrower or any
Subsidiary Loan Party (other than assets constituting Collateral under any
Collateral Document that become subject to the Lien of such Collateral Document
automatically upon the acquisition thereof), the Borrower will notify the
Administrative Agent and the Lenders thereof, and, if requested by the
Administrative Agent, the Incremental Facility Arrangers or the Required
Lenders, Holdings and the Borrower will, or will cause the applicable Restricted
Subsidiary to, cause such assets to be subjected to a Lien securing some or all
of the Obligations, as requested by the Administrative Agent, the Incremental
Facility


                                       83
<PAGE>


Arrangers or the Required Lenders, and will take, and cause such Subsidiary Loan
Parties to take, such actions as shall be necessary or reasonably requested by
the Administrative Agent, the Incremental Facility Arrangers or the Required
Lenders to grant and perfect such Liens, including actions described in Section
5.11B, all at the expense of the Loan Parties; provided that, none of the
Borrower, Holdings or any Subsidiary Loan Party shall be required to grant to
the Administrative Agent or any Lender, pursuant to the provisions of this
Section 5.14, a Lien on any of the following assets: (i) at any time prior to
any Collateral Establishment Date, any assets of a type other than a type
constituting "Collateral" under the form of Security Agreement set forth on
Exhibit K hereto as in effect on the Amendment No. 4 Effective Date, (ii) voting
Equity Interests of any Foreign Subsidiary representing in excess of 66% of the
outstanding voting Equity Interests of such Foreign Subsidiary, (iii) any ADP
Property to the extent such ADP Property secures any ADP Obligation and (iv) any
other asset subject to a security interest permitted by clauses (iv), (v),
(viii), or (ix) of Section 6.02 but only, in the case of any asset described in
clauses (iii) or (iv), to the extent the granting of such Lien is prohibited by
the terms of the agreement pursuant to which such security interest has been
granted.

         SECTION 5.15. Concentration Accounts. At all times after any Collateral
Establishment Date and before a Collateral Release Date, Holdings and the
Borrower will maintain Holdings' and each Restricted Subsidiary's principal
concentration account with one or more Lenders.

         SECTION 5.16. [Intentionally deleted]

         SECTION 5.17. Sale of Solutions and ATL(a) Not later than September 30,
2001, Holdings and the Borrower shall have sold, or caused to be sold, to one or
more Persons that are not Affiliates of Holdings or any of its Subsidiaries, in
one or more transactions (x) its Williams Communications Solutions business unit
in existence on the Amendment No. 4 Effective Date (except for the portion of
such unit described in clause (b) below) and (y) all of the capital stock of ATL
held by the Borrower, Holdings or any of its Subsidiaries for fair market value
and for Net Proceeds in cash in an aggregate amount of at least $700,000,000.

         (b) Not later than December 31, 2001, Holdings and the Borrower shall
have sold or otherwise disposed of, or caused to be sold or otherwise disposed
of, to one or more Persons that are not Affiliates of Holdings or any of its
Subsidiaries, in one or more transactions, substantially all of the Canadian
assets of its Williams Communications Solutions business unit in existence on
the Amendment No. 4 Effective Date.

         SECTION 5.18. Qualifying Issuances. Not later than December 31, 2001,
the Borrower and/or Holdings shall have consummated Qualifying Issuances for Net
Proceeds in cash in an aggregate amount of at least $500,000,000; provided that
Net Proceeds in cash in an aggregate amount of not more than $350,000,000 shall
have resulted from Qualifying Issuances described in clause (ii) or (iii) of the
definition thereof.


                                       84
<PAGE>


                                    ARTICLE 6

                               NEGATIVE COVENANTS

         Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full
and all Letters of Credit have expired or terminated and all LC Disbursements
shall have been reimbursed, each of Holdings and the Borrower covenants and
agrees with the Lenders that:

         SECTION 6.1. Indebtedness; Certain Equity Securities. Holdings and the
Borrower will not, and will not permit any other Restricted Subsidiary to,
create, incur, assume or permit to exist any Indebtedness, except:

         (a) Indebtedness under the Loan Documents;

         (b) Indebtedness of Holdings under Qualifying Holdings Debt;

         (c) Indebtedness of Holdings under the High Yield Notes and
refinancings thereof, provided that any Indebtedness issued in any such
refinancing shall be on terms no less favorable to Holdings and its Restricted
Subsidiaries than the High Yield Notes, shall be in an aggregate principal
amount no greater than the High Yield Notes refinanced and shall not require any
payment of principal thereof (upon maturity or by mandatory sinking fund,
mandatory redemption, mandatory prepayment or otherwise) prior to the date that
is one year after the Term Maturity Date;

         (d) ADP Outstandings in an aggregate amount not to exceed $750,000,000
at any time outstanding;

         (e) Indebtedness existing on the date hereof and set forth in Schedule
6.01 and extensions, renewals and replacements of any such Indebtedness that do
not increase the outstanding principal amount thereof or result in an earlier
maturity date or decrease the Weighted Average Life to Maturity thereof;

         (f) Indebtedness of Holdings to any Subsidiary and of any Restricted
Subsidiary to any other Subsidiary; provided that Indebtedness of any Subsidiary
that is not a Loan Party to any Loan Party shall be subject to Section 6.04;

         (g) Guarantees by Holdings of Indebtedness of any Subsidiary and by any
Subsidiary of Indebtedness of the Borrower or any other Subsidiary; provided
that Guarantees by Holdings, the Borrower or any Subsidiary Loan Party of
Indebtedness of any Subsidiary that is not a Loan Party shall be subject to
Section 6.04;


                                       85
<PAGE>


         (h) Indebtedness of any Person that becomes a Restricted Subsidiary or
is merged into a Restricted Subsidiary after the date hereof (provided that such
Indebtedness exists at the time such Person becomes a Restricted Subsidiary and
is not created in contemplation of or in connection with such Person becoming a
Restricted Subsidiary) and extensions, renewals or replacements of any such
Indebtedness that do not increase the principal amount thereof or result in an
earlier maturity date or decreased Weighted Average Life to Maturity thereof;

         (i) Indebtedness in respect of performance, surety or appeal bonds and
Guarantees incurred or provided in the ordinary course of business securing the
performance of contractual, franchise, lease, self-insurance or license
obligations and not in connection with an incurrence of Indebtedness;

         (j) Indebtedness in respect of customary agreements providing for
indemnification, purchase price adjustments after closing or similar obligations
in connection with the disposition of any assets (other than Guarantees of
Indebtedness incurred by any Person acquiring all or any portion of such assets
for the purpose of financing such acquisition); provided that (i) any such
disposition is permitted by Section 6.05, (ii) the aggregate principal amount of
such Indebtedness does not exceed the gross proceeds actually received by
Holdings or any Restricted Subsidiary in connection with such disposition and
(iii) to the extent the gross proceeds thereof constitute Net Proceeds
hereunder, such Net Proceeds are applied in accordance with Sections 2.08(f) and
2.11(b);

         (k) Indebtedness of Holdings and the Restricted Subsidiaries pursuant
to Hedging Agreements entered into with Lenders or their affiliates in the
ordinary course of business and not for speculative purposes;

         (l) [Intentionally deleted];

         (m) [Intentionally deleted];

         (n) [Intentionally deleted];

         (o) other Indebtedness of Holdings or any Restricted Subsidiary in an
aggregate principal amount at any time outstanding, together with the aggregate
amount of Attributable Debt in respect of all Sale and Leaseback Transactions
then outstanding, not exceeding 15% of the consolidated net property, plant and
equipment of Holdings and the Restricted Subsidiaries at such time;

         (p) Indebtedness of the Borrower consisting of Qualifying Borrower
Indebtedness;

         (q) Permitted Specified Security Hedging Transactions;


                                       86
<PAGE>


         (r) Indebtedness of Holdings or the Borrower incurred pursuant to a
Qualifying Issuance; provided that the aggregate Net Proceeds in cash received
by Holdings and/or the Borrower from the issuance of such Indebtedness, plus the
Net Proceeds in cash from any Sale and Leaseback Transaction constituting a
Qualifying Issuance shall not exceed $350,000,000;

         (s) Indebtedness with respect to industrial revenue bonds issued for
the benefit of the Borrower, Holdings or any Restricted Subsidiary in an
aggregate principal or face amount not to exceed $50,000,000;

          (t) unsecured Indebtedness of Holdings in an aggregate principal
amount not to exceed $100,000,000 incurred prior to the consummation of the
Structured Note Financing so long as (i) the proceeds of such Indebtedness are
used solely to make the capital contributions described in Section 6.04(u) and
(ii) the terms and conditions of any such Indebtedness shall have been approved
by all the Incremental Facility Arrangers (if any) and the Administrative Agent
prior to the issuance thereof;

          (u) unsecured Indebtedness of Holdings owed to the Structured Note
Trust in an aggregate principal amount up to $1,500,000,000 in connection with
the consummation of the Structured Note Financing, so long as the terms and
conditions of such Indebtedness shall have been approved by all the Incremental
Facility Arrangers (if any) and the Administrative Agent prior to the issuance
thereof; and

         (v) on any date on or after the Leverage Target Date, Indebtedness of
the Borrower owing to a Receivables Subsidiary under a Permitted Receivables
Financing;

provided that, notwithstanding anything in this Agreement to the contrary, the
Borrower and the other Restricted Subsidiaries may not Guarantee any
Indebtedness of Holdings under (i) the High Yield Notes or (ii) any Qualifying
Holdings Debt.

         SECTION 6.2. Liens. (a) Holdings and the Borrower will not, and will
not permit any other Restricted Subsidiary to, create, incur, assume or permit
to exist any Lien on any property or asset now owned or hereafter acquired by
it, or assign or sell any income or revenues or rights in respect of any
thereof, except:

                  (i) Liens created under the Loan Documents (including, without
         limitation, Liens securing Indebtedness of Holdings and the Parent
         created thereunder in accordance with Section 5.11B(d));

                 (ii) Permitted Encumbrances;

                (iii) Liens on any ADP Property securing only ADP Obligations;


                                       87
<PAGE>


                  (iv) any Lien on any property or asset of Holdings or any
         Restricted Subsidiary existing on the date hereof and set forth in
         Schedule 6.02; provided that (A) such Lien shall not apply to any other
         property or asset of Holdings or any Restricted Subsidiary and (B) such
         Lien shall secure only those obligations which it secures on the date
         hereof and extensions, renewals and replacements thereof that do not
         increase the outstanding principal amount thereof or decrease the
         Weighted Average Life to Maturity thereof;

                  (v) any Lien existing on any property or asset prior to the
         acquisition thereof by Holdings or any Restricted Subsidiary or
         existing on any property or asset of any Person that becomes a
         Restricted Subsidiary after the date hereof prior to the time such
         Person becomes a Subsidiary; provided that (A) such Lien is not created
         in contemplation of or in connection with such acquisition or such
         Person becoming a Restricted Subsidiary, as the case may be, (B) such
         Lien shall not apply to any other property or assets of Holdings or any
         Restricted Subsidiary and (C) such Lien shall secure only those
         obligations which it secures on the date of such acquisition or the
         date such Person becomes a Restricted Subsidiary, as the case may be,
         and extensions, renewals and replacements thereof that do not increase
         the outstanding principal amount thereof or decrease the Weighted
         Average Life to Maturity thereof;

                  (vi) Liens in favor of the Borrower or any Subsidiary Loan
         Party;

                  (vii) Liens on property of Holdings or any Restricted
         Subsidiary consisting of, or securing, licenses of such property;

                  (viii) Liens of a Specified Security securing Permitted
         Specified Security Hedging Transactions with respect to such Specified
         Security;

                 (ix) on any date on or after the Leverage Target Date, Liens
         created in connection with Permitted Receivables Financings, including,
         without limitation, Liens on proceeds in any form and bank accounts in
         which any such proceeds are deposited; provided that, except for the
         assets transferred pursuant to Permitted Receivables Dispositions made
         in connection with such Permitted Receivables Financings, no such Lien
         may extend to any assets of Borrower or any Subsidiary of the Borrower
         that is not a Receivables Subsidiary; and

                  (x) other Liens securing Indebtedness at any time outstanding
         that, together with the aggregate amount of Attributable Debt in
         respect of all Sale and Leaseback Transactions then outstanding, does
         not exceed 5% of the consolidated net property, plant and equipment of
         Holdings and the Restricted Subsidiaries at such time.

         (b) Notwithstanding anything to the contrary contained herein, Holdings
and the Borrower will not, and will not permit any other Restricted Subsidiary
to, create, incur,


                                       88
<PAGE>


assume or permit to exist any Lien on any of its assets to secure (i) except in
accordance with Section 5.11B(d), any obligations in respect of the High Yield
Notes or any refinancing thereof, permitted under Section 6.01(c), or (ii)
except in accordance with Section 5.11B(d), any Qualifying Holdings Debt.

         SECTION 6.3. Fundamental Changes. (a) Neither Holdings nor the Borrower
will, nor will they permit any other Restricted Subsidiary to, merge into or
consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, or liquidate or dissolve, except that, if at the time
thereof and immediately after giving effect thereto no Default shall have
occurred and be continuing (i) any Person may merge into the Borrower in a
transaction in which the Borrower is the surviving corporation, (ii) any Person
may merge into any Restricted Subsidiary in a transaction in which the surviving
entity is a Restricted Subsidiary and (iii) any Restricted Subsidiary may
liquidate or dissolve if the Borrower determines in good faith that such
liquidation or dissolution is in the best interests of the Borrower and is not
materially disadvantageous to the Lenders; provided that any such merger
involving a Person that is not a wholly owned Restricted Subsidiary immediately
prior to such merger shall not be permitted unless also permitted by Section
6.04.

         (b) The Borrower will not, and will not permit any other Restricted
Subsidiary to, engage to any material extent in any business other than
businesses of the type conducted by the Borrower and its Subsidiaries on the
date of execution of this Agreement and businesses reasonably related thereto.

         (c) Holdings will not engage in any business or activity other than (i)
the ownership of all of the outstanding Equity Interests in the Borrower, (ii)
the issuance of the High Yield Notes, (iii) issuances of Qualifying Holdings
Debt, (iv) issuances of its Equity Interests, (v) the holding of 100% of the
Equity Interests of any Unrestricted Subsidiary which is engaged exclusively in
the buying, selling and trading of telecommunications services as a commodity on
a developing or an established market (a "Trading Subsidiary") and (vi) the
holding of Qualifying Borrower Indebtedness permitted under Section 6.01(q) and,
with respect to each of the foregoing, activities incidental thereto. Holdings
will not own or acquire any assets (other than Qualifying Equity Interests in
the Borrower, Qualifying Borrower Indebtedness, Equity Interests in any Trading
Subsidiary, cash and Cash Equivalent Investments) or incur any liabilities
(other than liabilities under the Loan Documents, liabilities in respect of the
High Yield Notes, liabilities in respect of Qualified Holdings Debt permitted
hereunder, liabilities in respect of the Structured Note Financing, liabilities
imposed by law, including tax liabilities, and other liabilities incidental to
its existence and permitted business and activities).

         SECTION 6.4. Investments, Loans, Advances, Guarantees and Acquisitions
 . Holdings will not, and will not permit any Restricted Subsidiary to, purchase,
hold or acquire (including pursuant to any merger with any Person that was not a
wholly owned Restricted Subsidiary prior to such merger) any capital stock,
evidences of indebtedness


                                       89
<PAGE>


or other securities (including any option, warrant or other right to acquire any
of the foregoing) of, make or permit to exist any loans or advances to,
Guarantee any obligations of, or make or permit to exist any investment or any
other interest in, any other Person, or purchase or otherwise acquire (in one
transaction or a series of transactions) any assets of any other Person
constituting a business unit (collectively, "Investments"), except:

         (a) Cash Equivalent Investments;

         (b) Investments existing on the date hereof and set forth on Schedule
6.04;

         (c) Investments by Holdings and the Restricted Subsidiaries in Equity
Interests in Subsidiaries; provided that, (i) the aggregate amount of
Investments by Loan Parties in, and Guarantees by Loan Parties of Indebtedness
of, Subsidiaries that are not Loan Parties (including, without limitation, any
Deemed Subsidiary Investment pursuant to Section 6.14) shall be subject to the
proviso to this Section 6.04 and (ii) all Equity Interests acquired or held by
Holdings pursuant to this Section 6.04(c) shall be Qualifying Equity Interests
in the Borrower or Equity Interests in a Trading Subsidiary;

         (d) loans or advances made by Holdings to any Restricted Subsidiary and
made by any Restricted Subsidiary to any other Restricted Subsidiary; provided
that the amount of such loans and advances made by Loan Parties to Subsidiaries
that are not Loan Parties shall be subject to the proviso to this Section 6.04;

         (e) Guarantees constituting Indebtedness permitted by Section 6.01;
provided that (i) no Restricted Subsidiary shall Guarantee any High Yield Notes,
any Indebtedness of Holdings or the Borrower constituting a Qualifying Issuance
or Qualifying Holdings Debt and (ii) the aggregate principal amount of
Indebtedness of Subsidiaries that are not Loan Parties that is Guaranteed by any
Loan Party shall be subject to the proviso to this Section 6.04;

         (f) Investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;

         (g) acquisitions by the Borrower of ADP Property for consideration paid
on and prior to any date not exceeding Additional Capital as of such date; minus
(i) Investments permitted under clause (ii) of the proviso to this Section 6.04
made on or prior to such date and (iii) Capital Expenditures permitted under
Section 6.08(b) made on or prior to such date;

         (h) Hedging Agreements permitted under Section 6.01(k);

         (i) Capital Expenditures made in accordance with Section 6.08;


                                       90
<PAGE>


         (j) subject to the proviso to this Section 6.04, Investments in the
Telecommunications Business;

         (k) subject to the proviso to this Section 6.04, Investments in
Existing International Joint Ventures; provided that the acquisition by Holdings
or any Restricted Subsidiary of any equity interest in Algar Telecom S.A.
(formerly known as Lightel S.A.) owned by the Parent or its subsidiaries (other
than Holdings and the Subsidiaries) shall not be permitted under this clause (k)
but shall only be permitted under clause (p) of this Section 6.04;

         (l) exchanges and substitutions of ADP Property for like property which
take place prior to the occurrence of the Completion Date, the Expiration Date,
the Termination Date, or an ADP Event of Default, Environmental Trigger or
Unwind Event under the Operative Documents;

         (m) any Investment by a Restricted Subsidiary in any Person engaged in
the Telecommunication Business if such Investment is made in connection with an
agreement by such Person to utilize certain of the Borrower's or the Subsidiary
Loan Parties' Telecommunications Business, provided that, at any date, (i) the
aggregate amount of Investments made in all such Persons at any time outstanding
pursuant to this paragraph (m) (valued at the cost of acquisition thereof,
without regard to any increase or decrease in the value thereof based on
subsequent performance of such Person, but net of any distributions received by
the Borrower or any Subsidiary Loan Party in respect of such Investment) shall
not exceed 15% of Consolidated Assets at such time and (ii) the aggregate amount
of such Investments made in all such Persons with cash or Cash Equivalent
Investments that are at any time outstanding pursuant to this paragraph (m)
shall not exceed 5% of Consolidated Assets;

         (n) (i) loans to directors, officers and employees of Holdings or any
Restricted Subsidiary all of the proceeds of which are used (A) to pay
relocation expenses of any such director, officer or employee or (B) to purchase
Equity Interests in Holdings pursuant to and in accordance with stock option
plans or other benefit plans for directors, officers and employees of Holdings
and its Restricted Subsidiaries, provided that, in the case of any of the Loans
referred to in this subclause (B), any proceeds to Holdings of any such
purchases of Equity Interests shall be contributed to the Borrower and (ii)
other loans to directors, officers and employees of Holdings and its Restricted
Subsidiaries made in the ordinary course of business in an aggregate principal
amount not to exceed $5,000,000 at any time outstanding;

         (o) trade accounts receivable for goods sold or services provided
arising in the ordinary course of business and on customary payment terms (not
to exceed 120 days after the date such receivables are accrued in accordance
with GAAP);

         (p) Investments for which the consideration paid by Holdings and its
Restricted Subsidiaries consists exclusively of Qualifying Equity Interests in
Holdings;


                                       91
<PAGE>


         (q) Investments made in any Person (a "REINVESTMENT PERSON") in whom
the Borrower or any of its Subsidiaries has, or at any time after the Closing
Date had, an Investment permitted under clause (b), (f) or (p) above or this
clause (q) (an "ORIGINAL INVESTMENT"); provided that the aggregate amount of
Investments in any Reinvestment Person permitted under this clause (q) may not
exceed the aggregate amount of the cash proceeds received, within 270 days prior
to the making of such Investment, by the Borrower and its Subsidiaries from
sales or other dispositions of, or distributions with respect to Original
Investments in such Reinvestment Person;

         (r) Permitted Specified Security Hedging Transactions; and

         (s) Investments in Persons that become Subsidiary Loan Parties if such
Persons, prior to such Investments, were engaged principally in the transmission
of voice, video or data through or over owned or leased fiber optic cable and/or
the holding, developing or constructing of assets or technology used therein;

         (t) Letters of Credit to support obligations of a Trading Subsidiary
incurred in the ordinary course of business; and

         (u) capital contributions made by Holdings to the Borrower and by the
Borrower to the Structured Note Trust, in each case in an aggregate principal
amount not to exceed $100,000,000 and in order to consummate the Structured Note
Financing;

         (v) Investments in Receivables Subsidiaries made in connection with
Permitted Receivables Financings;

provided that the aggregate amount of all Investments (valued at the cost of
acquisition thereof, without regard to any increase or decrease in the value
thereof based on subsequent performance of the Person in which such Investment
is held), but net, in case of each such Investment (but not below zero), of any
distributions received by the Borrower or any Subsidiary Loan Party in respect
of such Investment and any proceeds received upon any disposition (other than a
disposition to Holdings or any of its Subsidiaries or the Parent or any of its
Subsidiaries) of such Investment, made pursuant to Sections 6.04(j) and 6.04(k)
on or prior to any date, or referred to in Section 6.04(c)(i), the proviso to
Section 6.04(d) and Section 6.04(e)(ii) and made on or prior to such date, shall
not exceed the sum of an amount (which amount, for purposes of this proviso
only, shall not be less than zero) equal to (x) the amount of Additional Capital
as of such date minus (y) (A) acquisitions of ADP Property permitted under
Section 6.04(g) made on or prior to such date and (B) Capital Expenditures
permitted under Section 6.08(b) made on or prior to such date.

         SECTION 6.5. Asset Sales. Holdings and the Borrower will not, and will
not permit any other Restricted Subsidiary to, sell, transfer, lease or
otherwise dispose of any


                                       92
<PAGE>


asset, including any Equity Interests owned by it, nor will Holdings permit any
of its Restricted Subsidiaries to issue any additional Equity Interests, except:

         (a) sales, transfers, leases or other dispositions of fiber optic cable
capacity, sales of inventory, and sales of used or surplus equipment and Cash
Equivalent Investments, in each case in the ordinary course of business;

         (b) sales, transfers and dispositions to the Borrower or a Subsidiary;
provided that any such sales, transfers or dispositions involving a Subsidiary
that is not a Loan Party shall be made in compliance with Section 6.09;

         (c) issuances to the Borrower or any other Restricted Subsidiary of
Equity Interests in any Restricted Subsidiary other than the Borrower;

         (d) issuances to Holdings by the Borrower of Qualifying Equity
Interests in the Borrower;

         (e) Permitted Telecommunications Asset Dispositions;

         (f) sales, transfers and dispositions of assets to the extent
constituting Investments permitted under Section 6.04;

         (g) Restricted Payments permitted under Section 6.07(a) and payments of
principal and interest permitted under Section 6.07(b);

         (h) the sale, transfer or other dispositions required by Section 5.17
or 5.18;

         (i) any transfer of Receivables and Related Transferred Rights (each as
defined in the Security Agreement attached hereto as Exhibit K) in order to
consummate a Permitted Receivables Transaction or to transfer such assets
pursuant to a factoring arrangement; and

         (j) sales, transfers and dispositions of assets (other than
Telecommunications Assets) that are not permitted by any other clause of this
Section; provided that the aggregate fair market value of all assets sold,
transferred or otherwise disposed of in reliance upon this Section 6.05(j) shall
not exceed $25,000,000 during any fiscal year of the Borrower;

provided that all sales, transfers, leases and other dispositions permitted
under Sections 6.05(e) and 6.05(j) shall be made (x) for fair value and (y) only
if at least 75% of the consideration paid therefor is cash or Cash Equivalent
Investments (or, if less than 75%, the remainder of such consideration consists
of Telecommunications Assets).

         SECTION 6.6. Sale and Leaseback Transactions. Holdings and the Borrower
will not, and will not permit any other Restricted Subsidiary to, enter into any
arrangement,


                                       93
<PAGE>


directly or indirectly, whereby it shall (a) sell or transfer any property, real
or personal, used or useful in its business, whether now owned or hereafter
acquired, and thereafter rent or lease such property or other property that it
intends to use for substantially the same purpose or purposes as the property
sold or transferred or (b) lease any property, real or personal, from any entity
substantially all of whose activities consist of acquiring, constructing or
developing property to be leased to Holdings and the Restricted Subsidiaries
pursuant to leases intended to cover, and measured by the cost of or the
financing incurred by such entity to finance, such property (the transactions
referred to in clause (a) and (b) being collectively referred to as "Sale and
Leaseback Transactions"), except for (i) sales and leases of ADP Property
pursuant to the ADP in respect of ADP Outstandings not to exceed $750,000,000 at
any time outstanding and (ii) (x) any such sale referred to in clause (a) above
of any fixed or capital assets that is made for cash consideration in an amount
not less than the cost of such fixed or capital asset and is consummated within
270 days after the Borrower or such other Restricted Subsidiary acquires or
completes the construction of such fixed or capital asset and (y) any such lease
referred to in clause (b) above providing for rental payments measured by the
cost of the property leased or the financing incurred by the lessor thereof to
acquire, construct or develop the property so leased; provided that the sum of
the aggregate amount of Attributable Debt in respect of all such Sale and
Leaseback Transactions permitted under this clause (ii) at any time outstanding
(other than any such Attributable Debt with respect to any Sale and Leaseback
Transaction constituting a Qualifying Issuance) and the aggregate amount of
Indebtedness secured by Liens permitted by Section 6.02(a)(viii) at such time
outstanding shall not exceed 5% of consolidated net property, plant and
equipment of Holdings and the Restricted Subsidiaries at such time. For purposes
of determining compliance with the proviso set forth in the immediately
preceding sentence, Capital Lease Obligations shall not in any event be included
in the calculation of "Attributable Debt."

         SECTION 6.7. Restricted Payments; Certain Payments of Indebtedness. (a)
Neither Holdings nor the Borrower will, nor will they permit any other
Restricted Subsidiary to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, or enter into any transaction the economic
effect of which is substantially similar to any Restricted Payment, except (i)
Holdings and the Borrower may declare and pay dividends with respect to their
capital stock payable solely in additional shares of their respective common
stock, (ii) Restricted Subsidiaries (other than the Borrower) may declare and
pay dividends ratably with respect to their capital stock, (iii) Holdings may
make Restricted Payments, not exceeding $3,000,000 during any fiscal year,
pursuant to and in accordance with stock option plans or other benefit plans for
management or employees of Holdings and the Restricted Subsidiaries; (iv) so
long as no Default shall have occurred and be continuing or result from the
making of such payment, the Borrower may pay dividends to Holdings at such times
and in such amounts as shall be necessary to permit Holdings to discharge, to
the extent permitted hereunder, its permitted liabilities; (v) on and after the
Leverage Target Date, Holdings may declare and pay dividends in cash with
respect to its convertible preferred stock outstanding as of the Amendment No. 4
Effective Date in an amount not exceeding


                                       94
<PAGE>


$40,000,000 in any fiscal year and the Borrower may declare and pay dividends to
Holdings to permit Holdings to declare and pay such dividends and (vi) at any
time after the consummation of the Structured Note Financing, the Borrower may
declare and pay a dividend to Holdings so long as (x) the aggregate amount of
such dividend shall not exceed the principal amount of the Structured Note
Bridge Indebtedness outstanding at the time such dividend is paid plus accrued
interest thereon, (y) no Default has occurred and is continuing or would result
therefrom and (z) immediately upon receipt thereof, Holdings shall apply all of
the proceeds of such dividend to repay in full the Structured Note Bridge
Indebtedness then outstanding.

         (b) Neither Holdings nor the Borrower will, nor will they permit any
Restricted Subsidiary to, make, directly or indirectly, any voluntary payment or
other distribution (whether in cash, securities or other property) of or in
respect of principal of or interest on any High Yield Notes, any Qualifying
Holdings Debt or any Qualifying Borrower Indebtedness (collectively "Specified
Indebtedness"), or any voluntary payment or other distribution (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any Specified Indebtedness (or enter into any transaction the
economic effect of which is substantially similar to any of the foregoing),
except, provided no Default has occurred and is continuing or would result
therefrom, payments of regularly scheduled interest as and when due in respect
of any Specified Indebtedness other than Qualifying Borrower Indebtedness.

         SECTION 6.8. Limitation on Capital Expenditures. (a) Capital
Expenditures (other than Capital Expenditures permitted under Section 6.08(b)
below) for any fiscal year set forth below shall not exceed the amount set forth
below opposite such fiscal year:

<Table>
<Caption>
FISCAL YEAR                                    AMOUNT
- -----------                                    ------
<S>                                       <C>

2001                                       $2,750,000,000
2002                                       $2,500,000,000
2003                                       $2,250,000,000
2004                                       $2,250,000,000
2005                                       $2,250,000,000
2006 and each fiscal year thereafter       $2,800,000,000
</Table>

provided that if the aggregate amount of Capital Expenditures (other than
Capital Expenditures permitted under Section 6.08(b) below) actually made in any
such period or fiscal year shall be less than the limit with respect thereto set
forth above (before giving effect to any increase therein pursuant to this
proviso) (the "Base Amount"), then an amount equal to 50% of such shortfall may
be added to the amount of such Capital Expenditures permitted for the
immediately succeeding fiscal year (such amount to be added for any fiscal year,
the "Rollover Amount"); provided further that any Capital Expenditures (other
than Capital Expenditures permitted under Section 6.08(b) below) made during any
fiscal year for which any Rollover Amount shall have been so added


                                       95
<PAGE>


shall be applied, first, to the Rollover Amount added for such fiscal year and,
second, to the Base Amount for such fiscal year.

         (b) In addition to Capital Expenditures permitted under Section 6.08(a)
above, Holdings and the Restricted Subsidiaries may make (i) Capital
Expenditures consisting of acquisitions of ADP Property permitted under Section
6.04(g) or 6.04(l) and (ii) Capital Expenditures on any date after the Amendment
No. 4 Effective Date in an aggregate amount not to exceed Additional Capital as
of such date minus (A) Investments permitted under clause (ii) of the proviso to
Section 6.04 made on or prior to such date and (B) purchases of ADP Property
permitted under Section 6.04(g) made on or prior to such date.

         SECTION 6.9. Transactions with Affiliates. Neither Holdings nor the
Borrower will, nor will they permit any other Restricted Subsidiary to, sell,
lease or otherwise transfer any property or assets to, or purchase, lease or
otherwise acquire any property or assets from, or otherwise engage in any other
transactions with, any of their respective Affiliates, except (a) transactions
that are at prices and on terms and conditions not less favorable to Holdings,
the Borrower or such other Restricted Subsidiary than could be obtained on an
arm's-length basis from unrelated third parties, (b) transactions between or
among the Borrower and the Subsidiary Loan Parties not involving any other
Affiliate, (c) any Restricted Payment permitted by Section 6.07 and (d)
transactions required to be effected pursuant to, and on terms provided for in,
existing agreements (as in effect on the date hereof) listed in Schedule 6.09
hereto.

         SECTION 6.10. Restrictive Agreements. Neither Holdings nor the Borrower
will, nor will they permit any other Restricted Subsidiary to, directly or
indirectly, enter into, incur or permit to exist any agreement or other
arrangement that prohibits, restricts or imposes any condition upon (a) the
ability of Holdings or any Restricted Subsidiary to create, incur or permit to
exist any Lien upon any of its property or assets, or (b) the ability of any
Restricted Subsidiary to pay dividends or other distributions with respect to
any shares of its capital stock or to make or repay loans or advances to the
Borrower or any other Restricted Subsidiary or to Guarantee Indebtedness of the
Borrower or any other Restricted Subsidiary; provided that (i) the foregoing
shall not apply to restrictions and conditions imposed by law or by any Loan
Document, the High Yield Notes or, to the extent that any such restrictions
therein, taken as a whole, are no more restrictive than those contained in the
High Yield Notes, any Qualifying Holdings Debt, (ii) the foregoing shall not
apply to restrictions and conditions existing on the date hereof identified on
Schedule 6.10 (but shall apply to any extension or renewal of, or any amendment
or modification expanding the scope of, any such restriction or condition),
(iii) the foregoing shall not apply to customary restrictions and conditions
contained in agreements relating to the sale of a Subsidiary pending such sale,
provided such restrictions and conditions apply only to the Subsidiary that is
to be sold and such sale is permitted hereunder, (iv) Section 6.10(a) of the
foregoing shall not apply to restrictions or conditions imposed by any agreement
relating to secured Indebtedness permitted by this Agreement if such
restrictions or conditions apply only to the property or assets securing such
Indebtedness


                                       96
<PAGE>


and (v) Section 6.10(a) of the foregoing shall not apply to customary provisions
in leases and other contracts restricting the assignment thereof.

         SECTION 6.11. Fiscal Year. Holdings and the Borrower will not, and will
not permit any other Restricted Subsidiary to, change its fiscal year from a
fiscal year ending December 31.

         SECTION 6.12. Change in Business. Holdings and the Borrower will not,
and will not permit any other Restricted Subsidiary to, engage in any material
line of business other than the Telecommunications Business.

         SECTION 6.13. Amendment of Material Documents. Holdings and the
Borrower will not, and will not permit any other Restricted Subsidiary to,
without the prior written consent of the Required Lenders, consent to any
amendment, modification or waiver of (a) its certificate of incorporation,
by-laws or other organizational documents (except for the filing of a
Certificate of Designation with the Secretary of State of Delaware relating to
the issuance of preferred securities that are Qualifying Equity Interests of
such Person, to the extent provided for in its certificate of incorporation,
by-laws or other organizational documents), (b) the Other Financing Documents,
(c) any agreements governing any Qualifying Holdings Debt, (d) the Parent
Indemnity or (e) the Operative Documents, in each of the foregoing cases if such
amendment, modification of waiver could reasonably be expected to have (i) an
adverse effect on the ability of any Loan Party to perform any of its
obligations under any Loan Document or the rights of, or benefits available to,
the Lenders under any Loan Document or (ii) a Material Adverse Effect.

         SECTION 6.14. Designation of Unrestricted Subsidiaries. Holdings and
the Borrower will not designate any Restricted Subsidiary (other than a newly
created Subsidiary in which no Investment has previously been made) as an
Unrestricted Subsidiary (a "Subsidiary Designation") unless:

           (i)    no Default shall have occurred and be continuing at the time
                  of or after giving effect to such Subsidiary Designation;

          (ii)    after giving effect to such Subsidiary Designation, Holdings
                  would be in compliance with the covenants contained in Section
                  6.08 and Sections 6.15 through 6.19 on a pro forma basis as if
                  such Subsidiary Designation had been made on the first day of
                  the period of four fiscal quarters most recently ended in
                  respect of which financial statements have been delivered by
                  the Company pursuant to Section 5.01(a) or 5.01(b);

         (iii)    Holdings has delivered to the Administrative Agent (x) written
                  notice of such Subsidiary Designation and (y) a certificate of
                  a Financial Officer setting forth in reasonable detail
                  calculations demonstrating pro forma compliance with the
                  financial covenants contained in Section 6.08 and Sections
                  6.15 through 6.19, as required by clause (ii) above; and


                                       97
<PAGE>


          (iv)    on the date of such Subsidiary Designation, Holdings and the
                  Borrower would not be prohibited by Section 6.04(c) and the
                  proviso to Section 6.04 from making an Investment (a "Deemed
                  Subsidiary Investment") in an aggregate amount equal to the
                  fair market value (valued at the date of such Subsidiary
                  Designation) of (x) the net assets of such Restricted
                  Subsidiary or (y) if less than 100% of the Equity Interests in
                  such Restricted Subsidiary are held by Holdings and its
                  Restricted Subsidiaries, in an aggregate amount equal to the
                  percentage interest of Holdings and the Restricted
                  Subsidiaries in such net assets.

         Holdings and the Borrower will not, and will not permit any other
Restricted Subsidiary to (x) Guarantee any Indebtedness of any Unrestricted
Subsidiary, (y) be directly or indirectly liable for any Indebtedness of any
Unrestricted Subsidiary or (z) be directly or indirectly liable for any other
Indebtedness which provides that the holder thereof may (upon notice, lapse of
time or both) declare a default thereon (or cause such Indebtedness or the
payment thereof to be accelerated, payable or subject to repurchase prior to its
final scheduled maturity) upon the occurrence of a default with respect to any
other Indebtedness that is Indebtedness of an Unrestricted Subsidiary, except in
the case of clause (x) or (y) to the extent permitted under Section 6.01 and
Section 6.04 hereof. In no event may the Borrower be designated as an
Unrestricted Subsidiary.

         SECTION 6.15. Total Net Debt to Contributed Capital Ratio. The Total
Net Debt to Contributed Capital Ratio shall at no time prior to January 1, 2002
exceed .65 to 1.00.

         SECTION 6.16. Minimum EBITDA. The amount equal to (i) EBITDA for the
period of four fiscal quarters ending during any period set forth below plus
(ii) ADP Interest Expense for such period minus (iii) gains for such period
attributable to Dark Fiber and Capacity Dispositions plus (iv) Dark Fiber and
Capacity Proceeds for such period shall not be less than the amount set forth
below opposite such period:

<Table>
<Caption>
PERIOD                                                AMOUNT
- ------                                                ------
<S>                                                  <C>

January 1, 2001-March 31, 2001                        $200,000,000
April 1, 2001-June 30, 2001                           $300,000,000
July 1, 2001-September 30, 2001                       $350,000,000
October 1, 2001-December 31, 2001                     $350,000,000
</Table>

         SECTION 6.17. Total Leverage Ratio. (a) The Total Leverage Ratio during
any period set forth below shall not exceed the ratio set forth below opposite
such period:

<Table>
<Caption>
                                                      TOTAL
PERIOD                                                LEVERAGE RATIO
- ------                                                --------------
<S>                                                  <C>

March 31, 2002-December 30, 2002                      12.50:1.00
December 31, 2002-December 30, 2003                   9.50:1.00
December 31, 2003 and thereafter                      4.00:1.00
</Table>


                                       98
<PAGE>


         SECTION 6.18. Senior Leverage Ratio. The Senior Leverage Ratio during
any period set forth below shall not exceed the ratio set forth below opposite
such period:

<Table>
<Caption>
                                              SENIOR
PERIOD                                        LEVERAGE RATIO
- ------                                        --------------
<S>                                           <C>
March 31, 2002-December 30, 2002              5.25:1.00
December 31, 2002-December 30, 2003           3.25:1.00
December 31, 2003 and thereafter              2.50:1.00
</Table>

         SECTION 6.19. Interest Coverage Ratio. The Interest Coverage Ratio for
any period of four consecutive fiscal quarters ending during any period set
forth below shall not be less than the ratio set forth below opposite such
period:

<Table>
<Caption>
                                                  INTEREST
PERIOD                                            COVERAGE RATIO
- ------                                            --------------
<S>                                              <C>

June 30, 2002-June 29, 2003                         1.00:1.00
June 30, 2003-December 30, 2003                     1.50:1.00
December 31, 2003 and thereafter                    2.00:1.00
</Table>

         SECTION 6.20. Financial Covenant Non-Compliance Cure. (a) At any time
prior to the consummation of the Spin-Off, in the event that Holdings and the
Restricted Subsidiaries fail to comply with any of Sections 6.15 through 6.19,
inclusive, for any period or on any date set forth therein, the Parent shall
have the right, but not the obligation, to make, within three Business Days of
the date upon which financial statements as of the last day of such period are
delivered or required to be delivered pursuant to Section 5.01(a) or (b), a cash
equity contribution to Holdings in exchange for Qualifying Equity Interests of
Holdings (which Holdings shall thereupon contribute to the Borrower, in exchange
for Qualifying Equity Interests of the Borrower) to cure such failure.

         (b) If such contribution is made to cure a failure to comply with the
covenant contained in Section 6.16, such contribution shall be in an amount
sufficient, when added to EBITDA for the applicable period, to enable Holdings
and the Restricted Subsidiaries to comply with such covenant on a consolidated
basis. Upon the making of any such capital contribution to Holdings and to the
Borrower in the amount specified above, the amount so contributed (to the
extent, but only to the extent, of the shortfall in EBITDA for the applicable
period) shall thereafter be deemed to have been EBITDA in the last fiscal
quarter of such period for purposes of all calculations in respect of compliance
with Section 6.16 thereafter.


                                       99
<PAGE>


         (c) If such contribution is made to cure a failure to comply with a
covenant contained in Section 6.15, 6.17, 6.18 or 6.19, such contribution shall
be in an amount sufficient, when applied to repay or prepay Indebtedness of
Holdings and the Restricted Subsidiaries, to enable Holdings and the Restricted
Subsidiaries, on a pro forma basis after giving effect to such contribution and
application, to comply with such covenant on a consolidated basis.

         (d) The right to cure provided in this Section 6.20 may not be
exercised in respect of more than two consecutive quarters or more than three
times in the aggregate during the term of the Facilities.



                                    ARTICLE 7

                                EVENTS OF DEFAULT

         SECTION 7.1. Events of Default. If any of the following events ("Events
of Default") shall occur:

         (a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise;

         (b) the Borrower shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount referred to in Section 7.01(a))
payable under this Agreement or any other Loan Document, when and as the same
shall become due and payable, and such failure shall continue unremedied for a
period of three Business Days;

         (c) any representation or warranty made or deemed made by or on behalf
of the Parent or any Loan Party in or in connection with any Loan Document or
any amendment or modification thereof or waiver thereunder, or in any report,
certificate, financial statement or other document furnished pursuant to or in
connection with any Loan Document or any amendment or modification thereof or
waiver thereunder, shall prove to have been incorrect in any material respect
when made or deemed made;

         (d)(i) Holdings or the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.02, 5.03 (with respect
to the existence of Holdings or the Borrower), 5.10, 5.11A, 5.11B, 5.13, 5.17,
5.18 or in Article 6, or (i) such failure shall continue unremedied for a period
of 30 days after the earlier to occur of (x) knowledge thereof by any Loan Party
or (y) notice thereof from the Administrative Agent to the Borrower (which
notice will be given at the request of any Lender);


                                      100
<PAGE>


         (e) any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in any Loan Document (other than those
specified in Sections 7.01(a), 7.01(b) or 7.01(d)), and such failure shall
continue unremedied for a period of 30 days after the earlier to occur of (i)
knowledge thereof by any Loan Party or (ii) notice thereof from the
Administrative Agent to the Borrower (which notice will be given at the request
of any Lender);

         (f) Holdings or any Restricted Subsidiary shall fail to make any
payment (whether of principal or interest and regardless of amount) in respect
of any Material Indebtedness, when and as the same shall become due and payable
(subject to any applicable grace period);

         (g) any event or condition occurs that results in any Material
Indebtedness or Permitted Receivables Financing becoming due prior to its
scheduled maturity or that enables or permits (with or without the giving of
notice, the lapse of time or both) the holder or holders of any Material
Indebtedness or Permitted Receivables Financing or any trustee or agent on its
or their behalf to cause any Material Indebtedness or Permitted Receivables
Financing to become due, or to require the prepayment, repurchase, redemption or
defeasance thereof, prior to its scheduled maturity; provided that this Section
7.01(g) shall not apply to secured Indebtedness permitted hereunder that becomes
due as a result of the voluntary sale or transfer of the property or assets
securing such Indebtedness;

         (h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of Holdings or any Restricted Subsidiary or its debts, or of a
substantial part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for Holdings or any Restricted Subsidiary or for a substantial
part of its assets, and, in any such case, such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or ordering any
of the foregoing shall be entered;

         (i) Holdings or any Restricted Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation, reorganization
or other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in Section 7.01(h), (iii) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for Holdings or any Restricted Subsidiary or for a
substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;


                                      101
<PAGE>


         (j) Holdings or any Restricted Subsidiary shall become unable, admit in
writing its inability or fail generally, to pay its debts as they become due;

         (k) one or more judgments for the payment of money in an aggregate
amount in excess of $25,000,000 shall be rendered against Holdings, any
Restricted Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution shall
not be effectively stayed, or any action shall be legally taken by a judgment
creditor to attach or levy upon any assets of Holdings or any Restricted
Subsidiary to enforce any such judgment;

         (l) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of Holdings and
the Restricted Subsidiaries in an aggregate amount exceeding $25,000,000 for all
periods;

         (m) any Lien (if any) purported to be created under any Collateral
Document shall cease to be, or shall be asserted by any Loan Party not to be, a
valid and perfected Lien on any Collateral having a fair market value in excess
of $1,000,000, with the priority required by the applicable Collateral Document,
except (i) as a result of the sale or other disposition of the applicable
Collateral in a transaction permitted under the Loan Documents or (ii) pursuant
to a Collateral Release Event;

         (n) any Guarantee by Holdings or any Subsidiary Loan Party under any
Loan Document shall cease for any reason (other than the merger out of existence
of such Guarantor pursuant to a transaction permitted hereunder or pursuant to
the express terms of such Guarantee) to be in full force and effect, or Holdings
or any Subsidiary Loan Party shall so assert in writing;

         (o) a Change in Control shall occur; and

         (p) at any time prior to the consummation of the Spin-Off, the senior
unsecured long-term debt of the Parent shall be rated less than BBB- by S&P or
less than Baa3 by Moody's;

then, and in every such event (other than an event with respect to Holdings or
the Borrower described in Section 7.01(h) or 7.01(i)), and at any time
thereafter during the continuance of such event, the Administrative Agent may,
and at the request of the Required Lenders shall, by notice to the Borrower,
take either or both of the following actions, at the same or different times:
(i) terminate the Commitments, and thereupon the Commitments shall terminate
immediately, and (ii) declare the Loans then outstanding to be due and payable
in whole (or in part, in which case any principal not so declared to be due and
payable may thereafter be declared to be due and payable), and thereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon and all fees and other obligations of the Borrower accrued
hereunder, shall become due and payable immediately, without presentment,
demand, protest or other


                                      102
<PAGE>


notice of any kind, all of which are hereby waived by Holdings and the Borrower;
and in the case of any event with respect to Holdings or the Borrower described
in Section 7.01(h) or 7.01(i), the Commitments shall automatically terminate and
the principal of the Loans then outstanding, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall automatically become due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by Holdings and the
Borrower.


                                    ARTICLE 8

                                   THE AGENTS

         SECTION 8.1. Appointment, Powers, Immunities. (a) Each Lender,
Swingline Lender and Issuing Bank hereby irrevocably appoints the Administrative
Agent as its agent and authorizes the Administrative Agent to take such actions
on its behalf and to exercise such powers as are delegated to the Administrative
Agent by the terms of the Loan Documents, together with such actions and powers
as are reasonably incidental thereto.

         (b) The institutions serving as Agents hereunder shall have the same
rights and powers in their capacities as Lenders, Swingline Lenders or Issuing
Banks, as the case may be, as any other Lenders, Swingline Lenders or Issuing
Banks and may exercise the same as though they were not Agents, and each such
institution and its affiliates may accept deposits from, lend money to and
generally engage in any kind of business with Holdings or any Subsidiary or
other Affiliate thereof as if it were not an Agent hereunder.

         (c) The Agents shall not have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the generality of
the foregoing, (i) the Agents shall not be subject to any fiduciary or other
implied duties, regardless of whether a Default has occurred and is continuing,
(ii) the Agents shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated by the Loan Documents that an Agent is required to
exercise in writing by the Required Lenders (or such other number or percentage
of the Lenders as shall be necessary under the circumstances as provided in
Section 10.02), and (iii) except as expressly set forth in the Loan Documents,
the Agents shall not have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to Holdings or any Subsidiary that
is communicated to or obtained by any institution serving as an Agent or any of
its affiliates in any capacity.

         (d) No Agent shall be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 10.02) or in the absence of its own gross negligence or
wilful misconduct.


                                      103
<PAGE>


         (e) No Agent shall be deemed to have knowledge of any Default unless
and until written notice thereof is given to such Agent by Holdings, the
Borrower or a Lender, and no Agent shall be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with any Loan Document, (ii) the contents of any certificate,
report or other document delivered thereunder or in connection therewith, (iii)
the performance or observance of any of the covenants, agreements or other terms
or conditions set forth in any Loan Document, (iv) the validity, enforceability,
effectiveness or genuineness of any Loan Document or any other agreement,
instrument or document, or (v) the satisfaction of any condition set forth in
Article 4 or elsewhere in any Loan Document, other than, in the case of the
Administrative Agent, to confirm receipt of items expressly required to be
delivered to the Administrative Agent.

         SECTION 8.2. Reliance by Agents. Each Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person. Each
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to be made by the proper Person, and shall not incur any
liability for relying thereon. Each Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.

         SECTION 8.3. Delegation to Sub-Agents. Each Agent may perform any and
all of its duties and exercise any of its rights and powers by or through any
one or more sub-agents appointed by such Agent. The Agents and any such
sub-agents may perform any and all of their duties and exercise rights and
powers through their respective Related Parties. The exculpatory provisions of
the preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of each Agent and any such sub-agent, and shall apply to their
respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Agent.

         SECTION 8.4. Resignation of Agents. Subject to the appointment and
acceptance of a successor Agent as provided in this paragraph, any Agent may
resign at any time by notifying the Lenders, the Issuing Banks and the Borrower.
Upon any such resignation, the Required Lenders shall have the right, in
consultation with the Borrower, to appoint a successor. If no successor shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Agent gives notice of its
resignation, then the retiring Agent may, on behalf of the Lenders and the
Issuing Banks, appoint a successor Agent which shall be a bank organized under
the laws of the United States or any State thereof, having (x) an office in any
State of the United States and (y) capital, surplus and undivided profits
aggregating at least $200,000,000, or an affiliate of any such bank. Upon the
acceptance of its appointment as Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights,


                                      104
<PAGE>


powers, privileges and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations hereunder. The fees payable
by the Borrower to a successor Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such successor.
After the Agent's resignation hereunder, the provisions of this Article and
Section 10.03 shall continue in effect for the benefit of such retiring Agent,
its sub-agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while it was acting as Agent.

         SECTION 8.5. Non-reliance on Agents or other Lenders. Each Lender
acknowledges that it has, independently and without reliance upon any Agent or
any other Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon any Agent, any Issuing Bank or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any other Loan Document or related agreement or any
document furnished hereunder or thereunder.

         SECTION 8.6. Syndication Agent, Incremental Facility Arrangers and
Co-Documentation Agents. Notwithstanding anything in this Agreement or any Loan
Document to the contrary, the Syndication Agent, the Incremental Facility
Arrangers and the Co-Documentation Agents shall have no obligation or
responsibility as such hereunder other than, in the case of the Syndication
Agent or the Incremental Facility Arrangers, as expressly set forth herein.


                                    ARTICLE 9

                               HOLDINGS GUARANTEE

         SECTION 9.1. The Guarantee. Holdings unconditionally and irrevocably
guarantees the full and punctual payment of all present and future indebtedness
and other obligations of the Borrower evidenced by or arising under any Loan
Document and all present and future indebtedness and other obligations of the
Borrower or any other Restricted Subsidiary under any Hedging Agreement
permitted under Section 6.01 (a "Specified Hedging Agreement") as and when the
same shall become due and payable, whether at maturity or by declaration or
otherwise, according to the terms hereof and thereof (including, without
limitation, any Post-Petition Interest). If the Borrower or any other Restricted
Subsidiary fails punctually to pay any indebtedness or other obligation
guaranteed hereby which is due and payable, Holdings unconditionally agrees to
cause such payment to be made punctually as and when the same shall become due
and payable, whether at maturity or by declaration or otherwise, and as if such
payment were made by the Borrower or such other Restricted Subsidiary.


                                      105
<PAGE>


         SECTION 9.2. Guarantee Unconditional. The obligations of Holdings under
this Article 9 shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:

                  (a) any extension, renewal, settlement, compromise, waiver or
         release in respect of any obligation of the Borrower or any other Loan
         Party under any Loan Document or Specified Hedging Agreement, by
         operation of law or otherwise;

                  (b) any modification, amendment or waiver of or supplement to
         any Loan Document or Specified Hedging Agreement;

                  (c) any release, impairment, non-perfection or invalidity of
         any direct or indirect security, or of any guarantee or other liability
         of any third party, for any obligation of the Borrower or any Loan
         Party under any Loan Document or Specified Hedging Agreement;

                  (d) any change in the corporate existence, structure or
         ownership of the Borrower or any other Loan Party or any insolvency,
         bankruptcy, reorganization or other similar proceeding affecting the
         Borrower or any other Loan Party or its assets, or any resulting
         release or discharge of any obligation of the Borrower or any other
         Loan Party contained in any Loan Document or Specified Hedging
         Agreement;

                  (e) the existence of any claim, set-off or other rights which
         Holdings may have at any time against the Borrower or any other Loan
         Party, any Agent, any Issuing Bank, any Lender or any other Person,
         whether or not arising in connection herewith or any unrelated
         transaction; provided that nothing herein shall prevent the assertion
         of any such claim by separate suit or compulsory counterclaim;

                  (f) any invalidity or unenforceability relating to or against
         the Borrower or any other Loan Party for any reason of any Loan
         Document or Specified Hedging Agreement, or any provision of applicable
         law or regulation purporting to prohibit the payment by any other Loan
         Party of any amount payable by it under any Loan Document or Specified
         Hedging Agreement; or

                  (g) any other act or omission to act or delay of any kind by
         any other Loan Party, any Lender or any other Person or any other
         circumstance that might, but for the provisions of this Section,
         constitute a legal or equitable discharge of Holdings' obligations
         under this Article 9.

         SECTION 9.3. Discharge Only Upon Payment in Full; Reinstatement in
Certain Circumstances. Holdings' obligations under this Article 9 constitute a
continuing guaranty and shall remain in full force and effect until the
Commitments shall have been terminated, all Letters of Credit shall have expired
or been terminated, all Specified


                                      106
<PAGE>


Hedging Agreements shall have been terminated and all amounts payable under the
Loan Documents and the Specified Hedging Agreements shall have been indefeasibly
paid in full. If at any time any amount payable by the Borrower under any Loan
Document or by the Borrower or any other Restricted Subsidiary under any
Specified Hedging Agreement is rescinded or must be otherwise restored or
returned upon the insolvency, bankruptcy or reorganization of any Loan Party or
otherwise, Holdings' obligations under this Article 9 with respect to such
payment shall be reinstated at such time as though such payment had become due
but had not been made at such time.

         SECTION 9.4. Waiver. Holdings irrevocably waives acceptance hereof,
presentment, demand, protest and any notice not provided for herein, as well as
any requirement that at any time any action be taken by any Person against the
Borrower or any other Restricted Subsidiary or any other Person.

         SECTION 9.5. Subrogation. When Holdings makes any payment under this
Article 9 with respect to the obligations of the Borrower or any other
Restricted Subsidiary, Holdings shall be subrogated to the rights of the payee
against the Borrower or such other Restricted Subsidiary with respect to the
portion of such obligations paid by Holdings; provided that Holdings shall not
enforce any payment by way of subrogation or contribution against the Borrower
or any Subsidiary so long as any amount payable under any Loan Document or
Specified Hedging Agreement remains unpaid.

         SECTION 9.6. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by any Loan Party under any Loan Document or
Specified Hedging Agreement is stayed upon the insolvency, bankruptcy or
reorganization of such Loan Party, all such amounts otherwise subject to
acceleration under the terms of such Loan Document or Specified Hedging
Agreement shall nonetheless be payable by Holdings under this Article 9
forthwith on demand by the Administrative Agent made, in the case of any Loans,
at the request of the requisite number of Lenders specified in Section 7.01
hereof or, in the case of obligations under a Specified Hedging Agreement, at
the request of the relevant Lender or Lenders or affiliate or affiliates of such
Lender or Lenders.

         SECTION 9.7. Successors and Assigns. This guarantee is for the benefit
of the Lenders, the Hedge Counterparties and their respective successors and
assigns. If any Loans, participations in Letters of Credit or Swingline Loans or
other amounts payable under the Loan Documents are assigned pursuant to Section
10.04 of the Credit Agreement, or any rights under any Specified Hedging
Agreement are assigned pursuant thereto, the rights under this Article 9, to the
extent applicable to the indebtedness so assigned, shall be transferred with
such indebtedness.


                                      107
<PAGE>


                                   ARTICLE 10

                                  MISCELLANEOUS

         SECTION 10.1. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

         (a) if to Holdings or the Borrower, to it at Williams Communications
Group, Inc., One Williams Center, Suite 2600, Tulsa, Oklahoma 74172, Attention
of (other than administrative notices) Scott E. Schubert (Telecopy No.
918-573-6024) or (for administrative notices) Attention of Kerri Lyle (Telecopy
No. 918-573-6558);

         (b) if to the Administrative Agent, to it at Bank of America, N.A., 901
Main Street, Dallas, Texas 75202, Attention of (other than Borrowing Requests)
Pamela Kurtzman, 64th Floor (Telecopy No. (214) 209-9390) or (for Borrowing
Requests) Judy Schneidmiller, 14th Floor (Telecopy No. 214-209-2118);

         (c) if to Bank of America, as Issuing Bank, to it at 901 Main Street,
64th Floor, Main Street, Dallas, Texas 75202, Attention of Pamela Kurtzman
(Telecopy No. 214-209-9390);

         (d) if to Chase, as Issuing Bank, to it at 270 Park Avenue, 37th Floor,
New York, New York 10017, Attention of Joe Brusco (Telecopy No. 212-270-4164);

         (e) if to Bank of America, as Swingline Lender, to it at 901 Main
Street, 64th Floor, Main Street, Dallas, Texas 75202, Attention of Pamela
Kurtzman (Telecopy No. 214-209-9390);

         (f) if to Chase, as Swingline Lender, to it at One Chase Manhattan
Plaza, 8th Floor, New York, New York 10081, Attention of Winslowe Ogbourne
(Telecopy No. 212-552-5700); and

         (g) if to any other Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.

         Any party hereto may change its address or telecopy number for notices
and other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.

         SECTION 10.2. Waivers; Amendments. (a) No failure or delay by the
Administrative Agent, any Issuing Bank, any Swingline Lender or any Lender in
exercising any right or power hereunder or under any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Administrative Agent, the Issuing Banks, the Swingline


                                      108
<PAGE>


Lenders and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of any Loan Document or consent to
any departure by any Loan Party therefrom shall in any event be effective unless
the same shall be permitted by Section 10.02(b), and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent, any Lender, any Issuing
Bank or any Swingline Lender may have had notice or knowledge of such Default at
the time.

         (b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by Holdings, the Borrower and the Required Lenders or, in the case
of any other Loan Document, pursuant to an agreement or agreements in writing
entered into by the Administrative Agent and the Loan Party or Loan Parties that
are parties thereto, in each case with the consent of the Required Lenders;
provided that no such agreement shall (i) increase the Commitment of any Lender
without the written consent of such Lender, (ii) reduce the principal amount of
any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce
any fees payable hereunder, without the written consent of each Lender affected
thereby, (iii) postpone the scheduled date of payment of the principal amount of
any Loan or LC Disbursement, or any interest thereon, or any fees payable
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the written
consent of each Lender affected thereby, (iv) change Section 2.18(b) or 2.18(c)
in a manner that would alter the pro rata sharing of payments required thereby,
without the written consent of each Lender, (v) change any of the provisions of
this Section or the definition of "Required Lenders" or any other provision of
any Loan Document specifying the number or percentage of Lenders (or Lenders of
any Class) required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, without the written consent of
each Lender (or each Lender of such Class, as the case may be), (vi) release
Holdings or substantially all of the Subsidiary Loan Parties from their
respective Guarantees hereunder under the Subsidiary Guarantee (except as
expressly provided herein or therein), or limit its liability in respect of such
Guarantee, without the written consent of each Lender, (vii) change any
condition set forth in Section 4.03 without the written consent of each
Incremental Lender, or (viii) change any provisions of any Loan Document in a
manner that by its terms adversely affects the rights in respect of payments due
to, or requirements to make loans by, Lenders holding Loans of any Class
differently than those holding Loans of any other Class, without the written
consent of Lenders holding a majority in interest of the outstanding Loans and
unused Commitments of each affected Class; provided further that (A) no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent, any Issuing Bank or any Swingline Lender without the prior
written consent of the Administrative Agent, the affected Issuing Bank or the
affected Swingline Lender, as the case may be, and (B) any


                                      109
<PAGE>


waiver, amendment or modification of this Agreement that by its terms affects
the rights or duties under this Agreement of the Lenders with Commitments or
Loans of any Class or Classes (but not Lenders with Commitments or Loans of any
other Class or Classes) may be effected by an agreement or agreements in writing
entered into by Holdings, the Borrower and the requisite percentage in interest
of the Lenders with Commitments or Loans of the affected Class or Classes.

         SECTION 10.3. Expenses; Indemnity; Damage Waiver. (a) The Borrower
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent, the Syndication Agent and the Incremental Facility
Arrangers and their respective affiliates, including the reasonable fees,
charges and disbursements of counsel for the Administrative Agent, the
Syndication Agent and the Incremental Facility Arrangers in connection with the
syndication of the credit facilities provided for herein, the preparation and
administration of the Loan Documents or any amendments, modifications or waivers
of the provisions thereof (whether or not the transactions contemplated hereby
or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses
incurred by any Issuing Bank in connection with the issuance, amendment, renewal
or extension of any Letter of Credit or any demand for payment thereunder and
(iii) all out-of-pocket expenses incurred by the Administrative Agent, the
Syndication Agent, the Incremental Facility Arrangers, any Issuing Bank, any
Swingline Lender or any Lender, including the fees, charges and disbursements of
any counsel for the Administrative Agent, the Incremental Facility Arrangers and
the Syndication Agent, any Issuing Bank, any Swingline Lender or any Lender, in
connection with the enforcement or protection of its rights in connection with
the Loan Documents, including its rights under this Section, or in connection
with the Loans made or Letters of Credit issued hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.

         (b) The Borrower shall indemnify the Administrative Agent, the
Syndication Agent, the Incremental Facility Arrangers, the Issuing Banks, the
Swingline Lenders and each Lender, and each Related Party of any of the
foregoing Persons (each such Person being called an "Indemnitee") against, and
hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including the fees, charges and disbursements
of any counsel for any Indemnitee, incurred by or asserted against any
Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of any Loan Document or any other agreement or instrument
contemplated hereby, the performance by the parties to the Loan Documents of
their respective obligations thereunder or the consummation of the Transactions
or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit
or the use of the proceeds therefrom (including any refusal by any Issuing Bank
to honor a demand for payment under a Letter of Credit if the documents
presented in connection with such demand do not strictly comply with the terms
of such Letter of Credit), (iii) any actual or alleged presence or release of
Hazardous Materials on or from any property owned or operated by Holdings or any
Subsidiary, or any Environmental Liability related in any way to Holdings or any
Subsidiary, or (iv) any actual or prospective claim, litigation,


                                      110
<PAGE>


investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of such Indemnitee.

         (c) To the extent that the Borrower fails to pay any amount required to
be paid by it to the Administrative Agent, the Incremental Facility Arrangers,
any Issuing Bank or any Swingline Lender under Sections 10.03(a) or 10.03(b),
each Lender severally agrees to pay to the Administrative Agent, the Syndication
Agent, the Incremental Facility Arrangers, any Issuing Bank or any Swingline
Lender, as the case may be, such Lender's pro rata share (determined as of the
time that the applicable unreimbursed expense or indemnity payment is sought) of
such unpaid amount; provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Administrative Agent, the Syndication Agent, the
Incremental Facility Arrangers, any Issuing Bank or any Swingline Lender in its
capacity as such. For purposes hereof, a Lender's "pro rata share" shall be
determined based upon its share of the sum of the total Revolving Exposures,
outstanding Loans (other than Revolving Loans) and unused Commitments (other
than Revolving Commitments) at the time.

         (d) To the extent permitted by applicable law, Holdings and the
Borrower will not and will not permit any other Restricted Subsidiary to assert,
and each hereby waives for itself and on behalf of its subsidiaries, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the Transactions, any Loan or
Letter of Credit or the use of the proceeds thereof.

         (e) All amounts due under this Section shall be payable promptly after
written demand therefor.

         SECTION 10.4. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including any
affiliate of any Issuing Bank that issues any Letter of Credit), except that the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender, each Issuing Bank
and each Swingline Lender (and any attempted assignment or transfer by the
Borrower without such consent shall be null and void). Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby (including any affiliate of any Issuing Bank that issues any
Letter of Credit) and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative


                                      111
<PAGE>


Agent, the Issuing Banks, the Swingline Lenders and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.

         (b) (1) Any Lender may assign to one or more assignees all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its Commitments and the Loans at the time owing to it); provided that (i)
each of the Borrower (except in the case of an assignment to a Lender or an
affiliate of a Lender) and Administrative Agent (except in the case of an
assignment to an affiliate of a Lender) (and, in the case of an assignment of
all or a portion of a Revolving Commitment or any Lender's obligations in
respect of its LC Exposure or Swingline Exposure, the Issuing Banks and the
Swingline Lenders) must give its prior written consent to such assignment (which
consent shall not be unreasonably withheld), (ii) except in the case of an
assignment to a Lender or an affiliate of a Lender or an assignment of the
entire remaining amount of the assigning Lender's Commitments or Loans, after
giving effect to such assignment, the amount of the Commitments or Loans of each
Class held by each of the assignor Lender and its affiliates and the assignee
Lender and its affiliates (determined in each case as of the date the Assignment
and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $1,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, (iii) each partial
assignment shall be made as an assignment of a proportionate part of all the
assigning Lender's rights and obligations under this Agreement, except that this
Section 10.04(b)(iii) shall not be construed to prohibit the assignment of a
proportionate part of all the assigning Lender's rights and obligations in
respect of one Class of Commitments or Loans, (iv) the parties to each
assignment (excluding any assignment by a Lender to an affiliate of such Lender)
shall execute and deliver to the Administrative Agent an Assignment and
Acceptance, together with a processing and recordation fee of $3,500, (v) the
parties to each assignment by a Lender to an affiliate of such Lender shall
execute and deliver to the Administrative Agent an Assignment and Acceptance,
together with a processing and recordation fee of $1,500, (vi) the assignee, if
it shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire and (vii) the Incremental Facility Arrangers shall
be notified by the Administrative Agent of any assignment of the Incremental
Facility; and provided further that any consent of the Borrower otherwise
required under this paragraph shall not be required if an Event of Default has
occurred and is continuing. Subject to acceptance and recording thereof pursuant
to Section 10.04(d), from and after the effective date specified in each
Assignment and Acceptance the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Acceptance, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all of the assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Sections
2.15, 2.16, 2.17 and 10.03). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this paragraph shall
be treated for purposes of this Agreement as a sale by such Lender of a


                                      112
<PAGE>


participation in such rights and obligations in accordance with Section
10.04(e). Each Lender that is an investment fund hereby agrees to notify the
Administrative Agent and the Incremental Facility Arrangers of any change of the
identity of the investment manager for such fund.

         (2) Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Lender") may grant to a special purpose funding vehicle (an
"SPC") identified as such in writing from time to time by the Granting Lender to
the Administrative Agent and the Borrower, the option to provide to the Borrower
all or any part of any Loan that such Granting Lender would otherwise be
obligated to make to the Borrower pursuant to this Agreement; provided that (i)
nothing herein shall constitute a commitment by any SPC to make any Loan, (ii)
if an SPC elects not to exercise such option or otherwise fails to provide all
or any part of such Loan, the Granting Lender shall be obligated to make such
Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder
shall utilize the Commitment of the Granting Lender to the same extent, and as
if, such Loan were made by such Granting Lender. Each party hereto hereby agrees
that no SPC shall be liable for any indemnity or similar payment obligation
under this Agreement (all liability for which shall remain with the Granting
Lender). In furtherance of the foregoing, each party hereto hereby agrees (which
agreement shall survive the termination of this Agreement) that, prior to the
date that is one year and one day after the payment in full of all outstanding
commercial paper or other senior indebtedness of any SPC, it will not institute
against, or join any other person in instituting against, such SPC any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under the laws of the United States or any State thereof. In addition,
notwithstanding anything to the contrary contained in this Section 10.04, any
SPC may (i) with notice to, but without the prior written consent of, the
Borrower and the Administrative Agent and without paying any processing fee
therefor, assign all or a portion of its interests in any Loans to the Granting
Lender or to any financial institutions (consented to by the Borrower and
Administrative Agent) providing liquidity and/or credit support to or for the
account of such SPC to support the funding or maintenance of Loans and (ii)
disclose on a confidential basis any non-public information relating to its
Loans to any rating agency, commercial paper dealer or provider of any surety,
guarantee or credit or liquidity enhancement to such SPC. This section may not
be amended without the written consent of each SPC that, at the time of such
proposed amendment, has an outstanding Loan or Loans to the Borrower. For
purposes of Section 10.02 of this Agreement and any other provision of any Loan
Document requiring the consent or approval of any Lender, the Granting Lender
shall, notwithstanding the funding of any Loans by any SPC, have the sole right
to consent to or approve any waiver or amendment of any provision of this
Agreement or any other Loan Document or to exercise any other right to consent
or to grant approval under any Loan Document.

         (c) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in any State of the United
States, a copy of each Assignment and Acceptance delivered to it and a register
for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amount of


                                      113
<PAGE>


the Loans and LC Disbursements owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall be
conclusive, and Holdings, the Borrower, the Administrative Agent, the Issuing
Banks, the Swingline Lenders and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Borrower, any Issuing Bank,
any Swingline Lender and any Lender, at any reasonable time and from time to
time upon reasonable prior notice.

         (d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in Section 10.04(b)
and any written consent to such assignment required by Section 10.04(b), the
Administrative Agent shall accept such Assignment and Acceptance and record the
information contained therein in the Register. No assignment shall be effective
for purposes of this Agreement unless it has been recorded in the Register as
provided in this paragraph.

         (e) Any Lender may, without the consent of the Borrower, the
Administrative Agent, any Issuing Bank or any Swingline Lender, sell
participations to one or more banks or other entities (a "Participant") in all
or a portion of such Lender's rights and obligations under this Agreement
(including all or a portion of its Commitments and the Loans owing to it);
provided that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) Holdings, the Borrower,
the Administrative Agent, the Issuing Banks, the Swingline Lenders and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce the Loan
Documents and to approve any amendment, modification or waiver of any provision
of the Loan Documents; provided that such agreement or instrument may provide
that such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section
10.02(b) that affects such Participant. Subject to Section 10.04(f), the
Borrower agrees that each Participant shall be entitled to the benefits of
Sections 2.15, 2.16 and 2.17 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to Section 10.04(b). To the extent
permitted by law, each Participant also shall be entitled to the benefits of
Section 10.08 as though it were a Lender, provided such Participant agrees to be
subject to Section 2.18(c) as though it were a Lender.

         (f) A Participant shall not be entitled to receive any greater payment
under Section 2.15 or 2.17 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Borrower's
prior written consent. A Participant that


                                      114
<PAGE>


would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 2.17 unless the Borrower is notified of the participation
sold to such Participant and such Participant agrees, for the benefit of the
Borrower, to comply with Section 2.17(e) as though it were a Lender.

         (g) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.

         SECTION 10.5. Survival. All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, any Issuing
Bank, any Swingline Lender or any Lender may have had notice or knowledge of any
Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount
payable under this Agreement is outstanding and unpaid or any Letter of Credit
is outstanding and so long as the Commitments have not expired or terminated.
The provisions of Sections 2.15, 2.16, 2.17 and 10.03 and Article 8 shall
survive and remain in full force and effect regardless of the consummation of
the transactions contemplated hereby, the repayment of the Loans, the expiration
or termination of the Letters of Credit and the Commitments or the termination
of this Agreement or any provision hereof.

         SECTION 10.6. Counterparts; Integration; Effectiveness. This Agreement
may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and any separate letter agreements with respect to fees payable
to the Administrative Agent or any Issuing Bank constitute the entire contract
among the parties relating to the subject matter hereof and supersede any and
all previous agreements and understandings, oral or written, relating to the
subject matter hereof. Except as provided in Section 4.01, this Agreement shall
become effective when it shall have been executed by the Administrative Agent
and when the Administrative Agent shall have received counterparts hereof which,
when taken together, bear the signatures of each of the other parties hereto,
and thereafter shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.


                                      115
<PAGE>


         SECTION 10.7. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

         SECTION 10.8. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender, Issuing Bank and Swingline Lender and
each of their respective affiliates is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other obligations at any time owing by such Lender, Issuing
Bank, Swingline Lender or affiliate to or for the credit or the account of the
Borrower or Holdings against any and all of the obligations of the Borrower or
Holdings, as the case may be, now or hereafter existing under this Agreement
held by such Lender, Issuing Bank or Swingline Lender, irrespective of whether
or not such Lender, Issuing Bank or Swingline Lender shall have made any demand
under this Agreement and although such obligations may be unmatured. The rights
of each Lender, Issuing Bank and Swingline Lender under this Section are in
addition to other rights and remedies (including other rights of setoff) which
such Lender, Issuing Bank or Swingline Lender may have.

         SECTION 10.9. Governing Law; Jurisdiction; Consent to Service of
Process. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.

         (b) Each of Holdings and the Borrower hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to any Loan Document, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement or any other Loan Document shall
affect any right that the Administrative Agent, any Issuing Bank, any Swingline
Lender or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or any other Loan Document against Holdings, the
Borrower or their respective properties in the courts of any jurisdiction.


                                      116
<PAGE>


         (c) Each of Holdings and the Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
any other Loan Document in any court referred to in Section 10.09(b). Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.

         (d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 10.01. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.

         SECTION 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.

         SECTION 10.11. Headings. Article and Section headings used herein and
the Table of Contents are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

         SECTION 10.12. Confidentiality. Each of the Administrative Agent, the
Issuing Banks, the Swingline Lenders and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its affiliates' (other than affiliates that are
direct competitors of any material business of Holdings and the Restricted
Subsidiaries) directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit,


                                      117
<PAGE>


action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to any
assignee of or Participant in, or any prospective assignee of or Participant in,
any of its rights or obligations under this Agreement (other than a direct
competitor of any material business of Holdings and the Restricted
Subsidiaries), (g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) becomes available to the Administrative Agent, any Issuing
Bank, any Swingline Lender or any Lender on a nonconfidential basis from a
source other than Holdings or the Borrower. For the purposes of this Section,
"Information" means all information received from Holdings or the Borrower
relating to Holdings or the Borrower or its business, other than any such
information that is available to the Administrative Agent, any Issuing Bank, any
Swingline Lender or any Lender on a nonconfidential basis prior to disclosure by
Holdings or the Borrower; provided that, in the case of information received
from Holdings or the Borrower after the date hereof, such information is clearly
identified at the time of delivery as confidential. Any Person required to
maintain the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

         SECTION 10.13. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.


                                      118
<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.


                                   WILLIAMS COMMUNICATIONS, LLC


                                   By /s/ Scott E. Schubert
                                      ---------------------------------------
                                      Title: Senior Vice President and Chief
                                                Financial Officer


                                   WILLIAMS COMMUNICATIONS GROUP, INC.


                                   By /s/ Scott E. Schubert
                                      ---------------------------------------
                                      Title: Senior Vice President and Chief
                                                Financial Officer


                                   BANK OF AMERICA, N.A.


                                   By /s/ Pamela S. Kurtzman
                                      ---------------------------------------
                                      Title: Principal


                                   THE CHASE MANHATTAN BANK


                                   By  /s/ Constance M. Coleman
                                      ---------------------------------------
                                      Title: Vice President


                                   BANK OF MONTREAL


                                   By /s/ W.T. Calder
                                      ---------------------------------------
                                      Title: Managing Director



                                      119
<PAGE>



                                   THE BANK OF NEW YORK


                                   By /s/ Brendan T. Nedzi
                                      ---------------------------------------
                                      Title: Senior Vice President


                                   SCOTIABANC INC.


                                   By /s/ M. D. Smith
                                      ---------------------------------------
                                      Title: Treasurer


                                   ABN AMRO BANK, N.V.


                                   By /s/
                                      ---------------------------------------
                                      Title:


                                   By /s/
                                      ---------------------------------------
                                      Title:


                                   FLEET NATIONAL BANK


                                   By /s/ Suzanne M. MacKay
                                      ---------------------------------------
                                      Title: Vice President


                                   CIBC INC.


                                   By /s/ Amy V. Kothari
                                      ---------------------------------------
                                      Title: Executive Director




                                      120
<PAGE>


                                   CREDIT SUISSE FIRST BOSTON


                                   By /s/ David L. Sawyer
                                      ---------------------------------------
                                      Title: Vice President


                                   By /s/ Lalita Advani
                                      ---------------------------------------
                                      Title: Assistant Vice President


                                   DEUTSCHE BANK AG
                                   NEW YORK BRANCH AND/OR CAYMAN
                                   ISLANDS BRANCH


                                   By /s/ Steve M. Godeke
                                      ---------------------------------------
                                      Title: Director


                                   By /s/ Alexander Richarz
                                      ---------------------------------------
                                      Title: Vice President


                                   CREDIT LYONNAIS NEW YORK BRANCH


                                   By /s/ Jeremy Horn
                                      ---------------------------------------
                                      Title: Authorized Signature



                                      121
<PAGE>


                                   BANK AUSTRIA CREDIT ANSTALT
                                   CORPORATE FINANCE, INC.


                                   By /s/ John T. Murphy
                                      ---------------------------------------
                                      Title: Senior Vice President

                                   By /s/ William W. Hunter
                                      ---------------------------------------
                                      Title: Vice President


                                   FIRST UNION NATIONAL BANK


                                   By /s/ Brand Hosford
                                      ---------------------------------------
                                      Title: Vice President


                                   IBM CREDIT CORPORATION


                                   By /s/ Thomas S. Curcio
                                      ---------------------------------------
                                      Title: Manager of Credit


                                   THE INDUSTRIAL BANK OF JAPAN,
                                   LIMITED, NEW YORK BRANCH


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





                                      122
<PAGE>


                                   BANK OF OKLAHAMA N.A.


                                   By /s/ Robert D. Mattax
                                      ------------------------------------------
                                      Title: Senior Vice President


                                   BANK ONE, N.A.


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


                                   KBC BANK, N.V.


                                   By /s/ Robert Snauffer
                                      ------------------------------------------
                                      Title: First Vice President


                                   By /s/ Eric Raskin
                                      ------------------------------------------
                                      Title: Assistant Vice President


                                   THE FUJI BANK, LIMITED


                                   By /s/ Nobuoki Koike
                                      ------------------------------------------
                                      Title: Vice President & Senior Team Leader



                                      123
<PAGE>


                                   INCREMENTAL TRANCHE A LENDERS:


                                   BANK OF AMERICA, N.A.


                                   By /s/ Pamela S. Kurtzman
                                      ---------------------------------------
                                      Title: Principal


                                   THE CHASE MANHATTAN BANK


                                   By /s/ Constance M. Coleman
                                      ---------------------------------------
                                      Title: Vice President


                                   LEHMAN COMMERCIAL PAPER INC.


                                   By /s/ G. Andrew Keith
                                      ---------------------------------------
                                      Title: Authorized Signatory


                                   CITICORP USA, INC.


                                   By /s/ Caesar W. Wyszomirski
                                      ---------------------------------------
                                      Title: Vice President


                                   MERRILL LYNCH & CO., INC.


                                   By /s/ Merrill Lynch & Co., Inc.
                                      ---------------------------------------
                                      Name:  Parker A. Weil
                                      Title: Managing Director



                                      124
<PAGE>



Acknowledged and agreed:

CRITICAL CONNECTIONS, INC.
SBCI - PACIFIC NETWORKS, INC.
WCS COMMUNICATIONS SYSTEMS, INC.
WCS, INC.
WILLIAMS COMMUNICATIONS OF
     VIRGINIA, INC.
WILLIAMS COMMUNICATIONS
     PROCUREMENT, L.L.C.
WILLIAMS COMMUNICATIONS
     PROCUREMENT, L.P.
WILLIAMS GLOBAL COMMUNICATIONS
     HOLDINGS, INC.
WILLIAMS INTERNATIONAL
     VENTURES COMPANY
WILLIAMS LEARNING NETWORK, INC.
WILLIAMS LOCAL NETWORK, INC.
WILLIAMS WIRELESS, INC.
WILLIAMS TECHNOLOGY CENTER, LLC
WILLIAMS COMMUNICATIONS AIRCRAFT, LLC


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




                                      125
<PAGE>
                                  SCHEDULE 2.01
                                   COMMITMENTS

<Table>
<Caption>
REVOLVING AND TERM                         REVOLVING          TERM
LENDERS                                   COMMITMENT       COMMITMENT
<S>                                       <C>              <C>

Bank of America, N.A.                     32,500,000       32,500,000
The Chase Manhattan Bank                  50,000,000       50,000,000
Bank of Montreal                          42,625,000       42,625,000
The Bank of New York                      42,625,000       42,625,000
ABN AMRO Bank N.V.                        34,250,000       34,250,000
CIBC Inc.                                 34,250,000       34,250,000
Credit Lyonnais
   New York Branch                        34,250,000       34,250,000
Credit Suisse First Boston                34,250,000       34,250,000
Deutsche Bank AG
   New York Branch and/or
   Cayman Islands Branch                  34,250,000       34,250,000
Fleet National Bank                       34,250,000       34,250,000
Scotiabanc Inc.                           34,250,000       34,250,000
Bank Austria Creditanstalt
   Corporate Finance, Inc.                17,500,000       17,500,000
First Union National Bank                 17,500,000       17,500,000
The Fuji Bank, Limited                    17,500,000       17,500,000
IBM Credit Corporation                    17,500,000       17,500,000
The Industrial Bank of Japan, Limited
   New York Branch                        17,500,000       17,500,000
Bank of Oklahoma N.A.                     10,000,000       10,000,000
Bank One, N.A.                            10,000,000       10,000,000
KBC Bank N.V.                             10,000,000       10,000,000
             Total                       525,000,000      525,000,000

     GRAND TOTAL                                        1,050,000,000

INCREMENTAL LENDERS

Citicorp USA, Inc.                                        150,000,000
Lehman Commercial Paper, Inc.                             150,000,000
Merrill Lynch & Co., Inc.                                  75,000,000
The Chase Manhattan Bank                                   40,000,000
Bank of America, N.A.                                      35,000,000

     GRAND TOTAL                                          450,000,000
</Table>



                                      126

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(W)
<SEQUENCE>14
<FILENAME>d93687ex10-w.txt
<DESCRIPTION>AIRCRAFT DRY LEASE N359WC, DATED 9/13/01
<TEXT>
<PAGE>
                                                                   EXHIBIT 10(w)

                               AIRCRAFT DRY LEASE
                                     N359WC

                  This Aircraft Dry Lease ("Lease") dated as of September 13,
2001 ("Effective Date"), is by and between Williams Communications Aircraft,
LLC, a Delaware limited liability company and a wholly owned subsidiary of
Williams Aircraft, Inc. ("Lessor") and Williams Communications, LLC, a Delaware
limited liability company (the "Lessee").

                  Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor the aircraft described on Schedule "B" attached hereto, together with all
engines, equipment, attachments, substitutions, replacements and additions
(collectively, the "Aircraft").

         1. Certain Definitions: For purposes of this Lease the terms
"Additional Charge", "Affiliate", "Change in Control", "Debt", "Encumbrance",
"Environmental Laws", "ERISA", "ERISA Event", "GAAP:", "Governmental Authority",
"Hazardous Materials", "Material Adverse Affect", "Material Debt", "Notice",
"Officer's Certificate", "Overdue Rate", "Permitted Encumbrances", "Person",
"Plan", "Prime Rate", "Proceeding", "Transfer", and "WCG" shall have the
meanings described for such capitalized terms as contained in the Master Lease
dated September 13, 2001, among Williams Headquarters Building Company, Williams
Technology Center, LLC, and Williams Communications, LLC. Capitalized terms not
otherwise specifically defined in this Lease shall have the meanings described
for such capitalized terms as contained in the Credit Agreement dated as of
September 8, 1999 (the "Credit Agreement") among Lessee, Bank of America, N.A.,
The Chase Manhattan Bank and other parties (and capitalized terms contained
within such definitions as set forth in the Credit Agreement shall similarly
have the meanings described for such capitalized terms therein) with respect to
the financial covenants therein. A copy of the Credit Agreement is attached
hereto as Exhibit I. Lessee shall provide copies of any amendments or
restatements or waivers to the Credit Agreement to Lessor within five (5) days
of execution thereof. Such amendments or restatements or waivers shall
automatically become a part hereof with respect to the financial covenants.

         2. Term and Rent: This Lease is for a term of ten (10) years, beginning
September 13, 2001, and ending September 1, 2011. For said term or any portion
thereof, Lessee shall pay to Lessor rentals ("Rent") payable in accordance with
Schedule "A", of which the first is due October 1, 2001, and the others on a
like date of each month thereafter. All Rent shall be paid at Lessor's place of
business shown below, or such other place as the Lessor may designate by written
notice to the Lessee. All Rent shall be paid without notice or demand and
without abatement, deduction or set-off of any amount whatsoever. The operation
and use of the Aircraft shall be at the risk of Lessee, and not of Lessor and
the obligation of Lessee to pay Rent hereunder shall be unconditional.

                  2.1 Late Charge; Interest: If any Rent payable to Lessor is
         not paid when due, Lessee shall pay Lessor on demand, as an Additional
         Charge, (a) a late charge equal to (i) two percent (2%) of the amount
         not paid within five (5) days of the date when due plus (b) if such
         Rent (including the late charge) is not paid within ten (10) days of
         the date due,


<PAGE>


         interest thereon at the Overdue Rate from such tenth (10th) day until
         such Rent (including the late charge and interest) is paid in full.

         3. Destruction of Aircraft: If the Aircraft is lost, stolen, totally
destroyed, damaged beyond repair or permanently rendered unfit for use for any
reason whatsoever, the liability of the Lessee to pay Rent therefor may be
discharged by paying to Lessor all the Rent due thereon, plus all the Rent to
become due thereon less the net amount of the recovery, if any, actually
received by Lessor from insurance or otherwise for such loss or damage. Lessor
shall not be obligated to undertake, by litigation or otherwise, the collection
of any claim against any person for loss or damage of the Aircraft. Except as
expressly provided in this paragraph, the total or partial destruction of the
Aircraft, or total or partial loss of use or possession thereof to Lessee, shall
not release or relieve Lessee from the duty to pay the Rent herein provided.

         4. No Warranties by Lessor; Compliance with Laws and Insurance: Lessor,
not being the manufacturer of the Aircraft, nor manufacturer's agent, makes no
warranty or representation, either express or implied, as to the fitness,
quality, design, condition, capacity, suitability, merchantability or
performance of the Aircraft or of the material or workmanship thereof, or that
the Aircraft will satisfy the requirements of any law, rule, specification or
contract, it being agreed that the Aircraft is leased "as is" and that all such
risks, as between the Lessor and the Lessee, are to be borne by the Lessee at
its sole risk and expense, Lessee accordingly agrees not to assert any claim
whatsoever against the Lessor based thereon. Lessee further agrees, regardless
of cause, not to assert any claim whatsoever against the Lessor for loss of
anticipatory profits or consequential, indirect, special or punitive damages.
Lessor shall have no obligation to test or service the Aircraft. Lessee agrees,
at its own cost and expense, (a) to pay all charges and expenses in connection
with the operation of the Aircraft; (b) to comply with all governmental laws,
ordinances, regulations, requirements and rules with respect to the use and
operation of the Aircraft; and (c) to maintain at all times (i) Aircraft hull
insurance, including all-risk ground and flight insurance on the Aircraft for
the stated value thereof (not to be less than the full current market value as
determined annually by the parties) for the term of this Lease, plus other
insurance thereon in amounts and against such risks as Lessor may specify, and
deliver each policy to Lessor with a standard long form endorsement attached
thereto showing loss payable to Lessor as its interest may appear, and (ii)
combined single limit liability insurance covering bodily injury liability,
property damage liability and passenger liability for the term of this Lease
naming Lessor its parent and affiliates as additional insureds to the full
extent of the policies carried, but in no event less than $200,000,000.00 per
occurrence. Lessee shall deliver to Lessor evidence of such insurance coverage.
All insurance policies must provide that no cancellation or non-renewal thereof
shall be effective without 30 days prior written notice to Lessor and all
insurance policies shall be in form, terms and amounts and with insurance
carriers satisfactory to Lessor.


                                       2
<PAGE>


         5. Maintenance. Lessee, at its cost and expense, shall:

                  5.1 perform or cause to be performed all airworthiness
         directives, mandatory manufacturer's service bulletins, and all other
         mandatory service, inspections, repair, maintenance, overhaul and
         testing: (a) as may be required under applicable Federal Aviation
         Administration (the "FAA") rules and regulations, (b) in the same
         manner and with the same care as shall be the case with similar
         aircraft and engines owned by or operated on behalf of Lessee without
         discrimination, and (c) so as to keep the Aircraft in as good operating
         condition as when delivered to the Lessee, ordinary wear and tear
         excepted, with all systems in good operating condition;

                  5.2 keep the Aircraft in such condition as is necessary to
         enable the airworthiness certification of the Aircraft to be maintained
         at all times under applicable FAA regulations and any other applicable
         law, including, but not limited to any equipment modifications or
         installations required by the FAA;

                  5.3 maintain, in the English language, all records and other
         materials required by and in a manner acceptable to the FAA and any
         other governmental entity having jurisdiction over the Aircraft and its
         operation;

                  5.4 Lessee shall furnish Lessor reports on an annual basis a
         list of those service bulletins, airworthiness directives and
         engineering modifications incorporated on the Aircraft during the
         preceding calendar year.

         6. Taxes: Lessee agrees that, during the term of this Lease, in
addition to the Rent and all other amounts provided herein to be paid, it will
promptly pay all taxes, assessments and other governmental charges (including
penalties and interest, if any, and fees for titling or registration, if
required) levied or assessed: (a) upon the interest of the Lessee in the
Aircraft or upon the use or operation thereof or on the earnings arising
therefrom; and (b) against Lessor on account of its acquisition or ownership of
the Aircraft, or the use or operation thereof or the leasing thereof to the
Lessee, or the Rent herein provided for, or the earnings arising therefrom,
exclusive, however, of any taxes based on net income of Lessor ("Taxes"). Lessee
agrees to file, on behalf of Lessor, all required tax returns and reports
concerning the Aircraft with all appropriate governmental agencies, and within
not more than 45 days after the due date of such filing to send Lessor
confirmation, in form satisfactory to Lessor, of such filing.

                  6.1 Lease Characterization: Lessor and Lessee agree that the
         terms of this Lease create an operating lease for federal and state
         income tax purposes. Consistent with the foregoing, Lessor intends to
         retain all tax benefits associated with this Lease and Lessee agrees
         not to take an inconsistent position on its federal or state income tax
         filings. If any action taken by one party under this Lease causes this
         Lease to be ultimately determined by any taxing authority not to be an
         operating lease, that party shall indemnify the other party for any
         resulting increase in the other party's federal or state income tax
         liability for any period.


                                       3
<PAGE>


                  6.2 Permitted Contests: Lessee, on its own or on Lessor's
         behalf or in Lessor's name, but at Lessee's sole cost and expense,
         shall have the right to contest, by an appropriate legal proceeding
         conducted in good faith and with due diligence, the amount or validity
         of any levy or assessment of Taxes provided (a) prior notice of such
         contest is given to Lessor, (b) the Aircraft would not be in any danger
         of being sold, forfeited or attached as a result of such contest, and
         there is no risk to Lessor of a loss of or interruption in the payment
         of Rent, (c) in the case of unpaid Taxes, collection thereof is
         suspended during the pendency of such contest, and (d) compliance may
         legally be delayed pending such contest. Upon request of Lessor, Lessee
         shall deposit funds or assure Lessor in some other manner reasonably
         satisfactory to Lessor that the Taxes, together with interest and
         penalties, if any, thereon, and any and all costs for which Lessee is
         responsible will be paid if and when required upon the conclusion of
         such contest. Lessee shall defend, indemnify and save harmless Lessor
         from all costs or expenses arising out of or in connection with any
         such contest, including but not limited to payment of Taxes and
         attorneys' fees. If at any time Lessor reasonably determines that
         payment of the Taxes contested by Lessee is necessary in order to
         prevent loss of the Aircraft or Rent or civil or criminal penalties or
         other damage, upon such prior notice to Lessee as is reasonable in the
         circumstances Lessor may pay such amount or take such other action as
         it may deem necessary to prevent such loss or damage. If reasonably
         necessary, upon Lessee's written request Lessor, at Lessee's expense,
         shall cooperate with Lessee in a permitted contest, provided Lessee
         upon demand reimburses Lessor for Lessor's costs incurred in
         cooperating with Lessee in such contest.

         7. Lessor's Right of Inspection and Identification of Aircraft: All
equipment, engines, radios, accessories, instruments and parts now or hereafter
used in connection with the Aircraft shall become part of the Aircraft by
accession. Lessor warrants that the Aircraft is not registered under the laws of
any foreign country. Lessee shall permit Lessor or its designee, on 5 days prior
written notice to visit and inspect the Aircraft, its condition, use and
operation, and the records maintained in connection therewith, at any reasonable
time without interfering with the normal operation of the Aircraft, at Lessor's
cost and expense, provided that no Default or Event of Default has occurred and
is continuing. Lessor shall have no duty to make any such inspection and shall
not incur any liability or obligation by reason of not making any such
inspection. Lessor's failure to object to any condition or procedure observed or
observed in the course of an inspection hereunder shall not be deemed to waive
or modify any of the terms of this Lease with respect to such condition or
procedure.

         8. Possession and Place of Use: The Aircraft shall be based at the
location specified in Schedule "B", and shall not be permanently removed
therefrom without Lessor's prior written consent. Lessee shall not, without
Lessor's prior written consent, (a) part with possession or control of the
Aircraft, (b) attempt or purport to sell, pledge, mortgage or otherwise encumber
the Aircraft


                                       4
<PAGE>


or otherwise dispose of or encumber any interest under this Lease, or (c) fly or
permit the Aircraft to be flown or located outside the area covered by insurance
required by paragraph 3 of this Lease.

         9. Lessee's Warranties: Lessee warrants that the Aircraft will be
registered under the laws of the United States and will not be registered under
the laws of any foreign country; that the Aircraft and/or equipment will not be
held, maintained or used in violation of any law, regulation, ordinance or
policy of insurance affecting the maintenance, use or flight of Aircraft. These
warranties are conditions of Lessee's right of possession and use, and delivery
is made in reliance thereon.

         10. Performance of Obligations of Lessee by Lessor: In the event that
Lessee shall fail duly and promptly to perform any of its obligations under the
provisions of this Lease, Lessor may, at its option, perform the same for the
account of Lessee without thereby waiving such default, and any amount paid or
expense (including reasonable attorneys' fees), penalty or other liability
incurred by Lessor in such performance, together with interest at the Overdue
Rate until paid by Lessee to Lessor, shall be payable by Lessee upon demand as
additional rent for the Aircraft.

         11. Purchase Option: At any time during the term of this Lease, if
Lessee has paid in full all rentals owing hereunder and is not in default
hereunder, Lessee shall have the option to purchase the Aircraft for an amount
equal to the greater of (1) fair market value of the Aircraft or (2) the
Termination Value in accordance with Schedule "C" plus accrued interest. Lessee
shall give Lessor written notice of its intent to exercise such option not less
than 30 days prior to the transfer of the Aircraft to Lessee. Fair market value
shall be determined by a mutually agreed upon independent aircraft broker. If
the parties cannot agree on the selection of a broker, each party shall
designate a broker. Such selected brokers will then select a third broker to
appraise the Aircraft. Such third party broker appraisal shall be binding upon
the parties.

                  Lessee shall also have the right to purchase the Aircraft as
of October 1, 2006 ("Early Buy-Out Option") for the Termination Value for such
date in accordance with Schedule "C" plus accrued interest.

         Lessee shall also be responsible for all transaction costs associated
with any exercise in accordance with this Section 11.

         12. Put Option: Upon the expiration of the original term of this Lease,
Lessor shall have the option to require the Lessee to purchase the Aircraft for
an amount equal to the agreed fair market value of the Aircraft as defined in
Section 11 hereof. Lessor shall provide Lessee written notice of its intent to
exercise such option not less than 30 days prior to the expiration of the
original term of this Lease.

         Lessee shall also be responsible for all transaction costs associated
with any exercise in accordance with this Section 12.


                                       5
<PAGE>


         13. Default: An event of default ("Event of Default") shall occur if:

                  (a) Lessee fails to pay or cause to be paid the Rent when due
and payable;

                  (b) Either Lessee or WCG, has a petition in bankruptcy filed
against it, is adjudicated a bankrupt or has an order for relief thereunder
entered against it, or a court of competent jurisdiction enters an order or
decree appointing a receiver of Lessee or WCG or of the whole or substantially
all of its property, or approving a petition filed against Lessee seeking
reorganization or arrangement of Lessee under the federal bankruptcy laws or any
other applicable law or statute of the United States of America or any state
thereof, any such judgment, order or decree is not vacated or set aside or
stayed within sixty (60) days from the date of the entry thereof, subject to the
applicable provisions of the Bankruptcy Code (11 U.S.C Section 101, et seq);

                  (c) Lessee or WCG: (i) admits in writing its inability to pay
its debts generally as they become due, (ii) files a petition in bankruptcy or a
petition to take advantage of any insolvency law, (iii) makes a general
assignment for the benefit of its creditors, (iv) consents to the appointment of
a receiver of itself or of the whole or any substantial part of its property, or
(v) files a petition or answer seeking reorganization or arrangement under the
Federal bankruptcy laws or any other applicable law or statute of the United
States of America or any state thereof, subject to the applicable provisions of
the Bankruptcy Code (11 U.S.A. Section 101, et seq);

                  (d) Lessee or WCG, is liquidated or dissolved, or begins a
Proceeding toward liquidation or dissolution, or has filed against it a petition
or other Proceeding to cause it to be liquidated or dissolved and the Proceeding
is not dismissed within thirty (30) days thereafter, or Lessee in any manner
permits the sale or divestiture of substantially all of its assets;

                  (e) The estate or interest of Lessee in the Aircraft or any
part thereof is levied upon or attached in any Proceeding and the same is not
vacated or discharged within thirty (30) days thereafter (unless Lessee is in
the process of consenting such lien or attachment in good faith);

                  (f) Any representation or warranty made by Lessee in the
Membership Interest Purchase Agreement or in the certificate delivered in
connection therewith shall prove to be incorrect in any material respect when
made or deemed made, Lessor is materially and adversely affected thereby and
Lessee fails within twenty (20) days after Notice from Lessor thereof to cure
such condition by terminating such adverse effect and making Lessor whole for
any damage suffered therefrom, or, if with due diligence such cure cannot be
effected within twenty (20) days, if Lessee has failed to commence to cure the
same within the twenty (20) days or failed thereafter to proceed promptly and
with due diligence to cure such condition and complete such cure prior to the
time that such condition causes a default in any other lease to which Lessee is
subject and prior to the time that the same results in civil or criminal
penalties to Lessor, Lessee, or any Affiliates of any of such parties or the
Aircraft;


                                       6
<PAGE>


                  (g) A Transfer occurs without the prior written consent of
Lessor;

                  (h) Except as otherwise provided in subsection (m) below, a
default occurs under any Material Debt when and as the same become due and
payable (subject to any applicable grace period);

                  (i) Lessee fails to purchase the Aircraft if and as required
under this Lease;

                  (j) Lessee or WCG breaches any of the financial covenants set
forth in Section 14 hereof and the breach is not cured within a period of thirty
(30) days after the earlier to occur of (i) the Notice thereof from Lessor, or
(ii) knowledge thereof by Lessee or WCG;

                  (k) Lessee fails to observe or perform any other term,
covenant or condition of this Lease and the failure is not cured by Lessee
within a period of thirty (30) days after Notice thereof from Lessor:

                  (l) Lessee breaches any representation or warranty made by it
in this Lease;

                  (m) An Event of Default as defined in the Credit Agreement,
occurs and an acceleration of any of the Loans as defined in the Credit
Agreement results;

                  (n) One or more judgments for the payment of money in an
aggregate amount in excess of $25,000,000 shall be rendered against Lessee or
WCG, or any combination thereof and the same shall remain undischarged for a
period of thirty (30) consecutive days during which execution shall not be
effectively stayed, or any action shall be legally taken by a judgment creditor
to attach or levy upon any assets of Lessee or WCG to enforce any such judgment;

                  (o) An ERISA Event shall have occurred that, in the opinion of
the Lessor, when taken together with all other ERISA Events that have occurred,
could reasonable be expected to result in liability of Lessee or WCG in an
aggregate amount exceeding $25,000,000 for all periods;

                  (p) Lessee fails to maintain the Aircraft in accordance with
the terms of this Lease;

                  (q) A Change in Control shall occur;

                  (r) Lessee fails to observe or perform any provisions of
Section 4 and Section 14.4 regarding insurance; or

                  (s) Lessee defaults on any other Aircraft Dry Lease dated
concurrently herewith.


                                       7
<PAGE>


         Upon the occurrence of an Event of Default, Lessor, at Lessor's option,
may: (a) proceed by appropriate court action or actions or other proceedings
either at law or in equity to enforce performance by Lessee of any and all
covenants of this Lease and to recover damages for the breach thereof; (b)
demand that Lessee deliver the Aircraft forthwith to Lessor at Lessee's expense
at such place as Lessor may designate; (c) Lessor and/or Lessor's agents may,
without notice or liability or legal process, enter into any premises of or
under control or jurisdiction of Lessee or any agent of Lessee where the
Aircraft may be or by Lessor is believed to be, and repossess the Aircraft,
using all force necessary or permitted by applicable law so to do, Lessee hereby
expressly waiving all further rights to possession of the Aircraft and all
claims for injuries suffered through or loss caused by such repossession; (d)
terminate this Lease, whereupon Lessee shall, without further demand, as
liquidated damages for loss of the bargain and not as a penalty forthwith pay to
Lessor any unpaid Rent that accrued on or before the occurrence of the event of
default plus an amount equal to the difference between the value, as of the date
of the occurrence of such event of default, of the aggregate Rent reserved
hereunder for the unexpired term of this Lease and the then value of the
aggregate rental value of the Aircraft for such unexpired term which the Lessor
reasonably estimates to be obtainable for the use of the Aircraft during such
unexpired terms. Should any proceedings be instituted by or against Lessor for
monies due to Lessor hereunder and/or for possession of the Aircraft or for any
other relief, Lessee shall pay a reasonable sum as attorneys' fees. If any
statute governing the proceeding in which damages are to be proved specifies the
amount of such claim, Lessor shall be entitled to prove as and for damages for
the breach an amount equal to that allowed under such statute. The remedies of
this Lease provided in favor of Lessor shall not be deemed exclusive, but shall
be cumulative, and shall be in addition to all other remedies in its favor
existing at law or in equity, and the exercise, or beginning of exercise by
Lessor of any one or more of such remedies shall not preclude the simultaneous
or later exercise by Lessor of any or all such remedies. No express or implied
waiver by Lessor of any event of default hereunder shall in any way be, or be
construed to be, a waiver of any future or subsequent events of default.

         14. Covenants: Lessee represents, warrants and covenants that:

                  14.1 Existence; Conduct of Business. Lessee and WCG each will
         (i) continue to engage in business of the same general type as now
         conducted and (ii) do or cause to be done all things necessary to
         preserve, renew and keep in full force and effect its legal existence
         and the rights, licenses, permits, privileges, franchises, patents,
         copyrights, trademarks and trade names material to the conduct of its
         business.

                  14.2 Payment of Obligations. Lessee and WCG each (i) will pay
         its Debt and other material obligations, including tax liabilities,
         before the same shall become delinquent or in default, except where (a)
         the validity or amount thereof is being contested in good faith by
         appropriate legal process, (b) has set aside on its books adequate
         reserves with respect thereto in accordance with GAAP, (c) such contest
         effectively suspends collection of the contested obligation and the
         enforcement of any Encumbrance securing such obligation and (d) the
         failure to make payment pending such contest could not reasonably be
         expected to


                                       8
<PAGE>


         result in a Material Adverse Effect and (ii) shall not breach, in any
         material respect, or permit to exist any material default under, the
         terms of any material lease, commitment, contract, instrument or
         obligation to which it is a party, or by which its properties or assets
         are bound, except where the failure to do the foregoing would not in
         the aggregate have a Material Adverse Effect.

                  14.3 Maintenance of Properties. Lessee and WCG each will keep
         and maintain all property material to the conduct of its business in
         good working order and condition, ordinary wear and tear excepted.

                  14.4 Insurance. In addition to the insurance required in
         Section 4, Lessee and WCG each will maintain, with financially sound
         and reputable insurance companies, insurance in such amounts and
         against such risks as are customarily maintained by companies engaged
         in the same or similar businesses operating in the same or similar
         locations. As of the Effective Date, all premiums in respect of all
         insurance described in the Lease have been paid. Lessee shall deliver
         an insurance certificate to Lessor as of the Effective Date evidencing
         all such insurance coverages.

                  14.5 Casualty and Condemnation. The Lessee will furnish to
         Lessor prompt written notice of any casualty or other insured damage to
         any portion of any of Lessor's property or assets or the commencement
         of any action or Proceeding for the taking of any of Lessor's property
         or assets or any part thereof or interest therein under power of
         eminent domain or by condemnation or similar Proceeding (in each case
         with a value in excess of $10,000,000).

                  14.6 Books and Records; Inspection and Audit Rights. Lessee
         and WCG each will keep proper books of record and account in which
         materially full, true and correct entries are made of all dealings and
         transactions in relation to its business and activities. Lessee and WCG
         each will permit any representatives designated by the Lessor at the
         expense of Lessor, or, if an Event of Default shall have occurred and
         be continuing, at the expense of the Lessee, upon reasonable prior
         notice, to visit and inspect its properties, to examine and make
         extracts from its books and records, and to discuss its affairs,
         finances and condition with its officers and independent accountants,
         all at such reasonable times and as often as reasonably requested.

                  14.7 Compliance with Laws. Lessee and WCG each will comply
         with all laws, rules, regulations and orders of any Governmental
         Authority applicable to it or its property (including, without
         limitation, Environmental Laws and ERISA and the rules and regulations
         thereunder), except where the necessity of compliance therewith is
         contested in good faith by appropriate action and such failure to
         comply, individually or in the aggregate, could not reasonably be
         expected to result in a Material Adverse Effect.


                                       9
<PAGE>


                  14.8 Further Assurances. At any time and from time to time,
         Lessee will execute any and all further documents, financing
         statements, agreements and instruments, and take all such further
         actions (including the filing and recording of financing statements,
         fixture filings, mortgages, deeds of trust and other documents), which
         may be required under any applicable law, or which the Lessor may
         reasonably request, to effectuate the transactions contemplated by this
         Lease or to grant, preserve, protect or perfect the Encumbrances
         created or intended to be created in connection with this Lease or any
         of the other documents contemplated herein, required to be in effect or
         the validity or priority of any such Encumbrance, all at the expense of
         Lessee and Lessor. Lessee and Lessor also agree to provide to Lessor,
         from time to time upon request, evidence reasonably satisfactory to
         Lessor as to the perfection and priority of the Encumbrance created or
         intended to be created in connection with this Lease or any of the
         other documents contemplated herein.

                  14.9 Pledge or Encumber Assets. Lessee shall not pledge or
         otherwise encumber any of its assets, other than leased equipment used
         in the operation of the Aircraft.

                  14.10 Encumbrances. Lessee will not create, incur, assume or
         permit to exist any Encumbrance on any property or asset now owned or
         hereafter acquired by it, or assign or sell any income or revenues or
         rights in respect of any thereof, except for any Permitted Encumbrances
         or Encumbrances created in connection with or specifically contemplated
         by this Lease or permitted by the Credit Agreement.

                  14.11 Fundamental Changes. Lessee and WCG each will not merge
         into or consolidate with any other Person, or permit any other Person
         to merge into or consolidate with it, or liquidate or dissolve, except
         that, if at the time thereof and immediately after giving effect
         thereto no Event of Default shall have occurred and be continuing (i)
         any Person may merge into the Lessee in a transaction in which the
         Lessee is the surviving entity, provided that any such merger involving
         a Person that is not a wholly owned by Lessor immediately prior to such
         merger shall not be permitted, and (ii) any person may merge into the
         Lessee in a transaction in which the Lessee is the surviving
         corporation.

                  14.12 Other Material Agreements. Lessee shall not (i) enter
         into any other material agreement relating to any portion of the
         Aircraft, or (ii) if entered into with Lessor's consent, thereafter,
         amend, modify, renew, replace or otherwise change the terms of any such
         material agreement without the prior written consent of Lessor.

                  14.13 Total Net Debt to Contributed Capital Ratio. The Total
         Net Debt to Contributed Capital ratio shall at no time prior to January
         1, 2002 exceed .65 to 1.00.

                  14.14 Minimum EBITDA. The amount equal to (i) EBITDA for the
         period of four (4) fiscal quarters ending during any period set forth
         below plus (ii) ADP Interest Expense for such period minus (iii) gains
         for such period attributable to Dark Fiber and Capacity


                                       10
<PAGE>


         Dispositions plus (iv) Dark Fiber and Capacity Proceeds for such period
         shall not be less than the amount set forth below opposite such period:

<Table>
<Caption>
                 PERIOD                               AMOUNT
                 ------                               ------
<S>                                                <C>
     January 1,2001-March 31, 2001                 $200,000,000

      April 1, 2001-June 30, 2001                  $300,000,000

    July 1, 2001-September 20, 2001                $350,000,000

   October 1, 2001-December 31, 2001               $350,000,000
</Table>

                  14.15 Total Leverage Ratio. (a) The Total Leverage Ratio
         during any period set forth below shall not exceed the ratio set forth
         below opposite such period:

<Table>
<Caption>

                  PERIOD                                       TOTAL LEVERAGE RATIO
                  ------                                       --------------------
<S>                                                            <C>
     March 31, 2001-December 30, 2001                               12.50:1.00

   December 31, 2002-December 30, 2003                              9.50:1.00

     December 31, 2003 and thereafter                               4.00:1.00
</Table>

                  14.16 Senior Leverage Ratio. The Senior Leverage Ratio during
         any period set forth below shall not exceed the ratio set forth below
         opposite such period:

<Table>
<Caption>
                  PERIOD                                      SENIOR LEVERAGE RATIO
                  ------                                      ---------------------
<S>                                                           <C>
     March 31, 2002-December 30, 2002                               5.25:1.00

   December 31, 2002-December 30, 2003                              3.25:1.00

     December 31, 2003 and thereafter                               2.50:1.00
</Table>

                  14.17 Interest Coverage Ratio. The Interest Coverage Ratio for
         any period of four (4) consecutive fiscal quarters ending during any
         period set forth below shall not be less than the ratio set forth below
         opposite such period:

<Table>
<Caption>
                PERIOD                                      INTEREST COVERAGE RATIO
                ------                                      -----------------------
<S>                                                         <C>
     June 30, 2002-June 29, 2003                                  1.00:1.00

   June 30, 2003-December 30, 2003                                1.50:1.00

   December 31, 2003 and thereafter                               2.00:1.00
</Table>


                                       11
<PAGE>


                  14.18 Organization; Powers. Lessee is duly organized, validly
         existing and in good standing under the laws of the jurisdiction of its
         organization, has all requisite power and authority to carry on its
         business as now conducted and, except where the failure to do so,
         individually or in the aggregate, could not reasonably be expected to
         result in a Material Adverse Effect, is qualified to do business in,
         and is in good standing in, every jurisdiction where such qualification
         is required.

                  14.19 Authorization; Enforceability. The execution of and
         performance under this Lease is within Lessee's' entity powers and has
         been duly authorized by all necessary member, corporate and, if
         required, stockholder action as the case may be. This Lease has been
         duly executed and delivered by Lessee and constitutes a legal, valid
         and binding obligation of the Lessee, enforceable in accordance with
         its terms, subject to applicable bankruptcy, insolvency,
         reorganization, moratorium or other laws affecting creditors' rights
         generally and subject to general principles of equity, regardless of
         whether considered in a Proceeding in equity or at law.

                  14.20 Governmental Approvals; No Conflicts. The Lease or any
         of the other documents contemplated herein, (a) does not require any
         consent or approval of, registration or filing with, or any other
         action by, any Governmental Authority, except such as have been
         obtained or made and are in full force and effect and except filings
         necessary to perfect Lessor's rights under this Lease, (b) will not
         violate any applicable law or regulation or the charter, by-laws or
         other organizational documents of Lessee or Lessor or any order of any
         Governmental Authority, (c) will not violate or result in a default
         under any indenture, agreement or other instrument binding upon Lessee
         or Lessor or any of their respective assets, or give rise to a right
         thereunder to require any payment to be made by Lessee or Lessor, and
         (d) will not result in the creation or imposition of any Encumbrance on
         any asset of Lessee or Lessor, except any Encumbrance created by or in
         accordance with the Lease.

                  14.21 Material Adverse Change. Since December 31, 2000, there
         has been no Material Adverse Change.

                  14.22 Properties. Lessee has good title to, or valid leasehold
         interests in, all its real and personal property material to its
         business, except for minor defects in title that do not interfere with
         its ability to conduct its business as currently conducted or to
         utilize such properties for their intended purposes. None of the
         properties and assets of Lessee or Lessor is subject to any Encumbrance
         other than Permitted Encumbrances, and Encumbrances created by or in
         connection with this Lease.

                  14.23 Intellectual Property. Lessee owns, or is licensed to
         use, all trademarks, trade names, copyrights, patents and other
         intellectual property material to its business, and the use thereof by
         Lessee does not infringe upon the rights of any other Person, except
         for any such infringements that, individually or in the aggregate,
         could not reasonably be expected to result in a Material Adverse
         Effect.

                  14.24 Litigation and Environmental Matters. There is no
         action, suit or Proceeding by or before any arbitrator or Governmental
         Authority pending against or, to the knowledge


                                       12
<PAGE>

         of Lessee or Lessor, threatened against or affecting Lessee or WCG (i)
         as to which there is a reasonable possibility-bility of an adverse
         determination and that, if adversely determined, could reasonably be
         expected, individually or in the aggregate, to result in a Material
         Adverse Effect or (ii) that involve this Lease or any of the other
         documents contemplated herein.

                           14.24.1 Environmental Compliance. Except with respect
                  to other matters that, individually or in the aggregate, could
                  not reasonably be expected to result in a Material Adverse
                  Effect, Lessee (i) has not failed to comply with any
                  Environmental Law or to obtain, maintain or comply with any
                  permit, license or other approval required under any
                  Environmental Law, (ii) has not become subject to any
                  liability with respect to any Environmental Law, (iii) has not
                  received written notice of any claim with respect to any
                  Environmental Law or (iv) does not know of any basis for any
                  violations of any Environmental Law or any release, threatened
                  release or exposure to any Hazardous Materials that is likely
                  to form the basis of any liability under any Environmental
                  Law.

                  14.25 Compliance with Laws and Agreements. Lessee is in
         compliance with all laws, regulations and orders of any Governmental
         Authority applicable to it or its property and all indentures,
         agreements and other instruments binding upon it or its property,
         except where the failure to do so, individually or in the aggregate,
         could not reasonably be expected to result in a Material Adverse
         Effect. No Event of Default has occurred and is continuing.

                  14.26 Investment and Holding Company Status. Lessee is not (a)
         an "investment company" as defined in, or subject to regulation under,
         the Investment Company Act of 1940 or (b) a "holding company" as
         defined in, or subject to regulation under, the Public Utility Holding
         Company Act of 1935.

                  14.27 Taxes. Lessee or WCG has timely filed or caused to be
         filed all tax returns and reports required to have been filed and has
         paid or caused to be paid all taxes required to have been paid by or
         with respect to it, except (a) taxes that are being contested in good
         faith by an appropriate Proceeding and for which Lessee or Lessor, as
         applicable, has set aside on its books adequate reserves or (b) to the
         extent that the failure to do so could not reasonably be expected to
         result in a Material Adverse Effect.

                  14.28 ERISA. No ERISA Event has occurred or is reasonably
         expected to occur that, when taken together with all other such ERISA
         Events for which liability is reasonably expected to occur, could
         reasonably be expected to result in a Material Adverse Effect. The
         present value of all accumulated benefit obligations under each Plan
         (based on the assumptions used for purposes of Statement of Financial
         Accounting Standards No. 87) did not, as of the date of the most recent
         financial statements reflecting such amounts, exceed by more than
         $25,000,000 the fair market value of the assets of such Plan, and the
         present value of all accumulated benefit obligations of all underfunded
         Plans (based on the assumptions used for purposes of Statement of
         Financial Accounting Standards No. 87) did not, as of the date of the
         most recent financial statements reflecting such amounts, exceed by
         more than $25,000,000 the fair market value of the assets of all such
         underfunded Plans.


                                       13
<PAGE>


                  14.29 Disclosure. Lessee has disclosed all agreements,
         instruments and corporate or other restrictions to which Lessee is
         subject, and all other matters known to Lessee, that, individually or
         in the aggregate, could reasonably be expected to result in a Material
         Adverse Effect. None of the reports, financial statements, certificates
         or other information furnished by or on behalf of Lessee in connection
         with the negotiation of this Lease or delivered hereunder (as modified
         or supplemented by other information so furnished) contains any
         material misstatement of fact or omits to state any material fact
         necessary to make the statements therein, in the light of the
         circumstances under which they were made, not misleading; provided
         that, with respect to projected financial information, Lessee
         represents only that such information was prepared in good faith based
         upon assumptions believed to be reasonable at the time.

                  14.30 Labor Matters. As of the Effective Date, there are no
         strikes, lockouts or slowdowns against Lessee pending or, to the
         knowledge of Lessee, threatened. The hours worked by and payments made
         to employees of Lessee have not been in violation of the Fair Labor
         Standards Act or any other applicable Federal, state, local or foreign
         law dealing with such matters. All payments due from Lessee, or for
         which any claim may be made against Lessee, on account of wages and
         employee health and welfare insurance and other benefits, have been
         paid or accrued as a liability on the books of Lessee. The execution of
         this Lease has not and will not give rise to any right of termination
         or right of renegotiation on the part of any union under any collective
         bargaining agreement by which Lessee is bound.

                  14.31 No Burdensome Restrictions. No contract, lease,
         agreement or other instrument to which Lessee is a party or by which
         any of its property is bound or affected, no charge, corporate
         restriction, judgment, decree or order and no provision of applicable
         law or governmental regulation could reasonably be expected to have
         Material Adverse Effect.

                  14.32 Representations True and Correct. As of the dates when
         made and as of the Effective Date, each representation and warranty of
         Lessee thereto contained in this Lease or any other documents executed
         in connection herewith, is true and correct.

         15. OFFICER'S CERTIFICATES AND FINANCIAL STATEMENTS. Lessee shall
furnish or cause to be furnished to one another:

                  15.1 Fiscal Year Information. (i) within 90 days after the end
         of each fiscal year of WCG, its audited consolidated balance sheets and
         related audited consolidated statements of operations, stockholders' or
         members' equity and cash flows as of the end of and for such fiscal
         year (including segment reporting with respect to each of WCG's
         business segments consistent), setting forth in each case in
         comparative form the figures for the previous fiscal year, all reported
         on by Ernst & Young LLP or other independent public accountants of
         recognized national standing (without a "going concern" or like
         qualification or exception and without any qualification or exception
         as to the scope of such audit) to the effect that such consolidated
         financial statements present fairly in all material respects the
         financial condition and results of operations of WCG on a consolidated
         basis in accordance with GAAP consistently applied, and (ii) within 90
         days after the end of each fiscal year of WCG, supplemental unaudited
         balance sheets and related unaudited statements of operations,


                                       14
<PAGE>


         stockholders' or members' equity and cash flows as of the end of and
         for such fiscal year, setting forth in tabular form in each case the
         figures for the previous year, for WCG and the consolidating
         adjustments with respect thereto.

                  15.2 Quarterly Information. (i) within 45 days after the end
         of each of the first 3 fiscal quarters of each fiscal year of WCG,
         unaudited consolidated and consolidating balance sheets and related
         consolidated and consolidating statements of operations, stockholders'
         or members' equity and cash flow of WCG as of the end of and for such
         fiscal quarter and the then elapsed portion of the fiscal year, setting
         forth in each case in comparative form the figures for the
         corresponding period or periods of the previous fiscal year (or in the
         case of the balance sheet, as of the end of the previous fiscal year),
         all certified by an Officer's Certificate as presenting fairly in all
         material respects the financial condition and results of operations of
         WCG on a consolidated basis in accordance with GAAP consistently
         applied, subject to normal year-end audit adjustments and the absence
         of footnotes and (ii) within 45 days after the end of each of the first
         3 fiscal quarters of each fiscal year of WCG, unaudited balance sheets
         and related statements of operations, stockholders' or members' equity
         and cash flow of Lessor as of the end of and for such fiscal quarter
         and the then elapsed portion of the fiscal year, setting forth in each
         case in comparative form the figures for the corresponding period or
         periods of the previous fiscal year (or, in the case of the balance
         sheet, as of the end of the previous fiscal year) all certified by a
         Officer's Certificate as presenting fairly in all material respects the
         financial condition and results of operations of WCG in accordance with
         GAAP consistently applied, subject to normal year-end audit adjustments
         and the absence of footnotes.

                  15.3 Officers Certificate. Concurrently with any delivery of
         financial statements in accordance with this Lease, an Officer's
         Certificate of the Lessee (i) certifying as to whether an Event of
         Default has occurred and, if an Event of Default has occurred,
         specifying the details thereof and any action taken or proposed to be
         taken with respect thereto, (ii) setting forth in reasonable detail
         calculations demonstrating compliance with Sections 14.13 through
         14.17, and (iii) stating whether any change in GAAP or in the
         application thereof has occurred since the date referred to in
         paragraph 14.24 and, if any such change has occurred, specifying the
         effect of such change on the financial statements accompanying such
         Officer's Certificate.

                  15.4 Accounting Firm Certificate. Concurrently with any
         delivery of financial statements in accordance with this Lease, a
         certificate of the accounting firm that reported on such financial
         statements stating whether they obtained knowledge during the course of
         their examination of such financial statements of any Event of Default
         (which certificate may be limited to the extent required by accounting
         rules or guidelines).

                  15.5 Budget. As soon as practicable after approval by the
         Board of Directors of WCG, and in any event not later than 120 days
         after the commencement of each fiscal year of Lessor, a consolidated
         and consolidating budget of WCG for such fiscal year and a consolidated
         budget of WCG for such fiscal year and, promptly when available, any
         significant revisions of any such budget.


                                       15
<PAGE>


                  15.6 SEC Filings. Promptly after the same become publicly
         available, copies of all periodic and other reports, proxy statements
         and other materials filed by WCG or any of its Affiliates with the SEC,
         or any Governmental Authority succeeding to any or all of the functions
         of the SEC, or with any national securities exchange, or distributed by
         WCG to its members generally, as the case may be, except to the extent
         any such report, proxy statement or other material is available
         electronically on a publicly-accessible website.

                  15.7 Other Information. Promptly following any request
         therefor, such other information regarding the operations, business
         affairs and financial condition of Lessee, or compliance with the terms
         of this Lease or any of the documents contemplated herein.

                  15.8 Credit Agreement Information. To the extent not
         previously covered by the provisions of this paragraph, copies of all
         information provided by Lessee or any Affiliates pursuant to the Credit
         Agreement, contemporaneously with its delivery pursuant thereto.

         16. NOTICES OF MATERIAL EVENTS. Upon knowledge thereof, Lessee will
furnish prompt written notice of the following. Each notice delivered under this
paragraph shall be accompanied by a statement of an Officer's Certificate, duly
executed, setting forth the details of the event or development requiring such
notice and any action taken or proposed to be taken with respect thereto.

                  16.1 Event of Default. The occurrence of any Event of Default.

                  16.2 Action, Suit or Proceeding. The filing or commencement of
         any action, suit or Proceeding by or before any arbitrator or
         Governmental Authority against or affecting Lessee, WCG or any
         Affiliate thereof that could reasonably be expected to result in a
         Material Adverse Effect.

                  16.3 ERISA Event. The occurrence of any ERISA Event that,
         alone or together with any other ERISA Events that have occurred, could
         reasonably be expected to result in a Material Adverse Effect.

                  16.4 Credit Agreement. Any change or modification to the
         Credit Agreement.

                  16.5 Other Matters. Any other development that results in, or
         could reasonably be expected to result in, a Material Adverse Effect.

         17. Indemnity: Lessee agrees that Lessor shall not be liable to Lessee
for, and Lessee shall indemnify and save Lessor, its parent and affiliated
companies harmless from and against any and all liability, loss, damage,
expense, causes of action, suits, claims or judgments arising from or caused
directly or indirectly by (a) Lessee's failure to promptly perform any of its
obligations under the provisions of this Lease, (b) injury to person or property
resulting from or based upon the actual or alleged use, operation, delivery or
transportation of the Aircraft or its location or condition, or (c) inadequacy
of the Aircraft for any purpose or any deficiency or defect therein or the use
or maintenance thereof or any repairs, servicing or adjustments thereto or any
delay in providing or failure to provide any thereof or any interruption or loss
of service or use thereof or any loss of


                                       16
<PAGE>


business; and shall, at its own cost and expense, defend any and all suits which
may be brought against Lessor, either alone or in conjunction with others upon
any such liability or claim or claims and shall satisfy, pay and discharge any
and all judgments and fines that may be recovered against Lessor in any such
action or actions, provided, however, that Lessor shall give Lessee written
notice of any such claim or demand.

         18. Assignments and Notices: Neither this Lease nor Lessee's rights
hereunder shall be assignable except with Lessor's written consent; the
conditions hereof shall bind any permitted successors and assigns of Lessee.
Lessor may assign this Lease without consent of Lessee. Lessee, after receiving
notice of any assignment, shall abide thereby and make payment as may therein be
directed. Following such assignment, solely for the purpose of determining
assignor's rights hereunder, the term "Lessor" shall be deemed to include or
refer to Lessor's assignee. All notices relating hereto shall be delivered in
person to an officer of Lessor or Lessee or shall be mailed to Lessor or Lessee
at its respective address herein shown or at any later address last known to the
sender.

         19. Further Assurances: Lessee shall execute and deliver to Lessor,
upon Lessor's request, such instruments and assurances as Lessor deems necessary
or advisable for the confirmation or perfection of this Lease and Lessor's
rights hereunder, including the filing or recording of this Lease at Lessor's
option.

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

         21. Entire Agreement: There are no oral or written agreements or
representations between the parties hereto affecting this Lease. This Lease
supersedes and cancels any and all previous negotiations, arrangements,
representations, brochures, agreements and understandings, if any, between
Lessor and Lessee.

         22. Governing Law: This Lease is executed and delivered in the State of
Oklahoma, and except insofar as the law of another state or jurisdiction may be
mandatorily applicable, shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the laws of said State.

         23. Truth-in-Leasing Clause: THE AIRCRAFT HAS BEEN MAINTAINED AND
INSPECTED UNDER FEDERAL AVIATION REGULATION PART 91 FOR THE 12 MONTHS PRECEDING
THE DATE OF THIS LEASE. THE AIRCRAFT WILL BE MAINTAINED AND INSPECTED UNDER
FEDERAL AVIATION REGULATION PART 91 FOR OPERATIONS TO BE CONDUCTED UNDER THIS
LEASE. THE LESSEE CERTIFIES THAT IT IS RESPONSIBLE FOR OPERATIONAL CONTROL OF
THE AIRCRAFT AND THAT IT UNDERSTANDS ITS RESPONSIBILITIES FOR COMPLIANCE WITH
APPLICABLE FEDERAL AVIATION REGULATIONS. AN EXPLANATION OF THE FACTORS BEARING
ON OPERATIONAL CONTROL AND THE PERTINENT FEDERAL AVIATION


                                       17
<PAGE>


REGULATIONS CAN BE OBTAINED FROM THE NEAREST FAA FLIGHT STANDARDS DISTRICT
OFFICE.

LESSOR:                                           LESSEE:

WILLIAMS COMMUNICATIONS                           WILLIAMS COMMUNICATIONS, LLC
   AIRCRAFT, LLC



By:      /s/  Mark W. Husband           By:    /s/  Howard S. Kalika
      ------------------------------          ----------------------------------
Name:         Mark W. Husband           Name:       Howard S. Kalika
      ------------------------------          ----------------------------------
Title:        Assistant Treasurer       Title:      Treasurer and Vice President
      ------------------------------          ----------------------------------










Signature page to Aircraft Dry Lease (N359WC) by and between Williams
Communications Aircraft, LLC and Williams Communications, LLC dated September
13, 2001


                                       18
<PAGE>


                                  SCHEDULE "A"

                                   RENT-N359WC

                  Rent shall be payable in one hundred and twenty (120) equal
successive monthly rental payments in an amount as would be necessary to
amortize $9,250,000 on a straight-line basis over a period of one hundred and
twenty (120) months plus interest calculated at the Interest Rate as set forth
below:

                  The following definitions shall apply to this SCHEDULE "A":

                  "ABR", when used herein, refers to interest at a rate
determined by reference to the Alternate Base Rate.

                  "Applicable Margin" means, for any day, the applicable rate
per annum set forth below under the caption "Eurodollar Spread" or "ABR Spread",
as the case may be, based upon the Lessee's Bank Facility Rating set by S&P and
Moody's, respectively, applicable on such date plus (ii) the applicable rate per
annum set forth below under the caption "Leverage Premium", unless the Total
Leverage Ratio, as determined by reference to the financial statements delivered
to the Lessor in respect of the most recently ended fiscal quarter of WCG, is
less than 6:00 to 1:00.

                  "Eurodollar", when used herein, refers to interest at a rate
determined by reference to the Adjusted LIBO Rate.

                  "LIBO Rate" means, with respect to any Eurodollar Rate, the
rate appearing on Page 3750 of the Telerate Service (or on any successor or
substitute page of such Service, or any successor to or substitute for such
Service, providing rate quotations comparable to those currently provided on
such page of such Service, as determined by the Lessor from time to time for
purposes of providing quotations of interest rates applicable to dollar deposits
in the London interbank market) at approximately 11:00 a.m., London time, two
(2) Business Days prior to the FIRST DAY of each calendar month, as the rate for
dollar deposits with a maturity of thirty (30) days. In the event that such rate
is not available at such time for any reason, then the "LIBO Rate" shall be the
rate (rounded upwards, if necessary, to the next 1/16 of 1%) at which dollar
deposits of $5,000,000 and for a maturity of thirty (30) days are offered by the
principal London office of the CitiBank, N.A., in immediately available funds in
the London interbank market at approximately 11:00 a.m., London time, two (2)
Business Days prior to the FIRST DAY of each calendar month. IN EITHER CASE, THE
APPLICABLE LIBO RATE SHALL BE EFFECTIVE FOR THE CALENDAR MONTH NEXT SUCCEEDING
THE CALENDAR MONTH COMMENCING IMMEDIATELY AFTER SUCH DETERMINATION.

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

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

                  "WCG" means Williams Communications Group, Inc., a Delaware
corporation, and the parent company of Williams Communications, LLC.


                                       19
<PAGE>


Interest Rate Calculation

At Lessee's option, ABR plus Applicable Margin or LIBO Rate plus Applicable
Margin (the "Rate") as determined from time to time by S&P or by Moody's based
on Lessee's Facilities Rating in accordance with the grid below:



<Table>
<Caption>
                                   Facilities Rating of                                  Eurodollar      Leverage
                                          Lessee                       ABR Spread          Spread         Premium
                                   --------------------                ----------        ----------      --------
<S>                          <C>                                        <C>               <C>             <C>
       Level I                   BBB- and Baa3 or higher                 0.50%             1.50%           .25%
       Level II                        BB+ and Ba1                      0.875%            1.875%           .25%
       Level III                       BB and Ba2                        1.25%             2.25%           .25%
       Level IV                        BB- and Ba3                       1.50%             2.50%           .25%
       Level V               Lower than BB- or lower than Ba3            1.75%             2.75%           .25%
</Table>


         For purposes of the foregoing (i) if neither S&P nor Moody's or any
replacement or successor facility of similar size shall have in effect a rating
for the Facilities, then the Applicable Margin shall be the rate set forth in
Level V, (ii) if either S&P or Moody's, but not bot S&P or Moody's, shall have
in effect a rating for the Facilities, then the Applicable Margin shall be based
on such rating, (iii) if the ratings established by S&P or Moody's for the
Facilities shall fall within different Levels, then the Applicable Margin shall
be based on the lower of the two ratings, (iv) if the ratings established by S&P
or Moody's for the Facilities shall fall within the same Level, then the
Applicable Margin shall be based on that Level and (v) if the ratings
established by S&P or Moody's for the Facilities shall be changed (other than as
a result of a change in the rating system of S&P of Moody's), such change shall
be effective as of the date on which it is first announced by the applicable
rating agency. Each change in the Applicable Margin shall apply during the
period commencing on the effective date of such change and engine on the date
immediately preceding the effective date of the next such change.


                                       20
<PAGE>


                                  SCHEDULE "B"

         Cessna model 560XL Citation Excel aircraft with manufacturer's serial
         number 560-5129 and United States nationality and registration marks
         N359WC.

         Pratt & Whitney model PW545A aircraft engines with manufacturer's
         serial numbers PCEDB0271 and PCEDB0265.

         Such aircraft to be based at Spirit of Saint Louis Airport, City of
         Chesterfield, Missouri, Country of U.S.A.







                                       21
<PAGE>

                                  SCHEDULE "C"

                                Termination Value

The Termination Value of the Aircraft shall be set forth opposite the applicable
rent payment, plus accrued interest to such date.

CAPITALIZED LESSOR'S COST:                      $9,250,000.00

<Table>
<Caption>
                                                (1)             (2)                (3)              (4)              (2) + (4)
                            Termination       Ten Year                           Monthly        Present Value
   Payment  Monthly         Value as a      Straight-Line    Unamortized        Depreciation   of Depreciation       Termination
   Number   Period           % of Cost      Amotization        Balance           Benefits         Benefits              Value
<S>         <C>             <C>             <C>             <C>                 <C>            <C>                 <C>
      1     10/1/01          133.83%         $77,083.33     $9,250,000.00       $154,166.67      $3,129,143.23      $12,379,143.23
      2     11/1/01          131.55%         $77,083.33     $9,172,916.67       $154,166.67      $2,995,837.52      $12,168,754.19
      3     12/1/01          129.27%         $77,083.33     $9,095,833.33       $154,166.67      $2,861,643.10      $11,957,476.44
      4      1/1/02          126.98%         $77,083.33     $9,018,750.00        $61,666.67      $2,726,554.06      $11,745,304.06
      5      2/1/02          125.67%         $77,083.33     $8,941,666.67        $61,666.67      $2,683,064.42      $11,624,731.09
      6      3/1/02          124.37%         $77,083.33     $8,864,583.33        $61,666.67      $2,639,284.85      $11,503,868.18
      7      4/1/02          123.06%         $77,083.33     $8,787,500.00        $61,666.67      $2,595,213.41      $11,382,713.41
      8      5/1/02          121.74%         $77,083.33     $8,710,416.67        $61,666.67      $2,550,848.17      $11,261,264.84
      9      6/1/02          120.43%         $77,083.33     $8,633,333.33        $61,666.67      $2,506,187.16      $11,139,520.49
     10      7/1/02          119.11%         $77,083.33     $8,556,250.00        $61,666.67      $2,461,228.41      $11,017,478.41
     11      8/1/02          117.79%         $77,083.33     $8,479,166.67        $61,666.67      $2,415,969.93      $10,895,136.60
     12      9/1/02          116.46%         $77,083.33     $8,402,083.33        $61,666.67      $2,370,409.73      $10,772,493.06
     13     10/1/02          115.13%         $77,083.33     $8,325,000.00        $61,666.67      $2,324,545.79      $10,649,545.79
     14     11/1/02          113.80%         $77,083.33     $8,247,916.67        $61,666.67      $2,278,376.10      $10,526,292.76
     15     12/1/02          112.46%         $77,083.33     $8,170,833.33        $61,666.67      $2,231,898.61      $10,402,731.94
     16      1/1/03          111.12%         $77,083.33     $8,093,750.00        $37,000.00      $2,185,111.26      $10,278,861.26
     17      2/1/03          110.05%         $77,083.33     $8,016,666.67        $37,000.00      $2,162,678.67      $10,179,345.34
     18      3/1/03          108.97%         $77,083.33     $7,939,583.33        $37,000.00      $2,140,096.53      $10,079,679.86
     19      4/1/03          107.89%         $77,083.33     $7,862,500.00        $37,000.00      $2,117,363.84       $9,979,863.84
     20      5/1/03          106.81%         $77,083.33     $7,785,416.67        $37,000.00      $2,094,479.60       $9,879,896.26
     21      6/1/03          105.73%         $77,083.33     $7,708,333.33        $37,000.00      $2,071,442.80       $9,779,776.13
     22      7/1/03          104.64%         $77,083.33     $7,631,250.00        $37,000.00      $2,048,252.41       $9,679,502.41
     23      8/1/03          103.56%         $77,083.33     $7,554,166.67        $37,000.00      $2,024,907.43       $9,579,074.10
     24      9/1/03          102.47%         $77,083.33     $7,477,083.33        $37,000.00      $2,001,406.81       $9,478,490.15
     25     10/1/03          101.38%         $77,083.33     $7,400,000.00        $37,000.00      $1,977,749.53       $9,377,749.53
     26     11/1/03          100.29%         $77,083.33     $7,322,916.67        $37,000.00      $1,953,934.52       $9,276,851.19
     27     12/1/03           99.20%         $77,083.33     $7,245,833.33        $37,000.00      $1,929,960.75       $9,175,794.09
     28      1/1/04           98.10%         $77,083.33     $7,168,750.00       $117,845.00      $1,905,827.16       $9,074,577.16
     29      2/1/04           96.13%         $77,083.33     $7,091,666.67       $117,845.00      $1,800,687.67       $8,892,354.34
     30      3/1/04           94.16%         $77,083.33     $7,014,583.33       $117,845.00      $1,694,847.26       $8,709,430.59
     31      4/1/04           92.17%         $77,083.33     $6,937,500.00       $117,845.00      $1,588,301.24       $8,525,801.24
     32      5/1/04           90.18%         $77,083.33     $6,860,416.67       $117,845.00      $1,481,044.91       $8,341,461.58
     33      6/1/04           88.18%         $77,083.33     $6,783,333.33       $117,845.00      $1,373,073.55       $8,156,406.88
     34      7/1/04           86.17%         $77,083.33     $6,706,250.00       $117,845.00      $1,264,382.37       $7,970,632.37
     35      8/1/04           84.15%         $77,083.33     $6,629,166.67       $117,845.00      $1,154,966.58       $7,784,133.25
     36      9/1/04           82.13%         $77,083.33     $6,552,083.33       $117,845.00      $1,044,821.36       $7,596,904.70
     37     10/1/04           80.10%         $77,083.33     $6,475,000.00       $117,845.00        $933,941.84       $7,408,941.84
     38     11/1/04           78.06%         $77,083.33     $6,397,916.67       $117,845.00        $822,323.12       $7,220,239.78
     39     12/1/04           76.01%         $77,083.33     $6,320,833.33       $117,845.00        $709,960.27       $7,030,793.60
</Table>


                                       22
<PAGE>


The Termination Value of the Aircraft shall be set forth opposite the applicable
rent payment, plus accrued interest to such date.

CAPITALIZED LESSOR'S COST:                      $9,250,000.00

<Table>
<Caption>
                                                (1)             (2)                (3)              (4)              (2) + (4)
                            Termination       Ten Year                           Monthly        Present Value
   Payment  Monthly         Value as a      Straight-Line    Unamortized        Depreciation   of Depreciation       Termination
   Number   Period           % of Cost      Amotization        Balance           Benefits         Benefits              Value
<S>         <C>             <C>             <C>             <C>                 <C>            <C>                 <C>
     40      1/1/05           73.95%         $77,083.33     $6,243,750.00        $35,520.00        $596,848.34       $6,840,598.34
     41      2/1/05           72.78%         $77,083.33     $6,166,666.67        $35,520.00        $565,307.33       $6,731,973.99
     42      3/1/05           71.60%         $77,083.33     $6,089,583.33        $35,520.00        $533,556.04       $6,623,139.38
     43      4/1/05           70.42%         $77,083.33     $6,012,500.00        $35,520.00        $501,593.08       $6,514,093.08
     44      5/1/05           69.24%         $77,083.33     $5,935,416.67        $35,520.00        $469,417.04       $6,404,833.70
     45      6/1/05           68.06%         $77,083.33     $5,858,333.33        $35,520.00        $437,026.48       $6,295,359.82
     46      7/1/05           66.87%         $77,083.33     $5,781,250.00        $35,520.00        $404,419.99       $6,185,669.99
     47      8/1/05           65.68%         $77,083.33     $5,704,166.67        $35,520.00        $371,596.13       $6,075,762.79
     48      9/1/05           64.49%         $77,083.33     $5,627,083.33        $35,520.00        $338,553.44       $5,965,636.77
     49     10/1/05           63.30%         $77,083.33     $5,550,000.00        $35,520.00        $305,290.46       $5,855,290.46
     50     11/1/05           62.11%         $77,083.33     $5,472,916.67        $35,520.00        $271,805.73       $5,744,722.39
     51     12/1/05           60.91%         $77,083.33     $5,395,833.33        $35,520.00        $238,097.77       $5,633,931.10
     52      1/1/06           59.71%         $77,083.33     $5,318,750.00        $17,760.00        $204,165.08       $5,522,915.08
     53      2/1/06           58.70%         $77,083.33     $5,241,666.67        $17,760.00        $187,766.19       $5,429,432.85
     54      3/1/06           57.68%         $77,083.33     $5,164,583.33        $17,760.00        $171,257.96       $5,335,841.29
     55      4/1/06           56.67%         $77,083.33     $5,087,500.00        $17,760.00        $154,639.68       $5,242,139.68
     56      5/1/06           55.66%         $77,083.33     $5,010,416.67        $17,760.00        $137,910.61       $5,148,327.28
     57      6/1/06           54.64%         $77,083.33     $4,933,333.33        $17,760.00        $121,070.01       $5,054,403.35
     58      7/1/06           53.63%         $77,083.33     $4,856,250.00        $17,760.00        $104,117.15       $4,960,367.15
     59      8/1/06           52.61%         $77,083.33     $4,779,166.67        $17,760.00         $87,051.26       $4,866,217.93
     60      9/1/06           51.59%         $77,083.33     $4,702,083.33        $17,760.00         $69,871.60       $4,771,954.94
     61     10/1/06           50.57%         $77,083.33     $4,625,000.00        $17,760.00         $52,577.42       $4,677,577.42
     62     11/1/06           49.55%         $77,083.33     $4,547,916.67        $17,760.00         $35,167.93       $4,583,084.60
     63     12/1/06           48.52%         $77,083.33     $4,470,833.33        $17,760.00         $17,642.38       $4,488,475.72
     64      1/1/07           47.50%         $77,083.33     $4,393,750.00                                            $4,393,750.00
     65      2/1/07           46.67%         $77,083.33     $4,316,666.67                                            $4,316,666.67
     66      3/1/07           45.83%         $77,083.33     $4,239,583.33                                            $4,239,583.33
     67      4/1/07           45.00%         $77,083.33     $4,162,500.00                                            $4,162,500.00
     68      5/1/07           44.17%         $77,083.33     $4,085,416.67                                            $4,085,416.67
     69      6/1/07           43.33%         $77,083.33     $4,008,333.33                                            $4,008,333.33
     70      7/1/07           42.50%         $77,083.33     $3,931,250.00                                            $3,931,250.00
     71      8/1/07           41.67%         $77,083.33     $3,854,166.67                                            $3,854,166.67
     72      9/1/07           40.83%         $77,083.33     $3,777,083.33                                            $3,777,083.33
     73     10/1/07           40.00%         $77,083.33     $3,700,000.00                                            $3,700,000.00
     74     11/1/07           39.17%         $77,083.33     $3,622,916.67                                            $3,622,916.67
     75     12/1/07           38.33%         $77,083.33     $3,545,833.33                                            $3,545,833.33
     76      1/1/08           37.50%         $77,083.33     $3,468,750.00                                            $3,468,750.00
     77      2/1/08           36.67%         $77,083.33     $3,391,666.67                                            $3,391,666.67
     78      3/1/08           35.83%         $77,083.33     $3,314,583.33                                            $3,314,583.33
     79      4/1/08           35.00%         $77,083.33     $3,237,500.00                                            $3,237,500.00
     80      5/1/08           34.17%         $77,083.33     $3,160,416.67                                            $3,160,416.67
     81      6/1/08           33.33%         $77,083.33     $3,083,333.33                                            $3,083,333.33
</Table>


                                       23
<PAGE>

The Termination Value of the Aircraft shall be set forth opposite the applicable
rent payment, plus accrued interest to such date.

CAPITALIZED LESSOR'S COST:                      $9,250,000.00

<Table>
<Caption>
                                                (1)             (2)                (3)              (4)              (2) + (4)
                            Termination       Ten Year                           Monthly        Present Value
   Payment  Monthly         Value as a      Straight-Line    Unamortized        Depreciation   of Depreciation       Termination
   Number   Period           % of Cost      Amotization        Balance           Benefits         Benefits              Value
<S>         <C>             <C>             <C>             <C>                 <C>            <C>                 <C>
     82      7/1/08           32.50%         $77,083.33     $3,006,250.00                                            $3,006,250.00
     83      8/1/08           31.67%         $77,083.33     $2,929,166.67                                            $2,929,166.67
     84      9/1/08           30.83%         $77,083.33     $2,852,083.33                                            $2,852,083.33
     85     10/1/08           30.00%         $77,083.33     $2,775,000.00                                            $2,775,000.00
     86     11/1/08           29.17%         $77,083.33     $2,697,916.67                                            $2,697,916.67
     87     12/1/08           28.33%         $77,083.33     $2,620,833.33                                            $2,620,833.33
     88      1/1/09           27.50%         $77,083.33     $2,543,750.00                                            $2,543,750.00
     89      2/1/09           26.67%         $77,083.33     $2,466,666.67                                            $2,466,666.67
     90      3/1/09           25.83%         $77,083.33     $2,389,583.33                                            $2,389,583.33
     91      4/1/09           25.00%         $77,083.33     $2,312,500.00                                            $2,312,500.00
     92      5/1/09           24.17%         $77,083.33     $2,235,416.67                                            $2,235,416.67
     93      6/1/09           23.33%         $77,083.33     $2,158,333.33                                            $2,158,333.33
     94      7/1/09           22.50%         $77,083.33     $2,081,250.00                                            $2,081,250.00
     95      8/1/09           21.67%         $77,083.33     $2,004,166.67                                            $2,004,166.67
     96      9/1/09           20.83%         $77,083.33     $1,927,083.33                                            $1,927,083.33
     97     10/1/09           20.00%         $77,083.33     $1,850,000.00                                            $1,850,000.00
     98     11/1/09           19.17%         $77,083.33     $1,772,916.67                                            $1,772,916.67
     99     12/1/09           18.33%         $77,083.33     $1,695,833.33                                            $1,695,833.33
    100      1/1/10           17.50%         $77,083.33     $1,618,750.00                                            $1,618,750.00
    101      2/1/10           16.67%         $77,083.33     $1,541,666.67                                            $1,541,666.67
    102      3/1/10           15.83%         $77,083.33     $1,464,583.33                                            $1,464,583.33
    103      4/1/10           15.00%         $77,083.33     $1,387,500.00                                            $1,387,500.00
    104      5/1/10           14.17%         $77,083.33     $1,310,416.67                                            $1,310,416.67
    105      6/1/10           13.33%         $77,083.33     $1,233,333.33                                            $1,233,333.33
    106      7/1/10           12.50%         $77,083.33     $1,156,250.00                                            $1,156,250.00
    107      8/1/10           11.67%         $77,083.33     $1,079,166.67                                            $1,079,166.67
    108      9/1/10           10.83%         $77,083.33     $1,002,083.33                                            $1,002,083.33
    109     10/1/10           10.00%         $77,083.33       $925,000.00                                              $925,000.00
    110     11/1/10            9.17%         $77,083.33       $847,916.67                                              $847,916.67
    111     12/1/10            8.33%         $77,083.33       $770,833.33                                              $770,833.33
    112      1/1/11            7.50%         $77,083.33       $693,750.00                                              $693,750.00
    113      2/1/11            6.67%         $77,083.33       $616,666.67                                              $616,666.67
    114      3/1/11            5.83%         $77,083.33       $539,583.33                                              $539,583.33
    115      4/1/11            5.00%         $77,083.33       $462,500.00                                              $462,500.00
    116      5/1/11            4.17%         $77,083.33       $385,416.67                                              $385,416.67
    117      6/1/11            3.33%         $77,083.33       $308,333.33                                              $308,333.33
    118      7/1/11            2.50%         $77,083.33       $231,250.00                                              $231,250.00
    119      8/1/11            1.67%         $77,083.33       $154,166.67                                              $154,166.67
    120      9/1/11            0.83%         $77,083.33        $77,083.33                                               $77,083.33
</Table>


                                       24
<PAGE>

                                                                       EXHIBIT I

================================================================================
                                 $1,500,000,000

                      AMENDED AND RESTATED CREDIT AGREEMENT

                                   dated as of

                                SEPTEMBER 8, 1999

                                      among

                          WILLIAMS COMMUNICATIONS, LLC,
                                   as Borrower

                      WILLIAMS COMMUNICATIONS GROUP, INC.,
                                  as Guarantor

                            THE LENDERS PARTY HERETO,

                             BANK OF AMERICA, N.A.,
                            as Administrative Agent,

                                       and

                            THE CHASE MANHATTAN BANK,
                              as Syndication Agent

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

                            SALOMON SMITH BARNEY INC.

                                       and

                             LEHMAN BROTHERS, INC.,
                  as Joint Lead Arrangers and Joint Bookrunners
           with respect to the Incremental Facility referred to herein

                           SALOMON SMITH BARNEY INC.,

                             LEHMAN BROTHERS, INC.,

                                       and

                            MERRILL LYNCH & CO., INC.

                           as Co-Documentation Agents
================================================================================


<PAGE>


<Table>
<S>            <C>                                                                                    <C>
                                          ARTICLE 1 DEFINITIONS


SECTION 1.01.  Defined Terms.............................................................................1
SECTION 1.02.  Classification of Loans and Borrowings...................................................36
SECTION 1.03.  Terms Generally..........................................................................36
SECTION 1.04.  Accounting Terms; GAAP...................................................................37

                                          ARTICLE 2 THE CREDITS


SECTION 2.01.  Commitments..............................................................................38
SECTION 2.02.  Loans and Borrowings.....................................................................38
SECTION 2.03.  Requests for Borrowings..................................................................39
SECTION 2.04.  Swingline Loans..........................................................................40
SECTION 2.05.  Letters of Credit........................................................................42
SECTION 2.06.  Funding of Borrowings....................................................................46
SECTION 2.07.  Interest Elections.......................................................................47
SECTION 2.08.  Termination and Reduction of Commitments.................................................48
SECTION 2.09.  Repayment of Loans; Evidence of Debt.....................................................51
SECTION 2.10.  Amortization of Term Loans and Incremental Term Loans....................................52
SECTION 2.11.  Prepayment of Loans......................................................................55
SECTION 2.12.  Fees.....................................................................................57
SECTION 2.13.  Interest.................................................................................58
SECTION 2.14.  Alternate Rate of Interest...............................................................59
SECTION 2.15.  Increased Costs..........................................................................60
SECTION 2.16.  Break Funding Payments...................................................................61
SECTION 2.17.  Taxes....................................................................................62
SECTION 2.18.  Payments Generally; Pro Rata Treatment; Sharing of Set-offs..............................63
SECTION 2.19.  Mitigation Obligations; Replacement of Lenders...........................................65
SECTION 2.20.  Additional Incremental Facilities and Commitments........................................66

                                ARTICLE 3 REPRESENTATIONS AND WARRANTIES


SECTION 3.01.  Organization; Powers.....................................................................67
SECTION 3.02.  Authorization; Enforceability............................................................67
SECTION 3.03.  Governmental Approvals; No Conflicts.....................................................68
SECTION 3.04.  Financial Condition; No Material Adverse Change..........................................68
SECTION 3.05.  Properties...............................................................................69
SECTION 3.06.  Litigation and Environmental Matters.....................................................69
SECTION 3.07.  Compliance with Laws and Agreements......................................................70
SECTION 3.08.  Investment and Holding Company Status....................................................70
</Table>




                                       i
<PAGE>


<Table>
<S>            <C>                                                                                    <C>
SECTION 3.09.  Taxes....................................................................................70
SECTION 3.10.  ERISA....................................................................................70
SECTION 3.11.  Disclosure...............................................................................71
SECTION 3.12.  Subsidiaries.............................................................................71
SECTION 3.13.  Insurance................................................................................71
SECTION 3.14.  Labor Matters............................................................................71
SECTION 3.15.  Solvency.................................................................................72
SECTION 3.16.  No Burdensome Restrictions...............................................................72
SECTION 3.17.  Representations in Loan Documents True and Correct.......................................72

                                          ARTICLE 4 CONDITIONS


SECTION 4.01.  Effective Date...........................................................................72
SECTION 4.02.  Each Credit Event........................................................................72
SECTION 4.03.  First Incremental Borrowing Date with Respect to the Incremental Facility................73

                                     ARTICLE 5 AFFIRMATIVE COVENANTS


SECTION 5.01.  Financial Statements and Other Information...............................................73
SECTION 5.02.  Notices of Material Events...............................................................76
SECTION 5.03.  Existence; Conduct of Business...........................................................77
SECTION 5.04.  Payment of Obligations...................................................................77
SECTION 5.05.  Maintenance of Properties................................................................77
SECTION 5.06.   Insurance...............................................................................77
SECTION 5.07.  Casualty and Condemnation................................................................77
SECTION 5.08.  Books and Records; Inspection and Audit Rights...........................................78
SECTION 5.09.  Compliance with Laws.....................................................................78
SECTION 5.10.  Use of Proceeds and Letters of Credit....................................................78
SECTION 5.11.A Initial Collateral Date..................................................................78
SECTION 5.11.B Collateral Event.........................................................................79
SECTION 5.12.  Information Regarding Collateral.........................................................81
SECTION 5.13.  Additional Subsidiaries..................................................................82
SECTION 5.14.  Further Assurances.......................................................................83
SECTION 5.15.  Concentration Accounts...................................................................84
SECTION 5.16.  Dissolution of CNG.......................................................................84
SECTION 5.17.  Sale of Solutions and ATL................................................................84
SECTION 5.18.  Qualifying Issuances.....................................................................84

                                      ARTICLE 6 NEGATIVE COVENANTS


SECTION 6.01.  Indebtedness; Certain Equity Securities..................................................85
SECTION 6.02.  Liens....................................................................................87
</Table>


                                       ii
<PAGE>

<Table>
<S>            <C>                                                                                    <C>
SECTION 6.03.  Fundamental Changes......................................................................89
SECTION 6.04.  Investments, Loans, Advances, Guarantees and Acquisitions................................89
SECTION 6.05.  Asset Sales..............................................................................92
SECTION 6.06.  Sale and Leaseback Transactions..........................................................93
SECTION 6.07.  Restricted Payments; Certain Payments of Indebtedness....................................94
SECTION 6.08.  Limitation on Capital Expenditures.......................................................95
SECTION 6.09.  Transactions with Affiliates.............................................................96
SECTION 6.10.  Restrictive Agreements...................................................................96
SECTION 6.11.  Fiscal Year..............................................................................97
SECTION 6.12.  Change in Business.......................................................................97
SECTION 6.13.  Amendment of Material Documents..........................................................97
SECTION 6.14.  Designation of Unrestricted Subsidiaries.................................................97
SECTION 6.15.  Total Net Debt to Contributed Capital Ratio..............................................98
SECTION 6.16.  Minimum EBITDA...........................................................................98
SECTION 6.17.  Total Leverage Ratio.....................................................................98
SECTION 6.18.  Senior Leverage Ratio....................................................................99
SECTION 6.19.  Interest Coverage Ratio..................................................................99
SECTION 6.20.  Financial Covenant Non-Compliance Cure...................................................99

                                       ARTICLE 7 EVENTS OF DEFAULT


SECTION 7.01.  Events of Default.......................................................................100

                                          ARTICLE 8 THE AGENTS


SECTION 8.01.  Appointment, Powers, Immunities.........................................................103
SECTION 8.02.  Reliance by Agents......................................................................104
SECTION 8.03.  Delegation to Sub-Agents................................................................104
SECTION 8.04.  Resignation of Agents...................................................................104
SECTION 8.05.  Non-reliance on Agents or other Lenders.................................................105
SECTION 8.06.  Syndication Agent, Incremental Facility Arrangers and Co-Documentation Agents...........105

                                      ARTICLE 9 HOLDINGS GUARANTEE


SECTION 9.01.  The Guarantee...........................................................................105
SECTION 9.02.  Guarantee Unconditional.................................................................106
SECTION 9.03.  Discharge Only Upon Payment in Full; Reinstatement in Certain Circumstances.............106
SECTION 9.04.  Waiver..................................................................................107
SECTION 9.05.  Subrogation.............................................................................107
</Table>


                                       iii
<PAGE>


<Table>
<S>            <C>                                                                                    <C>
SECTION 9.06.  Stay of Acceleration....................................................................107
SECTION 9.07.  Successors and Assigns..................................................................107

                                        ARTICLE 10 MISCELLANEOUS


SECTION 10.01.  Notices................................................................................108
SECTION 10.02.  Waivers; Amendments....................................................................108
SECTION 10.03.  Expenses; Indemnity; Damage Waiver.....................................................110
SECTION 10.04.  Successors and Assigns.................................................................111
SECTION 10.05.  Survival...............................................................................115
SECTION 10.06.  Counterparts; Integration; Effectiveness...............................................115
SECTION 10.07.  Severability...........................................................................116
SECTION 10.08.  Right of Setoff........................................................................116
SECTION 10.09.  Governing Law; Jurisdiction; Consent to Service of Process.............................116
SECTION 10.10.  WAIVER OF JURY TRIAL...................................................................117
SECTION 10.11.  Headings...............................................................................117
SECTION 10.12.  Confidentiality........................................................................117
SECTION 10.13.  Interest Rate Limitation...............................................................118
</Table>





                                       iv
<PAGE>



<Table>
<S>                  <C>
SCHEDULE 2.01  -     COMMITMENTS
SCHEDULE 3.05  -     REAL PROPERTY
SCHEDULE 3.06  -     DISCLOSED MATTERS
SCHEDULE 3.12  -     SUBSIDIARIES
SCHEDULE 3.13  -     INSURANCE
SCHEDULE 6.01  -     EXISTING INDEBTEDNESS
SCHEDULE 6.02  -     EXISTING LIENS
SCHEDULE 6.04  -     EXISTING INVESTMENTS
SCHEDULE 6.09  -     EXISTING AFFILIATE AGREEMENTS
SCHEDULE 6.10  -     EXISTING RESTRICTIVE AGREEMENTS



EXHIBIT A      -     FORM OF ASSIGNMENT AND ACCEPTANCE
EXHIBIT B      -     FORM OF BORROWING REQUEST
EXHIBIT C-1    -     FORM OF OPINION OF SPECIAL COUNSEL TO
                          HOLDINGS, THE BORROWER AND THE
                          SUBSIDIARY LOAN PARTIES
EXHIBIT C-2    -     FORM OF OPINION OF THE GENERAL COUNSEL OF HOLDINGS
EXHIBIT D      -     FORM OF SUBSIDIARY GUARANTEE
EXHIBIT E      -     FORM OF REVOLVING NOTE
EXHIBIT F      -     FORM OF TERM NOTE
EXHIBIT G      -     FORM OF INTERCOMPANY NOTE
EXHIBIT H      -     FORM OF INTERCREDITOR AGREEMENT
EXHIBIT I      -     [INTENTIONALLY DELETED]
EXHIBIT J      -     FORM OF PROMISSORY NOTE
EXHIBIT K      -     FORM OF SECURITY AGREEMENT
EXHIBIT L      -     FORM OF INCREMENTAL TERM NOTE
</Table>


                                        v
<PAGE>


         AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") dated as of
September 8, 1999 among Williams Communications, LLC, a Delaware limited
liability company, Williams Communications Group, Inc., a Delaware corporation,
the LENDERS party hereto, BANK OF AMERICA, N.A., as Administrative Agent, THE
CHASE MANHATTAN BANK, as Syndication Agent, and SALOMON SMITH BARNEY INC. and
LEHMAN BROTHERS, INC., as Joint Lead Arrangers with respect to the Incremental
Facility referred to herein.

         WHEREAS, Holdings, the Borrower, the lenders party thereto, Bank of
America, N.A., as Administrative Agent, The Chase Manhattan Bank, as Syndication
Agent and Salomon Smith Barney Inc. and Lehman Brothers, Inc., as Joint Lead
Arrangers with respect to the Incremental Facility referred to herein, have
entered into an Amendment No. 5 dated as of April 12, 2001 ("Amendment No. 5")
pursuant to which such parties have agreed to amend and restate the Existing
Agreement referred to therein as set forth herein;

         NOW, THEREFORE, the parties hereto agree as follows:



                                    ARTICLE 1

                                   DEFINITIONS

         SECTION 1.1. Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:

         "ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.

         "Additional Capital" means the sum of:

                  (a) $850 million;

                  (b) the aggregate Net Proceeds received by the Borrower from
         the issuance or sale of any Qualifying Equity Interests of Holdings,
         subsequent to the Amendment No. 4 Effective Date; and

                  (c) the aggregate Net Proceeds from the issuance or sale of
         Qualifying Holdings Debt subsequent to the Amendment No. 4 Effective
         Date convertible or exchangeable into Qualifying Equity Interests of
         Holdings, in each case upon conversion or exchange thereof into
         Qualifying Equity Interests of Holdings subsequent to the Amendment No.
         4 Effective Date;


                                       1
<PAGE>


provided, however, that the Net Proceeds from the issuance or sale of Equity
Interests or Debt described in clause (b) or (c) shall be excluded from any
computation of Additional Capital to the extent (1) utilized to make a
Restricted Payment or (2) such Equity Interests or Debt shall have been issued
or sold to the Borrower, a Subsidiary of the Borrower or a Plan.

         "Additional Incremental Commitment" has the meaning assigned to such
term in Section 2.20.

         "Additional Incremental Facility" has the meaning assigned to such term
in Section 2.20.

         "Additional Incremental Facility Agreement" has the meaning assigned to
such term in Section 2.20.

         "Additional Incremental Lender" has the meaning assigned to such term
in Section 2.20.

         "Additional Incremental Loan" means an Additional Incremental Revolving
Loan or an Additional Incremental Term Loan.

         "Additional Incremental Revolving Commitment" has the meaning assigned
to such term in Section 2.20.

         "Additional Incremental Revolving Loan" has the meaning assigned to
such term in Section 2.20.

         "Additional Incremental Term Commitment" has the meaning assigned to
such term in Section 2.20.

         "Additional Incremental Term Loan" has the meaning assigned to such
term in Section 2.20.

         "Adjusted EBITDA" means, for any period of four consecutive fiscal
quarters:

                  (i) if such period is a period ending on or after June 30,
         1999 and on or before September 30, 2001,

                           (A) an amount equal to (x)(1) EBITDA for the last
                           fiscal quarter in such period plus (2) ADP Interest
                           Expense for such fiscal quarter minus (3) gain for
                           such fiscal quarter attributable to Dark Fiber and
                           Capacity Dispositions multiplied by (y) four, plus

                           (B) Dark Fiber and Capacity Proceeds for such period;
                           and


                                       2
<PAGE>


                 (ii) if such period is any other period,

                           (A) EBITDA for such period plus (y) ADP Interest
                           Expense for such period minus (z) gain for such
                           period attributable to Dark Fiber and Capacity
                           Dispositions plus

                           (B) Dark Fiber and Capacity Proceeds for such period.

         "Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.

         "Administrative Agent" means Bank of America, in its capacity as
administrative agent for the Lenders hereunder, and any successor in such
capacity.

         "Administrative Questionnaire" means an Administrative Questionnaire in
a form supplied by the Administrative Agent.

         "ADP" means the program set forth in the Operative Documents.

         "ADP Event of Default" has the meaning assigned to such term in the
Intercreditor Agreement.

         "ADP Interest Expense" means, for any period, the amount that would be
accrued for such period in respect of the Borrower's obligations under the ADP
that would constitute "interest expense" for such period if such obligations
were treated as Capital Lease Obligations.

         "ADP Obligations" means all obligations of Holdings or any Subsidiary
under the ADP.

         "ADP Outstandings" means, at any time, the amount of the Borrower's
obligations at such time in respect of the ADP that would be considered
"principal" if such obligations were treated as Capital Lease Obligations.

         "ADP Property" has the meaning assigned to the term "Property" in the
Participation Agreement.

         "Affiliate" means, with respect to a specified Person, (i) another
Person that directly, or indirectly through one or more intermediaries, Controls
(a "controlling Person"), is Controlled by or is under common Control with the
specified Person, (ii) any Person that holds, directly or indirectly, 10% or
more of the Equity Interests of the specified Person and (iii) any Person 10% or
more of the Equity Interests of which are held directly or indirectly by the
specified Person or a controlling Person.



                                       3
<PAGE>


         "Agents" means, collectively, the Administrative Agent, the Syndication
Agent and each Co-Documentation Agent.

         "Alternate Base Rate" means, for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.

         "Amendment No. 4 Effective Date" means March 19, 2001.

         "Amendment No. 5" has the meaning set forth in the preamble.

         "Amendment No. 5 Effective Date" means the date of effectiveness of
Amendment No. 5.

         "Applicable Margin" means, for any day, (a) with respect to any Term
Loan or Revolving Loan, (i) the applicable rate per annum set forth below under
the caption "Eurodollar Spread" or "ABR Spread", as the case may be, based upon
the ratings by S&P and Moody's, respectively, applicable on such date to the
Facilities plus (ii) the applicable rate per annum set forth below under the
caption "Leverage Premium", unless the Total Leverage Ratio, as determined by
reference to the financial statements delivered to the Administrative Agent in
respect of the most recently ended fiscal quarter of the Borrower, is less than
6:00 to 1:00:

         (b) with respect to any Incremental Tranche A Loan, (i) the applicable
rate per annum set forth below under the caption "Eurodollar Spread" or "ABR
Spread", as the case may be, based upon the ratings by S&P and Moody's,
respectively, applicable on such date to the Facilities plus (ii) the applicable
rate per annum set forth below under the caption "Leverage Premium", unless the
Total Leverage Ratio, as determined by reference to the financial statements
delivered to the Administrative Agent in respect of the most recently ended
fiscal quarter of the Borrower, is less than 6:00 to 1:00:

<Table>
<Caption>
                   FACILITIES           EURODOLLAR             ABR                 LEVERAGE
                     RATING               SPREAD              SPREAD               PREMIUM
                   ----------           ----------            ------               --------
<S>             <C>                     <C>                   <C>                  <C>
LEVEL I         BBB- and Baa3 or           1.50%                0.50%                0.25%
                     higher

LEVEL II           BB+ and Ba1            1.875%               0.875%                0.25%

LEVEL III          BB and Ba2              2.25%                1.25%                0.25%

LEVEL IV           BB- and Ba3             2.50%                1.50%                0.25%

LEVEL V          Lower than BB-
                or lower than Ba3          2.75%                1.75%                0.25%
</Table>


                                       4
<PAGE>


         and

         (c) with respect to any Additional Incremental Loan, the Applicable
Margin in respect thereof set forth in the applicable Additional Incremental
Facility Agreement.

         For purposes of the foregoing clauses (a) and (b), (i) if neither S&P
nor Moody's shall have in effect a rating for the Facilities (other than by
reason of the circumstances referred to in the last sentence of this
definition), then the Applicable Margin shall be the rate set forth in Level V,
(ii) if either S&P or Moody's, but not both S&P and Moody's, shall have in
effect a rating for the Facilities, then the Applicable Margin shall be based on
such rating, (iii) if the ratings established by S&P and Moody's for the
Facilities shall fall within different Levels, then the Applicable Margin shall
be based on the lower of the two ratings, (iv) if the ratings established by S&P
and Moody's for the Facilities shall fall within the same Level, then the
Applicable Margin shall be based on that Level and (v) if the ratings
established by S&P and Moody's for the Facilities shall be changed (other than
as a result of a change in the rating system of S&P or Moody's), such change
shall be effective as of the date on which it is first announced by the
applicable rating agency. Each change in the Applicable Margin shall apply
(other than with respect to the Leverage Premium or as described in the
immediately succeeding sentence or the immediately succeeding paragraph) during
the period commencing on the effective date of such change and ending on the
date immediately preceding the effective date of the next such change. If the
rating system of S&P or Moody's shall change, or if either such rating agency
shall cease to be in the business of rating corporate debt obligations, the
Borrower and the Lenders shall negotiate in good faith to amend this definition
to reflect such changed rating system or the unavailability of ratings from such
rating agency and, pending the effectiveness of any such amendment, the
Applicable Margin shall be determined by reference to the rating most recently
in effect prior to such change or cessation. Any such amendment shall be subject
to the provisions of Section 10.02(b).

         If the Borrower shall enter into any Additional Incremental Facility
Agreement, the Borrower, the Incremental Facility Arrangers and the
Administrative Agent, on behalf of the then current Lenders, shall evaluate in
good faith at such time whether to amend this definition of Applicable Margin
with respect to the Term Loans, the Revolving Loans and the Incremental Tranche
A Term Loans. Any such amendment shall be subject to the provisions of Section
10.02(b).

         "Applicable Percentage" means, with respect to any Revolving Lender,
the percentage of the total Revolving Commitments represented by such Lender's
Revolving Commitment. If the Revolving Commitments have terminated or expired,
the Applicable Percentages shall be determined based upon the Revolving
Commitments most recently in effect, giving effect to any assignments.


                                       5
<PAGE>


         "Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 10.04), and accepted by the Administrative Agent, in the
form of Exhibit A or any other form approved by the Administrative Agent.

         "ATL" means ATL-Algar Telecom Leste S.A., a Brazilian corporation.

         "Attributable Debt" means, on any date, in respect of any lease of
Holdings or any Restricted Subsidiary entered into as part of a Sale and
Leaseback Transaction subject to Section 6.06(ii), (i) if such lease is a
Capital Lease Obligation, the capitalized amount thereof that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP,
and (ii) if such lease is not a Capital Lease Obligation, the capitalized amount
of the remaining lease payments under such lease that would appear on a balance
sheet of such Person prepared as of such date in accordance with GAAP if such
lease were accounted for as a Capital Lease Obligation.

         "Bank of America" means Bank of America, N.A.

         "Board" means the Board of Governors of the Federal Reserve System of
the United States of America.

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

         "Borrowing" means (a) Loans of the same Class and Type, made, converted
or continued on the same date and, in the case of Eurodollar Loans, as to which
a single Interest Period is in effect, or (b) a Swingline Loan.

         "Borrowing Request" means a request by the Borrower for a Borrowing in
accordance with Section 2.03.

         "Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York, New York or Dallas, Texas are
authorized or required by law to remain closed; provided that, when used in
connection with a Eurodollar Loan, the term "Business Day" shall also exclude
any day on which banks are not open for dealings in dollar deposits in the
London interbank market.

         "Capital Expenditures" means, for any period, the additions to
property, plant and equipment and other capital expenditures of Holdings and the
Restricted Subsidiaries that are (or would be) set forth in a consolidated
statement of cash flows of Holdings and the Restricted Subsidiaries for such
period prepared in accordance with GAAP, other than any such capital
expenditures that constitute Investments permitted under Section 6.04 (other
than Section 6.04(i)); provided that any use during such period of the proceeds
of any such Investment made by the recipient thereof for additions to property,
plant and equipment and other capital expenditures, as described in this
definition, shall (unless


                                       6
<PAGE>

such use shall, itself, constitute an Investment permitted under Section 6.04
(other than Section 6.04(i)) constitute "Capital Expenditures".

         "Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.

         "Cash Equivalent Investments" means:

                   (1) Government Securities maturing, or subject to tender at
         the option of the holder thereof, within two years after the date of
         acquisition thereof;

                   (2) time deposits and certificates of deposit of (a) any
         commercial bank organized in the United States having capital and
         surplus in excess of $500,000,000 or (b) any branch located in the
         United States of any commercial bank organized under the law of any
         other country that is a member of the Organization for Economic
         Cooperation and Development having total assets in excess of
         $500,000,000, or its foreign currency equivalent at the time, in either
         case with a maturity date not more than one year from the date of
         acquisition;

                   (3) repurchase obligations with a term of not more than 30
         days for underlying securities of the types described in clause (1)
         above entered into with (a) any bank meeting the qualifications
         specified in clause (2) above or (b) any primary government securities
         dealer reporting to the Market Reports Division of the Federal Reserve
         Bank of New York;

                   (4) direct obligations issued by any state of the United
         States or any political subdivision of any such state or any public
         instrumentality thereof maturing, or subject to tender at the option of
         the holder of such obligation, within one year after the date of
         acquisition thereof; provided that, at the time of acquisition, the
         long-term debt of such state, political subdivision or public
         instrumentality has a rating of A, or higher, from S&P or A-2 or higher
         from Moody's or, if at any time neither S&P nor Moody's shaft be rating
         such obligations, then an equivalent rating from such other nationally
         recognized rating service as is acceptable to the Administrative Agent;

                   (5) commercial paper issued by the parent corporation of (a)
         any commercial bank organized in the United States having capital and
         surplus in excess of $500,000,000 or (b) any branch located in the
         United States of any commercial bank organized under the laws of any
         other country that is a member of the Organization for Economic
         Cooperation and Development having total


                                       7
<PAGE>


         assets in excess of $500,000,000, or its foreign currency equivalent at
         the time, and money market instruments and commercial paper issued by
         others having one of the three highest ratings obtainable from either
         S&P or Moody's, or, if at any time neither S&P nor Moody's shall be
         rating such obligations, then from such other nationally recognized
         rating service as is acceptable to the Administrative Agent and in each
         case maturing within one year after the date of acquisition;

                   (6) overnight bank deposits and bankers' acceptances at (a)
         any commercial bank organized in the United States having capital and
         surplus in excess of $500,000,000 or (b) any branch located in the
         United States of any commercial bank organized under the laws of any
         other country that is a member of the Organization for Economic
         Cooperation and Development having total assets in excess of
         $500,000,000 or its foreign currency equivalent at the time;

                   (7) deposits available for withdrawal on demand with (a) a
         commercial bank organized in the United States having capital and
         surplus in excess of $500,000,000 or (b) any branch located in the
         United States of any commercial bank organized under the laws of any
         other country that is a member of the Organization for Economic
         Cooperation and Development having total assets in excess of
         $500,000,000 or its foreign currency equivalent at the time; and

                   (8) investments in money market funds substantially all of
         whose assets comprise securities of the types described in clauses (1)
         through (7).

         "Change in Control" means:

         (a) the acquisition of ownership, directly or indirectly, beneficially
or of record, by any Person other than Holdings of any shares of capital stock
of the Borrower;

         (b) the acquisition of ownership, directly or indirectly, beneficially
or of record, by any Person or group (within the meaning of Section 13(d) or
14(d) of the Exchange Act and the rules of the Commission thereunder as in
effect on the date hereof) other than the Parent and its subsidiaries, of shares
representing more than 35% of either (i) the aggregate ordinary voting power
represented by the issued and outstanding Voting Stock of Holdings or (ii) the
issued and outstanding capital stock of Holdings;

         (c) other than as a result of the consummation of the Spin-Off, the
failure of the Parent and its subsidiaries to own, directly or indirectly, (i)
more than 75% (or, if (x) the Facilities are rated at least BBB- by S&P and Baa3
by Moody's and (y) the Parent shall have been released from its obligations
under the Parent Guarantee, 35%) of the aggregate ordinary voting power
represented by the issued and outstanding Voting Stock of Holdings or (ii) more
than 65% (or, if (x) the Facilities are rated at least BBB- by S&P and Baa3 by
Moody's and (y) the Parent shall have been released from its obligations under
the Parent Guarantee, 35%) of the issued and outstanding capital stock of
Holdings;


                                       8
<PAGE>


         (d) occupation of a majority of the seats (other than vacant seats) on
the board of directors of Holdings by Persons who were neither (i) nominated by
the board of directors of Holdings nor (ii) appointed by directors so nominated;
or

         (e) the acquisition of direct or indirect Control of Holdings by any
Person or group (other than, prior to the consummation of the Spin-Off, the
Parent).

         "Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender, any Swingline
Lender or any Issuing Bank (or, for purposes of Section 2.15(b), by any lending
office of such Lender, Swingline Lender or Issuing Bank or by such Lender's,
Swingline Lender's or Issuing Bank's holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.

         "Chase" means The Chase Manhattan Bank.

         "Class" means, when used in reference to any Loan or Borrowing, to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans,
Term Loans, Swingline Loans, Incremental Term Loans or Additional Incremental
Loans and, when used in reference to any Commitment or Facility, refers to
whether such Commitment or Facility is a Revolving Commitment or Facility, a
Term Commitment or Facility, an Incremental Commitment or Facility or an
Additional Incremental Commitment or Facility. The Additional Incremental Loans,
Borrowings thereof and Additional Incremental Commitments under each Additional
Incremental Facility shall constitute a separate Class from the Additional
Incremental Loans, Borrowings thereof and Additional Incremental Commitments
under each other Additional Incremental Facility, and if an Additional
Incremental Facility includes Additional Incremental Revolving Commitments and
Additional Incremental Term Commitments, such Additional Incremental Revolving
Commitments and Additional Incremental Term Commitments and the Additional
Incremental Revolving Loans and Borrowings thereof and the Additional
Incremental Term Loans and Borrowings thereof, respectively, thereunder shall
constitute separate Classes.

         "CNG" means CNG Computer Networking Group, Inc., a Delaware
corporation, and its successors and assigns.

         "Co-Documentation Agent" means each of Salomon Smith Barney Inc.,
Lehman Brothers, Inc. and Merrill Lynch & Co., Inc., in each case in its
capacity as a co-documentation agent hereunder.


                                       9
<PAGE>


         "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

         "Collateral" means any and all "Collateral", as defined in any
applicable Collateral Document.

         "Collateral Documents" means the Security Agreement and all security
agreements, pledge agreements, mortgages and other security agreements or
instruments or documents executed and delivered pursuant to Section 5.11B, 5.13
or 5.14.

         "Collateral Establishment Date" has the meaning assigned to such term
in Section 5.11B.

         "Collateral Event" means the failure of the Facilities to be rated at
least (i) BB- by S&P and (ii) Ba3 by Moody's.

         "Collateral Notice" has the meaning assigned to such term in Section
5.11B.

         "Collateral Release Event" means the occurrence, after the occurrence
of a Collateral Event, of the earlier to occur of (i) the termination of the
Commitments, the payment in full of all obligations under the Loan Documents and
the expiration or termination of all Letters of Credit and (ii) the rating of
the Facilities by S&P of BB+ or greater and by Moody's of Ba1 or greater, in
each case after giving effect to the release of all Collateral.

         "Commission" means the United States Securities and Exchange
Commission.

         "Commitment" means a Revolving Commitment, a Term Commitment, an
Incremental Commitment, an Additional Incremental Commitment or any combination
thereof (as the context requires).

         "Commitment Fee Rate" means, (a) with respect to the Revolving
Commitments and the Term Commitments, a rate per annum equal to (x) 1.00% for
each day on which Usage is less than 33.3%, (y) 0.75% for each day on which
Usage is equal to or greater than 33.3% but less than 66.6% and (z) 0.50% for
each day on which Usage is equal to or greater than 66.6% and (b) with respect
to the Incremental Tranche A Commitments, 0.75% for each day. For purposes of
the foregoing, "Usage" means, on any date, the percentage obtained by dividing
(i) in the case of Revolving Commitments, (a) the aggregate Revolving Exposure
on such date less the aggregate principal amount of all Swingline Loans
outstanding on such date by (b) the aggregate outstanding Revolving Commitments
on such date and (ii) in the case of Term Commitments, (a) the aggregate
principal amount of all Term Loans outstanding on such date by (b) the sum of
the aggregate principal amount of all Term Loans outstanding on such date and
the aggregate unused Term Commitments on such date.

         "Commitment Fees" has the meaning assigned to such term in Section
2.12.


                                       10
<PAGE>


         "Consolidated Net Income" means, for any period, the net income or loss
of Holdings and the Restricted Subsidiaries (exclusive of the portion of net
income allocable to Persons that are not Restricted Subsidiaries, except to the
extent such amounts are received in cash by the Borrower or a Restricted
Subsidiary) for such period.

         "Consolidated Assets" means, at any date, the consolidated assets of
Holdings and the Restricted Subsidiaries.

         "Contributed Capital" means, at any date, (i) Total Net Debt at such
date plus (ii) without duplication, all cash proceeds received by Holdings on or
prior to such date from contributions to the capital, or purchases of common
equity securities, of Holdings, including, without limitation, the proceeds of
the Equity Issuance, and all other capital contributions made by the Parent and
its subsidiaries (other than Holdings and its Subsidiaries) to Holdings, but
only to the extent that proceeds of any of the foregoing are contributed by
Holdings to the Borrower.

         "Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have correlative meanings.

         "Dark Fiber and Capacity Proceeds" means, for any period, cash proceeds
received by Holdings and the Restricted Subsidiaries in respect of Dark Fiber
and Capacity Dispositions during such period.

         "Dark Fiber and Capacity Disposition" means a lease, sale, conveyance
or other disposition of fiber optic cable or capacity for a period constituting
all or substantially all of the expected useful life of either the fiber optic
cable (in the case of Dark Fiber Disposition) or optronic equipment generating
the capacity (in the case of Capacity Disposition) thereof.

         "Deemed Subsidiary Investment" has the meaning assigned to such term in
Section 6.14.

         "Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.

         "Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.

         "Disqualified Stock" of any Person means any Equity Interest of such
Person which, by its terms, or by the terms of any security into which it is
convertible or for which it is exchangeable, or upon the happening of any event,
matures or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the


                                       11
<PAGE>


option of the holder thereof, in whole or in part, on or prior to the first
anniversary of the Term Maturity Date.

         "dollars" or "$" refers to lawful money of the United States of
America.

         "EBITDA" means, for any period,

                  (i) Consolidated Net Income for such period,

         plus,

                  (ii) to the extent deducted in determining Consolidated Net
         Income, the sum, without duplication, of (w) interest expense, (x)
         income tax expense, (y) depreciation and amortization expense and (z)
         non-cash extraordinary or non-recurring charges (if any), in each case
         recognized in such period;

         minus,

                  (iii) to the extent included in Consolidated Net Income for
         such period, extraordinary or non-recurring gains (if any), in each
         case recognized in such period.

         "Effective Date" means September 8, 1999.

         "Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material, the health effects of Hazardous Materials or safety matters.

         "Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of Holdings or any Restricted Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.

         "Equity Interests" means shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person.


                                       12
<PAGE>


         "Equity Issuance" means the issuance and sale by Holdings of its common
stock (x) in an initial public offering or (y) to certain strategic investors
other than the Parent or any of its subsidiaries or Affiliates.

         "Equity Issuance Registration Statement" means Amendment No. 7 to the
Registration Statement on Form S-1 with respect to the Equity Issuance filed by
Holdings with the Commission on September 2, 1999.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

         "ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.

         "ERISA Event" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.

         "Eurodollar", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.

         "Event of Default" has the meaning assigned to such term in Article 7.

         "Excess Cash Flow" means, for any fiscal period, the sum (without
duplication) of:


                                       13
<PAGE>


                  (a) the Consolidated Net Income (or loss) of Holdings and the
         Restricted Subsidiaries for such period, adjusted to exclude any gains
         or losses attributable to Prepayment Events; plus

                  (b) depreciation, amortization, non-cash interest expense and
         other non-cash charges or losses deducted in determining Consolidated
         Net Income (or loss) for such period; plus

                  (c) the sum of (i) the amount, if any, by which Net Working
         Capital decreased during such period plus (ii) the amount, if any, by
         which the consolidated deferred revenues of Holdings and the Restricted
         Subsidiaries increased during such period plus (iii) the aggregate
         principal amount of Capital Lease Obligations and other Indebtedness
         incurred during such period to finance Capital Expenditures, to the
         extent that mandatory principal payments in respect of such
         Indebtedness would not be excluded from clause (f) below when made;
         minus

                  (d) the sum of (i) any non-cash gains included in determining
         Consolidated Net Income (or loss) for such period plus (ii) the amount,
         if any, by which Net Working Capital increased during such period plus
         (iii) the amount, if any, by which the consolidated deferred revenues
         of Holdings and the Restricted Subsidiaries decreased during such
         period; minus

                  (e) Capital Expenditures for such period; minus

                  (f) the aggregate principal amount of long-term Indebtedness
         (including pursuant to Capital Lease Obligations) repaid or prepaid by
         Holdings and the Restricted Subsidiaries during such period, excluding
         (i) Indebtedness in respect of Revolving Loans, Incremental Revolving
         Loans, Additional Incremental Revolving Loans and Letters of Credit,
         (ii) Term Loans, Incremental Term Loans and Additional Incremental Term
         Loans prepaid pursuant to Section 2.11(b) or (c), (iii) repayments or
         prepayments of Indebtedness financed by incurring other Indebtedness,
         to the extent that mandatory principal payments in respect of such
         other Indebtedness would not be excluded from this clause (f) when made
         and (iv) Indebtedness referred to in Sections 6.01(d), 6.01(f),
         6.01(g), 6.01(i), 6.01(j), 6.01(k) and 6.01(o).

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "Excluded Taxes" means, with respect to the Administrative Agent, any
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is a
resident or is organized or in which its principal


                                       14
<PAGE>


office is located or, in the case of any Lender, in which its applicable lending
office is located, (b) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction described in clause
(a) above and (c) in the case of a Foreign Lender (other than an assignee
pursuant to a request by the Borrower under Section 2.19(b)) or any Participant
that would be a Foreign Lender if it were a Lender, any withholding tax that (i)
is imposed on or with respect to amounts payable to such Foreign Lender or
Participant at the time such Foreign Lender becomes a party to this Agreement
(or designates a new lending office) or such Participant become a Participant,
except to the extent that such Foreign Lender (or its assignor, if any) or
Participant was entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts from the Borrower with respect to
such withholding tax pursuant to Section 2.17(a) or (ii) is attributable to such
Foreign Lender or Participant's failure to comply with Section 2.17(e).

         "Existing International Joint Ventures" means ATL, PowerTel Limited and
Telefonica Manquehue, S.A.

         "Facilities" means the Term Facility, the Revolving Facility, the
Incremental Facility and each Additional Incremental Facility.

         "Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.

         "Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of Holdings or the Borrower, as the
case may be.

         "First Incremental Borrowing Date" means the date on which the first
Borrowing under the Incremental Facility is made in accordance with Section
4.03.

         "Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.

         "Foreign Subsidiary" means any Subsidiary that is organized under the
laws of a jurisdiction other than the United States of America or any State
thereof or the District of Columbia, other than a Subsidiary that is (whether as
a matter of law, pursuant to an election by such Subsidiary or otherwise)
treated as a partnership in which any Subsidiary


                                       15
<PAGE>


that is not a Foreign Subsidiary is a partner or as a branch of any Subsidiary
that is not a Foreign Subsidiary for United States income tax purposes.

         "GAAP" means generally accepted accounting principles in the United
States of America.

         "Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.

         "Government Securities" means direct obligations of, or obligations
fully and unconditionally guaranteed or insured by, the United States of America
or any agency or instrumentality thereof for the payment of which obligations or
guarantee the full faith and credit of the United States is pledged and which
are not callable or redeemable at the issuer's option; provided that, for
purposes of the definition of "Cash Equivalents Investments" only, such
obligations shall not constitute Government Securities if they are redeemable or
callable at a price less than the purchase price paid by the Borrower or the
applicable other Restricted Subsidiary, together with all accrued and unpaid
interest, if any, on such Government Securities.

         "Granting Lender" has the meaning set forth in Section 10.04(b)(2).

         "Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.

         "Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of


                                       16
<PAGE>


any nature regulated pursuant to any Environmental Law as hazardous, toxic, a
pollutant or a contaminant.

         "Hedge Counterparty" means each Lender that is, and each affiliate of
any Lender that is, a counterparty under a Hedging Agreement entered into with
the Borrower or any other Restricted Subsidiary.

         "Hedging Agreement" means any interest rate protection agreement,
commodity price protection agreement or other interest or currency exchange rate
or commodity price hedging arrangement.

         "High Yield Notes" means the notes issued by Holdings (i) the terms of
which either (A) are substantially similar to the terms set forth in the Notes
Offering Registration Statement or (B) are otherwise approved by the
Administrative Agent and the Syndication Agent after consultation with the
Required Banks and (ii) no part of the principal of which is required to be paid
(upon maturity or by mandatory sinking fund, mandatory redemption, mandatory
prepayment or otherwise) prior to the date that is one year after the Term
Maturity Date.

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

         "Incremental Commitments" means the Incremental Tranche A Commitments.

         "Incremental Facility" means the Incremental Tranche A Facility.

         "Incremental Facility Arrangers" means Salomon Smith Barney Inc. and
Lehman Brothers, Inc., in their respective capacities as joint lead arrangers of
the Incremental Facility.

         "Incremental Lenders" means the Incremental Tranche A Lenders.

         "Incremental Term Loans" means the Incremental Tranche A Term Loans.

         "Incremental Tranche A Amortization Date" means December 31, 2002.

         "Incremental Tranche A Commitments" means with respect to each
Incremental Tranche A Lender, the commitment, if any, of such Lender to make
Incremental Tranche A Term Loans hereunder during the Incremental Tranche A Term
Loan Availability Period, expressed as an amount representing the maximum
principal amount of the Incremental Tranche A Term Loans to be made by such
Lender hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 10.04. The initial
amount of each Lender's Incremental Tranche A Term Commitment is set forth on
Schedule 2.01(b), or in the Assignment and Acceptance


                                       17
<PAGE>


pursuant to which such Lender shall have assumed its Incremental Tranche A Term
Commitment, as applicable. The initial aggregate amount of the Incremental
Tranche A Lenders' Incremental Tranche A Term Commitments is $450,000,000.

         "Incremental Tranche A Commitment Termination Date" means the date that
is the earlier of (i) 180 days after the Amendment No. 5 Effective Date and (ii)
the date of termination of the Incremental Tranche A Commitments.

         "Incremental Tranche A Facility" means the Incremental Tranche A
Commitments and the Incremental Tranche A Term Loans hereunder.

         "Incremental Tranche A Lenders" means a Lender with an Incremental
Tranche A Commitment or an outstanding Incremental Tranche A Term Loan.

         "Incremental Tranche A Maturity Date" means September 8, 2006.

         "Incremental Tranche A Term Loan" means a Loan made pursuant to Section
2.01(b)(i).

         "Incremental Tranche A Term Loan Availability Period" means the period
from and including the First Incremental Borrowing Date to but excluding the
earlier of (i) the Incremental Tranche A Commitment Termination Date and (ii)
the date of termination of the Incremental Tranche A Commitments.

         "Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
under conditional sale or other title retention agreements relating to property
acquired by such Person, (d) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding (i) current accounts
payable incurred in the ordinary course of business and (ii) payment obligations
of such Person to the owner of assets used in a Telecommunications Business for
the use thereof pursuant to a lease or other similar arrangement with respect to
such assets or a portion thereof entered into in the ordinary course of
business), (e) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on property owned or acquired by such Person, whether or not the
Indebtedness secured thereby has been assumed, (f) all Guarantees by such Person
of Indebtedness of others, (g) all (x) Capital Lease Obligations of such Person
(provided that Capital Lease Obligations in respect of fiber optic cable
capacity arising in connection with exchanges of such capacity shall constitute
Indebtedness only to the extent of the amount of such Person's liability in
respect thereof net (but not less than zero) of such Person's right to receive
payments obtained in exchange therefor) and (y) ADP Outstandings, if any, of
such Person, (h) all obligations, contingent or otherwise, of such Person as an
account party in respect of letters of credit and letters of guaranty, (i) all
obligations, contingent or otherwise, of such


                                       18
<PAGE>


Person in respect of bankers' acceptances, (j) any Disqualified Stock and (k)
all obligations under any Hedging Agreements or Permitted Specified Security
Hedging Transactions. The Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result
of such Person's ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such Person is
not liable therefor. Indebtedness of the Borrower and the other Subsidiaries
shall exclude any Indebtedness of Holdings that would otherwise constitute
Indebtedness of the Borrower or any such Subsidiary only under clause (e) above
and solely by virtue of a Lien created under the Loan Documents in accordance
with Section 5.11B(d), and Indebtedness of Holdings and the Subsidiaries shall
exclude any Indebtedness of the Parent that would otherwise constitute
Indebtedness of Holdings or any Subsidiary only under clause (e) above and
solely by virtue of a Lien created under the Loan Documents in accordance with
Section 5.11B(d).

         "Indemnified Taxes" means Taxes other than Excluded Taxes.

         "Information Memorandum" means the Confidential Information Memorandum
dated August 1999 relating to the Parent, Holdings, the Borrower and the
Transactions.

         "Initial Collateral Date" means the first date on which the Parent
ceases to own at least a majority of the outstanding securities having ordinary
voting power of Holdings, whether as a result of the consummation of the
Spin-Off or otherwise.

         "Intercreditor Agreement" means the Intercreditor Agreement,
substantially in the form of Exhibit H hereto, among the Lenders, the Parent,
Holdings and the Borrower.

         "Interest Coverage Ratio" means, at any date, the ratio of (i) the
amount equal to (A) EBITDA plus (B) ADP Interest Expense minus (C) gains
attributable to Dark Fiber and Capacity Dispositions plus (D) Dark Fiber and
Capacity Proceeds to (ii) Interest Expense, in each case for the period of four
consecutive fiscal quarters most recently ended on or prior to such date.

         "Interest Election Request" means a request by the Borrower to convert
or continue a Revolving Borrowing or Term Borrowing in accordance with Section
2.07.

         "Interest Expense" means, for any period, the cash interest expense of
Holdings and the Restricted Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP plus ADP Interest Expense for such
period, net of interest income for such period.

         "Interest Payment Date" means (a) with respect to any ABR Loan (other
than a Swingline Loan), the last day of each March, June, September and
December, (b) with respect to any Eurodollar Loan, the last day of the Interest
Period applicable to the Borrowing of which such Loan is a part and, in the case
of a Eurodollar Borrowing with


                                       19
<PAGE>


an Interest Period of more than three months' duration, each day prior to the
last day of such Interest Period that occurs at intervals of three months'
duration after the first day of such Interest Period, and (c) with respect to
any Swingline Loan, the day that such Loan is required to be repaid.

         "Interest Period" means with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three, or six months
(or if corresponding funding is available to each Lender of the applicable
Class, twelve months) thereafter, as the Borrower may elect; provided, that (i)
if any Interest Period would end on a day other than a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day and
(ii) any Interest Period that commences on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
last calendar month of such Interest Period) shall end on the last Business Day
of the last calendar month of such Interest Period. For purposes hereof, the
date of a Borrowing initially shall be the date on which such Borrowing is made
and thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.

         "Issuing Bank" means each of Bank of America and Chase, each in its
capacity as an issuer of Letters of Credit hereunder, and its successors in such
capacity as provided in Section 2.05(i). Each Issuing Bank may, in its
discretion, arrange for one or more Letters of Credit to be issued by affiliates
of the Issuing Bank, in which case the term "Issuing Bank" shall include any
such affiliate with respect to Letters of Credit issued by such affiliate.

         "Investment" has the meaning assigned to such term in Section 6.04.

         "LC Disbursement" means a payment made by an Issuing Bank pursuant to a
Letter of Credit.

         "LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Revolving Lender at any
time shall be its Applicable Percentage of the total LC Exposure at such time.

         "Lenders" means the Persons listed on Schedule 2.01, any Additional
Incremental Lender that shall become a Lender pursuant to Section 2.20 and any
other Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance. Unless the context otherwise requires, the term
"Lenders" includes the Swingline Lenders and the Additional Incremental Lenders.


                                       20
<PAGE>


         "Leverage Target Date" means the first date on or after March 31, 2002
on which the Total Leverage Ratio for the fiscal quarter (or fiscal year, as the
case may be) most recently ended and with respect to which Holdings and the
Borrower shall have delivered the financial statements required to be delivered
by them with respect to such fiscal quarter (or fiscal year, as the case may be)
pursuant to Section 5.01(a) or 5.01(b) does not exceed 3.5:1.0.

         "Letter of Credit" means any letter of credit issued pursuant to this
Agreement.

         "LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate (rounded
upwards, if necessary, to the next 1/16 of 1%) at which dollar deposits of
$5,000,000 and for a maturity comparable to such Interest Period are offered by
the principal London office of the Administrative Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.

         "Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.

         "Loan Documents" means this Agreement, the Parent Guarantee, the
Subsidiary Guarantee, the Intercreditor Agreement, any Additional Incremental
Facility Agreement and the Collateral Documents (if any).

         "Loan Parties" means Holdings, the Borrower and the Subsidiary Loan
Parties.

         "Loan Party Guarantees" means the Subsidiary Guarantee.

         "Loans" means the loans made by the Lenders to the Borrower pursuant to
this Agreement.


                                       21
<PAGE>


         "Mark-to-Market Valuation" means, at any date with respect to any
Hedging Agreement or Permitted Specified Security Hedging Transaction, all net
obligations under such Hedging Agreement or Permitted Specified Security Hedging
Transaction in an amount equal to (i) if such Hedging Agreement or Permitted
Specified Security Hedging Transaction has been closed out, the termination
value thereof or (ii) if such Hedging Agreement or Permitted Specified Security
Hedging Transaction has not been closed out, the mark-to-market value thereof
determined on the basis of readily available quotations provided by any
recognized dealer in Hedging Agreements or other transactions similar to such
Hedging Agreement or Permitted Specified Security Hedging Transaction."

         "Material Adverse Change" means any event, development or circumstance
that has had or could reasonably be expected to have a Material Adverse Effect.

         "Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
Holdings and its Subsidiaries taken as a whole, (b) the ability of any Loan
Party to perform any of its obligations under any Loan Document or (c) the
rights of or benefits available to the Lenders under any Loan Document.

         "Material Indebtedness" means Indebtedness (other than the Loans and
Letters of Credit) of any one or more of Holdings and the Restricted
Subsidiaries in an aggregate principal amount exceeding $25,000,000. For
purposes of determining Material Indebtedness, the "principal amount" of the
obligations of Holdings or any Restricted Subsidiary in respect of any Hedging
Agreement or Permitted Specified Security Hedging Transaction at any time shall
be the maximum aggregate amount (giving effect to any netting agreements) that
Holdings or such Restricted Subsidiary would be required to pay if such Hedging
Agreement or Permitted Specified Security Hedging Transaction were terminated at
such time.

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

         "Mortgage" means a mortgage, deed of trust, assignment of leases and
rents, leasehold mortgage or other security document granting a Lien on any
Mortgaged Property to secure the Obligations.

         "Mortgage Establishment Date" has the meaning assigned to such term in
Section 5.11B(b).

         "Mortgaged Property" means each parcel of real property and the
improvements thereto owned by a Loan Party with respect to which a Mortgage is
granted pursuant to Section 5.11B(b).

         "Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.


                                       22
<PAGE>


         "Net Proceeds" means, with respect to any event (a) the cash proceeds
received in respect of such event including (i) any cash received in respect of
any non-cash proceeds, but only as and when received, (ii) in the case of a
casualty, insurance proceeds, and (iii) in the case of a condemnation or similar
event, condemnation awards and similar payments, net of (b) the sum of (i) all
reasonable fees and out-of-pocket expenses paid by Holdings and the Restricted
Subsidiaries to third parties (other than Affiliates) in connection with such
event, (ii) in the case of a sale or other disposition of an asset (including
pursuant to a casualty or condemnation), the amount of all payments required to
be made by Holdings and the Restricted Subsidiaries as a result of such event to
repay Indebtedness (other than Loans) secured by such asset or otherwise subject
to mandatory prepayment as a result of such event, and (iii) the amount of all
taxes paid (or reasonably estimated to be payable) by Holdings and the
Restricted Subsidiaries, and the amount of any reserves established by Holdings
and the Restricted Subsidiaries to fund contingent liabilities reasonably
estimated to be payable, in each case during the year that such event occurred
or the next succeeding year and that are directly attributable to such event (as
determined reasonably and in good faith by the chief financial officer of
Holdings).

         "Net Working Capital" means, at any date, (a) the consolidated current
assets of Holdings and the Restricted Subsidiaries as of such date (excluding
cash and Cash Equivalent Investments) minus (b) the consolidated current
liabilities of Holdings and the Restricted Subsidiaries as of such date
(excluding current liabilities in respect of Indebtedness). Net Working Capital
at any date may be a positive or negative number. Net Working Capital increases
when it becomes more positive or less negative and decreases when it becomes
less positive or more negative.

         "Notes Offering" means the public offering and sale of the High Yield
Notes.

         "Notes Offering Registration Statement" means Amendment No. 6 to the
Registration Statement on Form S-1 with respect to the Notes Offering filed by
Holdings with the Commission on September 2, 1999.

         "Obligations" means (i) obligations under the Loan Documents, including
(x) all principal of and interest (including, without limitation, Post-Petition
Interest) on any Loan under, or any Note issued pursuant to, or any
reimbursement obligation under any Letter of Credit under, the Credit Agreement
and (y) all other amounts payable under the Loan Documents and (ii) obligations
of any Loan Party under any Hedging Agreement with any Lender or any affiliate
of any Lender, including, without limitation, a conditional obligation to make a
future payment under an outstanding Hedging Agreement.

         "Operative Documents" has the meaning set forth in the Participation
Agreement.

         "Other Financing Documents" means all agreements, instruments and other
documents entered into or related to the Equity Issuance and the Notes Offering.


                                       23
<PAGE>


         "Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.

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

         "Parent Indemnity" means the Indemnification Agreement dated as of
September 1, 1999 between the Parent and Holdings.

         "Participation Agreement" means the Amended and Restated Participation
Agreement dated as of September 2, 1998, as amended from time to time, among the
Borrower, State Street Bank and Trust Company of Connecticut, National
Association, as trustee, the Noteholders and Certificate Holders named therein,
State Street Bank and Trust Company, as collateral agent, and Citibank, N.A., as
agent, and the other agents, arrangers and managing agents party thereto.

         "PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.

         "Permitted Encumbrances" means:

         (a)      Liens imposed by law for taxes that are not yet due or are
                  being contested in compliance with Section 5.04;

         (b)      carriers', warehousemen's, mechanics', materialmen's,
                  repairmen's and other like Liens imposed by law, arising in
                  the ordinary course of business and securing obligations that
                  are not overdue by more than 45 days or are being contested in
                  compliance with Section 5.04;

         (c)      pledges and deposits made in the ordinary course of business
                  in compliance with workers' compensation, unemployment
                  insurance and other social security laws or regulations;

         (d)      deposits to secure the performance of bids, trade contracts,
                  leases, statutory obligations, surety and appeal bonds,
                  performance bonds and other obligations of a like nature, in
                  each case in the ordinary course of business;

         (e)      judgment liens in respect of judgments that do not constitute
                  an Event of Default under clause (k) of Section 7.01; and

         (f)      easements, zoning restrictions, rights-of-way and similar
                  encumbrances on real property imposed by law or arising in the
                  ordinary course of business that do not secure any monetary
                  obligations and do not materially detract


                                       24
<PAGE>


                  from the value of the affected property or interfere with the
                  ordinary conduct of business of Holdings or any Restricted
                  Subsidiary;

provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.

         "Permitted Receivables Disposition" means any transfer (by way of sale,
pledge or otherwise) by the Borrower or any Restricted Subsidiary to any other
Person (including a Receivables Subsidiary) of accounts receivable and other
rights to payment (whether constituting accounts, chattel paper, instruments,
general intangibles or otherwise and including the right to payment of interest
or finance charges) and related contract and other rights and property
(including all general intangibles, collections and other proceeds relating
thereto, all security therefor (and the property subject thereto), all
guarantees and other agreements or arrangements of whatsoever character from
time to time supporting such right to payment, and all other rights, title and
interest in goods relating to a sale which gave rise to such right of payment)
in connection with a Permitted Receivables Financing.

         "Permitted Receivables Financing" means any receivables securitization
program or other type of accounts receivable financing transaction by the
Borrower or any of its Restricted Subsidiaries in an aggregate amount not to
exceed $250,000,000 on terms reasonably satisfactory to all the Incremental
Facility Arrangers (if any) and the Administrative Agent.

         "Permitted Specified Security Hedging Transactions" means options,
collars, forwards and other similar transactions (including, without limitation,
prepaid forward transactions, collar/loan transactions and other similar
transactions) with respect to any Specified Security entered into by the
Borrower or any of its Subsidiaries to monetize the value of and/or hedge
against changes in the market price of such Specified Security."

         "Permitted Telecommunications Asset Disposition" means the transfer,
conveyance, sale, lease or other disposition of an interest in or capacity on
(1) optical fiber and/or conduit and any related equipment, technology or
software used in a Segment of the Borrower's and the Restricted Subsidiaries'
communications network, other than in the ordinary course of business; provided
that after giving effect to such disposition, the Borrower and the Restricted
Subsidiaries would retain the right to use at least the minimum retained
capacity set forth below:

         (i)      with respect to any Segment constructed by, for or on behalf
                  of the Borrower or any Subsidiary or Affiliate, (x) 24 optical
                  fibers per route mile on such Segment as deployed at the time
                  of such Permitted Telecommunications Asset Disposition or (y)
                  12 optical fibers and one empty conduit per route mile on such
                  Segment as deployed at the time of such Permitted
                  Telecommunications Asset Disposition; and


                                       25
<PAGE>


         (ii)     with respect to any Segment purchased or leased from third
                  parties, the lesser of (x) 50% of the optical fibers per route
                  mile originally purchased or leased on such Segment, (y) 24
                  optical fibers per route mile on such Segment as deployed at
                  the time of such Permitted Telecommunications Asset
                  Disposition or (z) 12 optical fibers and one empty conduit per
                  route mile on such Segment as deployed at the time of such
                  Permitted Telecommunications Asset Disposition; or

(2) single strand fiber used in a Segment of the Borrower's and the Restricted
Subsidiaries' communications network, other than in the ordinary course of
business; provided that after giving effect to such disposition, the Borrower
and the Restricted Subsidiaries would not eliminate all capacity between the
endpoint cities connected by any fiber of the Borrower or its Restricted
Subsidiaries.

         "Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.

         "Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.

         "Post-Petition Interest" means any interest that accrues after the
commencement of any case, proceeding or action relating to the bankruptcy,
reorganization or insolvency of the Borrower (or would accrue but for the
operation of applicable bankruptcy, reorganization or insolvency laws), whether
or not such interest is allowed or allowable as a claim in any such case,
proceeding or other action.

         "Prepayment Event" means:

         (a)      any sale, transfer or other disposition (including pursuant to
                  a Sale and Leaseback Transaction) of any property or asset of
                  Holdings or any Restricted Subsidiary, other than Dark Fiber
                  and Capacity Dispositions and dispositions permitted under
                  clauses (a) through (d) and (f) through (i) of Section 6.05
                  and except as contemplated by Sections 5.17 and 5.18; or

         (b)      any casualty or other insured damage to, or any taking under
                  power of eminent domain or by condemnation or similar
                  proceeding of, any property or asset of Holdings or any
                  Subsidiary, but only to the extent that the Net Proceeds
                  therefrom have not been applied to repair, restore or replace
                  such property or asset or purchase similar property or assets
                  within 360 days after such event; or


                                       26
<PAGE>


         (c)      the incurrence by Holdings, the Borrower or any Subsidiary of
                  any Indebtedness, other than Indebtedness permitted under
                  Section 6.01.

         "Prepayment Portion" means in respect of any prepayment to be made
pursuant to Section 2.11(b) or 2.11(c), a fraction, the numerator of which is
the aggregate principal amount of Term Loans, Additional Incremental Term Loans
and Incremental Term Loans of any Class subject to prepayment under such Section
on account of Excess Cash Flow or the applicable type of Prepayment Event, as
the case may be (whether or not such Loans are actually to be prepaid on account
of such Prepayment Event or Excess Cash Flow), and the denominator of which is
the sum of such aggregate principal amount and the aggregate Revolving
Commitments and Additional Incremental Revolving Commitments of any Class
subject to reduction pursuant to Section 2.08(f) or (g) on account of Excess
Cash Flow or the applicable type of Prepayment Event, as the case may be
(whether or not such Commitments are actually to be reduced on account of such
Prepayment Event or Excess Cash Flow).

         "Prime Rate" means the rate of interest per annum publicly announced
from time to time by the Administrative Agent as its prime rate in effect at its
principal office in Dallas, Texas; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.

         "Projections" has the meaning set forth in Section 3.04(d).

         "Qualifying Borrower Indebtedness" means, unsecured Indebtedness of the
Borrower to Holdings that (i) does not require the payment of any principal or
cash interest prior to the first anniversary of the Term Maturity Date, (ii) is
not redeemable by, or convertible or exchangeable for securities of the Borrower
or any of its Subsidiaries that are redeemable by, the holder thereof, and not
subject to any required sinking fund or other similar payment, prior to the
first anniversary of the Term Maturity Date, (iii) is subordinated to the
Obligations pursuant to subordination provisions at least as favorable to the
holders of the Obligations as the provisions set forth in Exhibit J hereto and
(iv) includes no covenants, events of default or acceleration provisions other
than a customary bankruptcy default and acceleration provision.

         "Qualifying Equity Interest" means, with respect to Holdings or the
Borrower, Equity Interests of Holdings or the Borrower, as the case may be, that
(i) are not mandatorily redeemable or redeemable at the option of the holder
thereof, (ii) are not convertible into or exchangeable for debt securities of
Holdings or any Restricted Subsidiary, Equity Interests in any Restricted
Subsidiary or Equity Interests that are not Qualifying Equity Interests of
Holdings, (iii) are not required to be repurchased or redeemed by Holdings or
any Restricted Subsidiary and (iv) do not require the payment of cash dividends,
in each of the foregoing cases, prior to the date that is one year after the
Term Maturity Date.


                                       27
<PAGE>


         "Qualifying Holdings Debt" means unsecured debt of Holdings (other than
the High Yield Notes) (i) no part of the principal of which is required to be
paid (upon maturity or by mandatory sinking fund, mandatory redemption,
mandatory prepayment or otherwise) prior to the date that is one year after the
Term Maturity Date, (ii) the payment of the principal of and interest on which
and other payment obligations of Holdings in respect of which are subordinated
to the prior payment in full in cash of the principal of and interest (including
Post-Petition Interest) on the Loans and all other obligations under the Loan
Documents and (iii) the terms and conditions of which are reasonably
satisfactory to the Required Lenders.

         "Qualifying Issuances" means (i) any issuance of Qualifying Equity
Interests of Holdings, (ii) any issuance of unsecured Indebtedness described in
clauses (a) or (b) of the definition thereof of Holdings or the Borrower, and
(iii) any Sale and Leaseback Transaction by the Borrower or a Restricted
Subsidiary the subject property of which is the building under construction as
of the Amendment No. 4 Effective Date and adjacent to One Williams Center,
together with the parking garage adjacent thereto, or any one or more of three
corporate jets identified by the Borrower to the Lenders prior to the Amendment
No. 4 Effective Date, so long as the terms and conditions of any such
Indebtedness or Sale and Leaseback Transaction shall have been approved by all
the Incremental Facility Arrangers (if any) and the Administrative Agent prior
to the issuance thereof.

         "Receivables Subsidiary" means any wholly-owned Unrestricted Subsidiary
(regardless of the form thereof) of the Borrower formed solely for the purpose
of, and which engages in no other activities except those necessary for,
effecting Permitted Receivables Financings.

         "Reduction Portion" means, in respect of any reduction of Revolving
Commitments or Additional Incremental Revolving Commitments to be made pursuant
to Section 2.08(f) or (g), a fraction, the numerator of which is the aggregate
Revolving Commitments and Additional Incremental Revolving Commitments of any
Class subject to reduction under such Section on account of Excess Cash Flow or
the applicable type of Prepayment Event, as the case may be (whether or not such
Commitments are actually to be reduced on account of such Prepayment Event or
Excess Cash Flow), and the denominator of which is the sum of such aggregate
Commitments and the aggregate principal amount of Term Loans, Additional
Incremental Term Loans and Incremental Term Loans of any Class subject to
prepayment under Section 2.11(b) or 2.11(c) on account of Excess Cash Flow or
the applicable type of Prepayment Event, as the case may be (whether or not such
Loans are actually to be prepaid on account of such Prepayment Event or Excess
Cash Flow).

         "Register" has the meaning set forth in Section 10.04.


                                       28
<PAGE>


         "Related Parties" means, with respect to any specified Person, such
Person's affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's affiliates.

         "Reorganization" means the contribution to the Borrower by the Parent
and its subsidiaries (other than Holdings and the Subsidiaries) of its material
subsidiaries that hold interests in international communications projects (other
than Algar Telecom S.A. (formerly known as Lightel S.A.) and by Holdings of all
of its material subsidiaries (other than the Borrower and its subsidiaries), in
each case not previously held, directly or indirectly, by the Borrower.

         "Required Lenders" means, at any time, Lenders having outstanding
Revolving Exposures, Additional Incremental Revolving Loans, Term Loans,
Incremental Term Loans, Additional Incremental Term Loans and unused Commitments
representing more than 50% of the sum of the total outstanding Revolving
Exposures, Additional Incremental Revolving Loans, Term Loans, Incremental Term
Loans, Additional Incremental Term Loans and unused Commitments at such time.

         "Restricted Payment" means any dividend or other distribution (whether
in cash, securities or other property) with respect to any shares of any class
of capital stock of Holdings, the Borrower or any Subsidiary, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such shares of capital stock of
Holdings, the Borrower or any Subsidiary or any option, warrant or other right
to acquire any such shares of capital stock of Holdings, the Borrower or any
Subsidiary.

         "Restricted Subsidiary" means the Borrower and each other Subsidiary
(other than any Foreign Subsidiary) of Holdings that has not been designated as
an Unrestricted Subsidiary pursuant to and in compliance with Section 6.14. On
the Effective Date, all Subsidiaries (other than (i) each Structured Note Trust
and (ii) any Foreign Subsidiary) of Holdings are Restricted Subsidiaries.

         "Revolving Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Revolving Maturity Date and
the date of termination of the Revolving Commitments.

         "Revolving Commitment" means, with respect to each Lender, the
commitment, if any, of such Lender to make Revolving Loans and to acquire
participations in Letters of Credit and Swingline Loans hereunder, expressed as
an amount representing the maximum aggregate amount of such Lender's Revolving
Exposure hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 10.04. The amount of
each Lender's Revolving Commitment as of


                                       29
<PAGE>

the Amendment No. 5 Effective Date is set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Revolving Commitment, as applicable. The initial aggregate amount of the
Lenders' Revolving Commitments is $525,000,000.

         "Revolving Commitment Reduction Date" means September 30, 2002.


         "Revolving Exposure" means, with respect to any Lender at any time, the
sum of the outstanding principal amount of such Lender's Revolving Loans and its
LC Exposure and Swingline Exposure at such time.

         "Revolving Facility" means the Revolving Commitments and the Revolving
Loans hereunder.

         "Revolving Lender" means a Lender with a Revolving Commitment or, if
the Revolving Commitments have terminated or expired, a Lender with Revolving
Exposure.

         "Revolving Loan" means a Loan made pursuant to clause (b) of Section
2.01.

         "Revolving Maturity Date" means the sixth anniversary of the Effective
Date.

         "Sale and Leaseback Transaction" has the meaning set forth in Section
6.06.

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

         "Security Agreement" means the security agreement substantially in the
form of Exhibit K hereto among the Borrower, each Restricted Subsidiary and the
Administrative Agent entered into as of the Initial Collateral Date, as amended
from time to time.

         "Segment" means (i) with respect to the Borrower's and the other
Restricted Subsidiaries' intercity network, the through-portion of such network
between two local networks and (ii) with respect to a local network of the
Borrower and the other Restricted Subsidiaries, the entire through-portion of
such network, excluding the spurs which branch off the through-portion.

         "Senior Debt" means, at any date, without duplication, all Indebtedness
(other than Qualifying Borrower Indebtedness permitted under Section 6.01(p)) of
the Borrower and the other Restricted Subsidiaries that are subsidiaries of the
Borrower, determined on a consolidated basis at such date and the ADP
Outstandings at such date; provided that, for purposes of this definition, (i)
Indebtedness in respect of Hedging Agreements shall be equal to (A) the
aggregate net Mark-to-Market Valuation of all Hedging Agreements of the Borrower
and the Restricted Subsidiaries that are subsidiaries of the Borrower then
outstanding, to the extent that such aggregate net Mark-to-Market Valuation
constitutes a net obligation of the Borrower and such Restricted Subsidiaries
and (B) zero, if such


                                       30
<PAGE>


aggregate net Mark-to-Market Valuation does not constitute such a net obligation
and (ii) Indebtedness in respect of Permitted Specified Security Hedging
Transactions shall be equal to (A) an amount equal to the Mark-to-Market
Valuation of such Permitted Specified Security Hedging Transaction less the fair
market value of the Specified Securities and related contract rights securing
such Permitted Specified Security Hedging Transaction, if such amount is greater
than zero and (B) zero, if such amount is not greater than zero."

         "Senior Leverage Ratio" means, at any date, the ratio of (i) Senior Net
Debt at such date, to (ii) Adjusted EBITDA, for the period of four fiscal
quarters most recently ended on or prior to such date.

         "Senior Net Debt" means, at any date, Senior Debt at such date minus
the aggregate amount of all cash and Cash Equivalent Investments of the Borrower
and the other Restricted Subsidiaries that are subsidiaries of the Borrower
(excluding any cash and Cash Equivalent Investments that are blocked or
restricted so that they may not be used for general corporate purposes at such
date) in excess of $10,000,000 at such date.

         "Solutions" means Williams Communications Solutions, LLC, a Delaware
corporation, and its successors and assigns.

         "SPC" has the meaning set forth in Section 10.04(b)(2).

         "Specified Hedging Agreement" has the meaning set forth in Section
9.01.

         "Specified Indebtedness" has the meaning set forth in Section 6.07(b).

         "Specified Security" means publicly traded equity securities of actual
or prospective customers or vendors of the Borrower and its subsidiaries
acquired by the Borrower and its subsidiaries in connection with (or pursuant to
warrants, options or rights acquired in connection with) actual or prospective
commercial agreements with such customers or vendors; provided that securities
of the Borrower or any of its subsidiaries or Affiliates shall not constitute
Specified Securities.

         "Spin-Off" means the distribution by Parent to its shareholders of all
or substantially all of the capital stock of Holdings held by Parent
substantially on the terms described by the Borrower to the Lenders prior to the
Amendment No. 4 Effective Date.

         "Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such


                                       31
<PAGE>


Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency
funding and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under such Regulation D or any comparable regulation. The
Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.

         "Structured Note Bridge Indebtedness" means the Indebtedness permitted
to be incurred by Holdings pursuant to Section 6.01(t).

         "Structured Note Financing" means the issuance by the Structured Note
Trust of notes for cash Net Proceeds of up to $1,500,000,000 substantially on
the terms and conditions described by the Borrower in the "Term Sheet for
Structured Note" included as an attachment to the Borrower's Amendment Request
distributed to the Lenders on or prior to March 7, 2001 or otherwise approved by
all the Incremental Facility Arrangers (if any) and the Administrative Agent
prior to the issuance thereof.

         "Structured Note Trust" means WCG Note Trust and WCG Note Corp., Inc.,
each of which is an Unrestricted Subsidiary created for the purpose of
consummating the Structured Note Financing and conducting no activities other
than the consummation of the Structured Note Financing and activities incidental
thereto.

         "subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.

         "Subsidiary" means any subsidiary of Holdings. For purposes of the
representations and warranties made herein on the Effective Date, the term
"Subsidiary" includes each of the Borrower and the other Restricted
Subsidiaries.

         "Subsidiary Designation" has the meaning set forth in Section 6.14.

         "Subsidiary Guarantee" means the Subsidiary Guarantee, substantially in
the form of Exhibit D, made by the Subsidiary Loan Parties in favor of the
Administrative Agent for the benefit of the Lenders, and any Supplements
thereto.


                                       32
<PAGE>


         "Subsidiary Loan Party" means any Restricted Subsidiary (other than the
Borrower) that is not a Foreign Subsidiary; provided that no Receivables
Subsidiary shall be a Subsidiary Loan Party for any purpose under the Loan
Documents.

         "Swingline Exposure" means, at any time, the aggregate principal amount
of all Swingline Loans outstanding at such time. The Swingline Exposure of any
Lender at any time shall be its Applicable Percentage of the total Swingline
Exposure at such time.

         "Swingline Lenders" means Bank of America and Chase, each in its
capacity as lender of Swingline Loans hereunder.

         "Swingline Loan" means a Loan made pursuant to Section 2.04.

         "Syndication Agent" means Chase, in its capacity as syndication agent
hereunder.

         "Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.

         "Telecommunications Assets" means:

         (a)      any property (other than cash or Cash Equivalent Investments)
                  to be owned or used by the Borrower or any other Restricted
                  Subsidiary and used in the Telecommunications Business; and

         (b)      Equity Interests of a Person that becomes a Restricted
                  Subsidiary as a result of the acquisition of such Equity
                  Interests by the Borrower or any other Restricted Subsidiary
                  from any Person other than an Affiliate of Holdings or the
                  Borrower; provided that such Person is primarily engaged in
                  the Telecommunications Business.

         "Telecommunications Business" means the business of:

         (a)      transmitting, or providing services relating to the
                  transmission of, voice, video or data through owned or leased
                  transmission facilities or the right to use such facilities;

         (b)      constructing, acquiring, creating, developing, operating,
                  managing or marketing communications networks, related network
                  transmission equipment, software and other devices for use in
                  a communications business;

         (c)      computer outsourcing, data center management, computer systems
                  integration, reengineering of computer software for any
                  purpose, including, without limitation, for the purposes of
                  porting computer software from one


                                       33
<PAGE>


                  operating environment or computer platform to another or to
                  address issues commonly referred to as "Year 2000 issues";

         (d)      constructing, managing or operating fiber optic
                  telecommunications networks and leasing capacity on those
                  networks to third parties;

         (e)      the sale, resale, installation or maintenance of
                  communications systems or equipment; or

         (f)      evaluating, participating in or pursuing any other activity or
                  opportunity that is primarily related to those identified in
                  (a), (b), (c), (d) or (e) above;

provided that the determination of what constitutes a Telecommunications
Business shall be made in good faith by the Board of Directors of Holdings.

         "Term Amortization Date" means September 30, 2002.

         "Term Commitment" means, with respect to each Lender, the commitment,
if any, of such Lender to make Term Loans hereunder during the Term Loan
Availability Period, expressed as an amount representing the maximum principal
amount of the Term Loans to be made by such Lender hereunder, as such commitment
may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 10.04. The amount of each Lender's Term Commitment as of the
Amendment No. 5 Effective Date is set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Term Commitment, as applicable. The initial aggregate amount of the Lenders'
Term Commitments is $525,000,000.

         "Term Commitment Termination Date" means September 8, 2000.

         "Term Facility" means the Term Commitments and the Term Loans
hereunder.

         "Term Lender" means a Lender with a Term Commitment or an outstanding
Term Loan.

         "Term Loan" means a Loan made pursuant to Section 2.01(a)(i).

         "Term Loan Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Term Commitment Termination
Date and the date of termination of the Term Commitments.

         "Term Maturity Date" means September 30, 2006.

         "Total Debt" means, at any date, without duplication, the sum of all
Indebtedness of Holdings and the Restricted Subsidiaries, determined on a
consolidated basis at such


                                       34
<PAGE>


date, and the ADP Outstandings at such date, provided that, for purposes of this
definition, (i) Indebtedness in respect of Hedging Agreements shall be equal to
(A) the aggregate net Mark-to-Market Valuation of all Hedging Agreements of
Holdings and the Restricted Subsidiaries then outstanding, to the extent that
such aggregate net Mark-to-Market Valuation constitutes a net obligation of the
Borrower and such Restricted Subsidiaries and (B) zero, if such aggregate net
Mark-to-Market Valuation does not constitute such a net obligation and (ii)
Indebtedness in respect of Permitted Specified Security Hedging Transactions
shall be equal to (A) an amount equal to the Market-to-Market Valuation of such
Permitted Specified Security Hedging Transaction less the fair market value of
the Specified Securities and related contract rights securing such Permitted
Specified Security Hedging Transaction, if such amount is greater than zero and
(B) zero, if such amount is not greater than zero.

         "Total Leverage Ratio" means, at any date, the ratio of (i) Total Net
Debt at such date to (ii) Adjusted EBITDA for the period of four fiscal quarters
most recently ended on or prior to such date.

         "Total Net Debt" means, at any date, Total Debt at such date, minus the
aggregate amount of all cash and Cash Equivalent Investments of Holdings and the
Restricted Subsidiaries (excluding any cash and Cash Equivalent Investments that
are blocked or restricted so that they may not be used for general corporate
purposes at such date) in excess of $10,000,000 at such date.

         "Total Net Debt to Contributed Capital Ratio" means, at any date, the
ratio of (i) Total Net Debt at such date to (ii) Contributed Capital at such
date.

         "Trading Subsidiary" has the meaning assigned to such term in Section
6.03(c).

         "Transactions" means the execution, delivery and performance by each
Loan Party of the Loan Documents to which it is to be a party, the borrowing of
Loans, the use of the proceeds thereof and the issuance of Letters of Credit
hereunder.

         "Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to an Adjusted LIBO Rate or the Alternate
Base Rate.

         "Unrestricted Subsidiary" means (i) any Subsidiary (other than the
Borrower) that is designated by the Board of Directors of Holdings as an
Unrestricted Subsidiary in accordance with Section 6.14, and (ii) each
Structured Note Trust.

         "Voting Stock" means, with respect to any Person, capital stock issued
by such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, whether or not the right so to
vote has been suspended by the happening of such a contingency.


                                       35
<PAGE>


         "Weighted Average Life to Maturity" means, on any date and with respect
to the Revolving Commitments, the Term Loans, any Additional Incremental
Revolving Commitments of any Class, any Incremental Term Loans, any Additional
Incremental Term Loans of any Class or any other Indebtedness or commitments to
provide financing, an amount equal to (i) the sum, for each scheduled repayment
of Term Loans, Additional Incremental Term Loans or Incremental Term Loans of
such Class or of such Indebtedness, as the case may be, to be made after such
date, or each scheduled reduction of Revolving Commitments or Additional
Incremental Revolving Commitments of such Class or other commitments to provide
financing, as the case may be, to be made after such date, of the amount of such
scheduled repayment or reduction multiplied by the number of days from such date
to the date of such scheduled prepayment or reduction divided by (ii) the
aggregate principal amount of such Term Loans, Additional Incremental Term Loans
or Incremental Term Loans or of such Indebtedness, as the case may be, or such
Revolving Commitments or Additional Incremental Revolving Commitments or other
commitments to provide financing, as the case may be.

         "Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.

         SECTION 1.2. Classification of Loans and Borrowings. For purposes of
this Agreement, Loans may be classified and referred to by Class (e.g., a
"Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type
(e.g., a "Eurodollar Revolving Loan"). Borrowings also may be classified and
referred to by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a
"Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving
Borrowing").

         SECTION 1.3. Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same


                                       36
<PAGE>

meaning and effect and to refer to any and all tangible and intangible assets
and properties, including cash, securities, accounts and contract rights.

         SECTION 1.4. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.





                                       37
<PAGE>


                                    ARTICLE 2

                                   THE CREDITS

         SECTION 2.1. Commitments. Subject to the terms and conditions set forth
herein, (a) each Lender agrees (i) to make Term Loans to the Borrower from time
to time during the Term Loan Availability Period in a principal amount not
exceeding its Term Commitment, if any, (ii) to make Revolving Loans to the
Borrower from time to time during the Revolving Availability Period in an
aggregate principal amount that will not result in such Lender's Revolving
Exposure exceeding such Lender's Revolving Commitment, if any, (iii) to make
Additional Incremental Term Loans to the Borrower under any Additional
Incremental Facility during the period or on the date set forth in the
applicable Additional Incremental Facility Agreement in a principal amount not
exceeding its Additional Incremental Commitment in respect of such Additional
Incremental Facility, if any, and (iv) to make Additional Incremental Revolving
Loans to the Borrower under any Additional Incremental Facility during the
period set forth in the applicable Additional Incremental Facility Agreement in
a principal amount not exceeding at any time its Additional Incremental
Revolving Commitment in respect of such Additional Incremental Facility, if any,
(b) each Incremental Tranche A Lender agrees to make Incremental Tranche A Term
Loans to the Borrower from time to time during the Incremental Tranche A Term
Loan Availability Period in a principal amount not exceeding its Incremental
Tranche A Commitment, provided that the initial Borrowing under the Incremental
Tranche A Facility shall be in an aggregate amount not less than $225,000,000
and shall occur on the First Incremental Borrowing Date. Within the foregoing
limits and subject to the terms and conditions set forth herein, the Borrower
may borrow, prepay and reborrow Revolving Loans and Additional Incremental
Revolving Loans. Amounts repaid in respect of Term Loans, Incremental Term Loans
or Additional Incremental Term Loans may not be reborrowed.

         SECTION 2.2. Loans and Borrowings. (a) Each Loan (other than a
Swingline Loan) shall be made as part of a Borrowing consisting of Loans of the
same Class and Type made by the Lenders ratably in accordance with their
respective Commitments of the applicable Class. The failure of any Lender to
make any Loan required to be made by it shall not relieve any other Lender of
its obligations hereunder; provided that the Commitments of the Lenders are
several and no Lender shall be responsible for any other Lender's failure to
make Loans as required.

         (b) Subject to Section 2.14, each Revolving Borrowing, Term Borrowing,
Additional Incremental Revolving Borrowing, Additional Incremental Term
Borrowing and Incremental Term Borrowing shall be comprised entirely of ABR
Loans or Eurodollar Loans as the Borrower may request in accordance herewith.
Each Swingline Loan shall be an ABR Loan. Each Lender at its option may make any
Eurodollar Loan by causing any domestic or foreign branch or affiliate of such
Lender to make such Loan; provided that any exercise of such option shall not
affect the obligation of the Borrower to repay such Loan in accordance with the
terms of this Agreement.

         (c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing (w) if a Revolving Borrowing shall be in an aggregate
amount that is an


                                       38
<PAGE>


integral multiple of $1,000,000 and not less than $10,000,000, (x) if a Term
Borrowing shall be in an aggregate amount that is an integral multiple of
$1,000,000 and not less than $50,000,000 (y) if an Incremental Term Borrowing
shall be in an aggregate amount that is an integral multiple of $1,000,000 and
not less than $10,000,000 or (z) if an Additional Incremental Term Borrowing or
an Additional Incremental Revolving Borrowing shall be in aggregate amounts that
are permitted under the applicable Incremental Facility Agreement. At the time
that each ABR Borrowing is made, such Borrowing (w) if a Revolving Borrowing
shall be in an aggregate amount that is an integral multiple of $1,000,000 and
not less than $5,000,000, (x) if a Term Borrowing shall be in an aggregate
amount that is an integral multiple of $1,000,000 and not less than $50,000,000
(y) if an Incremental Term Borrowing shall be in an aggregate amount that is an
integral multiple of $1,000,000 and not less than $10,000,000 or (z) if an
Additional Incremental Term Borrowing or an Additional Incremental Revolving
Borrowing shall be in aggregate amounts that are permitted under the applicable
Incremental Facility Agreement; provided that (i) an ABR Revolving Borrowing or
ABR Additional Incremental Revolving Borrowing may be in an aggregate amount
that is equal to the entire unused balance of the total Revolving Commitments or
Additional Incremental Revolving Commitments of the applicable Class, as the
case may be, (ii) an ABR Revolving Borrowing may be in an aggregate amount that
is required to finance the reimbursement of an LC Disbursement as contemplated
by Section 2.05(e) and (iii) an ABR Term Borrowing, ABR Incremental Term
Borrowing or ABR Additional Incremental Term Borrowing may be in an aggregate
amount that is equal to the entire unused balance of the total Term Commitments,
Incremental Term Commitments, Additional Incremental Term Commitments of the
applicable Class, as the case may be. Each Swingline Loan shall be in an amount
that is an integral multiple of $1,000,000 and not less than $5,000,000.
Borrowings of more than one Type and Class may be outstanding at the same time;
provided that there shall not at any time be more than a total of 10 Eurodollar
Borrowings outstanding.

         (d) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request, or to elect to convert or continue, any
Borrowing if the Interest Period requested with respect thereto would end after
the Revolving Maturity Date, the Term Maturity Date, the Incremental Tranche A
Maturity Date or the maturity date set forth in the applicable Additional
Incremental Facility Agreement, as applicable.

         SECTION 2.3. Requests for Borrowings. To request a Borrowing (other
than a Swingline Borrowing), the Borrower shall notify the Administrative Agent
of such request by telephone (a) in the case of a Eurodollar Borrowing, not
later than 11:00 a.m., Dallas, Texas time, three Business Days before the date
of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than
11:00 a.m., Dallas, Texas time, one Business Day before the date of the proposed
Borrowing; provided that any such notice of an ABR Revolving Borrowing to
finance the reimbursement of an LC Disbursement as contemplated by Section
2.05(e) may be given not later than 10:00 a.m., Dallas, Texas time, on the date
of the proposed Borrowing. Each such telephonic Borrowing Request


                                       39
<PAGE>


shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Borrowing Request
substantially in the form of Exhibit B hereto and signed by the Borrower. Each
such telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.02:

                  (i) whether the requested Borrowing is to be a Revolving
         Borrowing, Term Borrowing, Incremental Tranche A Term Borrowing,
         Additional Incremental Revolving Borrowing or Additional Incremental
         Term Borrowing and, in the case of Additional Incremental Revolving
         Borrowings and Additional Incremental Term Borrowings, the Additional
         Incremental Facility under which such Borrowing is to be made;

                  (ii) the aggregate amount of such Borrowing;

                  (iii) the date of such Borrowing, which shall be a Business
         Day;

                  (iv) whether such Borrowing is to be an ABR Borrowing or a
         Eurodollar Borrowing;

                  (v) in the case of a Eurodollar Borrowing, the initial
         Interest Period to be applicable thereto, which shall be a period
         contemplated by the definition of the term "Interest Period"; and

                  (vi) the location and number of the Borrower's account to
         which funds are to be disbursed, which shall comply with the
         requirements of Section 2.06.

         If no election as to the Type of Borrowing is specified, then the
requested Borrowing shall be an ABR Borrowing. If no Interest Period is
specified with respect to any requested Eurodollar Borrowing, then the Borrower
shall be deemed to have selected an Interest Period of one month's duration.
Promptly following receipt of a Borrowing Request in accordance with this
Section, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender's Loan to be made as part of the
requested Borrowing.

         SECTION 2.4. Swingline Loans. (a) Subject to the terms and conditions
set forth herein, the Swingline Lenders each agree to make Swingline Loans to
the Borrower from time to time during the Revolving Availability Period, in an
aggregate principal amount at any time outstanding that will not result in (i)
the aggregate principal amount of outstanding Swingline Loans of either
Swingline Lender exceeding $25,000,000 or (ii) the sum of the total Revolving
Exposures exceeding the total Revolving Commitments; provided that neither
Swingline Lender shall be required to make a Swingline Loan to refinance an
outstanding Swingline Loan. Within the foregoing limits and subject to the terms
and conditions set forth herein, the Borrower may borrow, prepay and reborrow
Swingline Loans.


                                       40
<PAGE>


          (b) To request a Swingline Loan, the Borrower shall notify the
Administrative Agent of such request by telephone (confirmed by telecopy), not
later than 12:00 noon, Dallas, Texas time, on the day of a proposed Swingline
Loan and shall advise the Administrative Agent as to which Swingline Lender the
Borrower desires to provide such Swingline Loan. Each such notice shall be
irrevocable and shall specify the requested date (which shall be a Business Day)
and amount of the requested Swingline Loan. The Administrative Agent will
promptly advise the Swingline Lender indicated by the Borrower in such notice of
any such notice received from the Borrower. The applicable Swingline Lender
shall make such Swingline Loan available to the Borrower by means of a credit to
the general deposit account of the Borrower with such Swingline Lender (or, in
the case of a Swingline Loan made to finance the reimbursement of an LC
Disbursement as provided in Section 2.05(e), by remittance to the applicable
Issuing Bank) by 3:00 p.m., Dallas, Texas time, on the requested date of such
Swingline Loan.

          (c) The applicable Swingline Lender may by written notice given to the
Administrative Agent not later than 10:00 a.m., Dallas, Texas time, on any
Business Day require the Revolving Lenders to acquire participations on such
Business Day in all or a portion of its Swingline Loans outstanding. Such notice
shall specify the aggregate amount of Swingline Loans in which Revolving Lenders
will participate. Promptly upon receipt of such notice, the Administrative Agent
will give notice thereof to each Revolving Lender, specifying in such notice
such Lender's Applicable Percentage of such Swingline Loan or Loans. Each
Revolving Lender hereby absolutely and unconditionally agrees, upon receipt of
notice as provided above, to pay to the Administrative Agent, for the account of
the applicable Swingline Lender, such Lender's Applicable Percentage of such
Swingline Loan or Loans. Each Revolving Lender acknowledges and agrees that its
obligation to acquire participations in Swingline Loans pursuant to this
paragraph is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or reduction or termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever. Each
Revolving Lender shall comply with its obligation under this paragraph by wire
transfer of immediately available funds, in the same manner as provided in
Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall
apply, mutatis mutandis, to the payment obligations of the Revolving Lenders),
and the Administrative Agent shall promptly pay to the applicable Swingline
Lender the amounts so received by it from the Revolving Lenders. The
Administrative Agent shall notify the Borrower of any participations in any
Swingline Loan acquired pursuant to this paragraph, and thereafter payments in
respect of such Swingline Loan shall be made to the Administrative Agent and not
to the applicable Swingline Lender. Any amounts received by a Swingline Lender
from the Borrower (or other party on behalf of the Borrower) in respect of a
Swingline Loan made by such Swingline Lender after receipt by such Swingline
Lender of the proceeds of a sale of participations therein shall be promptly
remitted to the Administrative Agent; any such amounts received by the
Administrative Agent shall be promptly remitted by the Administrative Agent to
the Revolving Lenders that shall have made their payments


                                       41
<PAGE>


pursuant to this paragraph and to the applicable Swingline Lender, as their
interests may appear. The purchase of participations in a Swingline Loan
pursuant to this paragraph shall not relieve the Borrower of any default in the
payment thereof.

         SECTION 2.5. Letters of Credit. (a) General. Subject to the terms and
conditions set forth herein, the Borrower may request the issuance of Letters of
Credit for its own account, in a form reasonably acceptable to the
Administrative Agent and the applicable Issuing Bank, at any time and from time
to time during the Revolving Availability Period. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Borrower to, or entered into by the Borrower with, the Issuing
Bank relating to any Letter of Credit, the terms and conditions of this
Agreement shall control.

         (b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing
Bank from whom the Borrower is requesting such Letter of Credit and to the
Administrative Agent (reasonably in advance of the requested date of issuance,
amendment, renewal or extension) a notice requesting the issuance of a Letter of
Credit, or identifying the Letter of Credit to be amended, renewed or extended,
and specifying the date of issuance, amendment, renewal or extension (which
shall be a Business Day), the date on which such Letter of Credit is to expire
(which shall comply with Section 2.05(c)), the amount of such Letter of Credit,
the name and address of the beneficiary thereof and such other information as
shall be necessary to prepare, amend, renew or extend such Letter of Credit. If
requested by the applicable Issuing Bank, the Borrower also shall submit a
letter of credit application on such Issuing Bank's standard form in connection
with any request for a Letter of Credit. A Letter of Credit shall be issued,
amended, renewed or extended only if (and upon issuance, amendment, renewal or
extension of each Letter of Credit the Borrower shall be deemed to represent and
warrant that), after giving effect to such issuance, amendment, renewal or
extension (i) the LC Exposure shall not exceed $350,000,000 and (ii) the total
Revolving Exposures shall not exceed the total Revolving Commitments.

         (c) Expiration Date. Each Letter of Credit shall expire at or prior to
the close of business on the earlier of (i) the date one year after the date of
the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension), provided that a
Letter of Credit may include customary "evergreen" provisions and (ii) the date
that is five Business Days prior to the Revolving Maturity Date.

         (d) Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the applicable Issuing Bank or the Lenders, the
applicable Issuing Bank hereby grants


                                       42
<PAGE>


to each Revolving Lender, and each Revolving Lender hereby acquires from such
Issuing Bank, a participation in such Letter of Credit equal to such Lender's
Applicable Percentage of the aggregate amount available to be drawn under such
Letter of Credit. In consideration and in furtherance of the foregoing, each
Revolving Lender hereby absolutely and unconditionally agrees to pay to the
Administrative Agent, for the account of such Issuing Bank, such Lender's
Applicable Percentage of each LC Disbursement made by such Issuing Bank and not
reimbursed by the Borrower on the date due as provided in paragraph Section
2.05(e), or of any reimbursement payment required to be refunded to the Borrower
for any reason. Each Lender acknowledges and agrees that its obligation to
acquire participations pursuant to this paragraph in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.

         (e) Reimbursement. If an Issuing Bank shall make any LC Disbursement in
respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement
by paying to the Administrative Agent an amount equal to such LC Disbursement
not later than 1:00 p.m., Dallas, Texas time, on the date that such LC
Disbursement is made, if the Borrower shall have received notice of such LC
Disbursement prior to 9:30 a.m., Dallas, Texas time, on such date, or, if such
notice has not been received by the Borrower prior to such time on such date,
then not later than 1:00 p.m., Dallas, Texas time, on (i) the Business Day that
the Borrower receives such notice, if such notice is received prior to 9:30
a.m., Dallas, Texas time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt; provided that,
if such LC Disbursement is not less than $5,000,000, the Borrower may, subject
to the conditions to borrowing set forth herein, request in accordance with
Section 2.03 or 2.04 that such payment be financed with an ABR Revolving
Borrowing or Swingline Loan in an equivalent amount and, to the extent so
financed, the Borrower's obligation to make such payment shall be discharged and
replaced by the resulting ABR Revolving Borrowing or Swingline Loan. If the
Borrower fails to make such payment when due, the Administrative Agent shall
notify each Revolving Lender of the applicable LC Disbursement, the payment then
due from the Borrower in respect thereof and such Lender's Applicable Percentage
thereof. Promptly following receipt of such notice, each Revolving Lender shall
pay to the Administrative Agent its Applicable Percentage of the payment then
due from the Borrower, in the same manner as provided in Section 2.06 with
respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis
mutandis, to the payment obligations of the Revolving Lenders), and the
Administrative Agent shall promptly pay to the applicable Issuing Bank the
amounts so received by it from the Revolving Lenders. Promptly following receipt
by the Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the
applicable Issuing Bank or, to the extent that Revolving Lenders have


                                       43
<PAGE>


made payments pursuant to this paragraph to reimburse the Issuing Bank, then to
such Lenders and the applicable Issuing Bank as their interests may appear. Any
payment made by a Revolving Lender pursuant to this paragraph to reimburse the
applicable Issuing Bank for any LC Disbursement (other than the funding of ABR
Revolving Loans or a Swingline Loan as contemplated above) shall not constitute
a Loan and shall not relieve the Borrower of its obligation to reimburse such LC
Disbursement.

         (f) Obligations Absolute. The Borrower's obligation to reimburse LC
Disbursements as provided in paragraph Section 2.05(e) shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by an Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower's obligations hereunder. Neither
the Administrative Agent, the Lenders nor either Issuing Bank, nor any of their
Related Parties, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank; provided that the foregoing shall not be construed to excuse an
Issuing Bank from liability to the Borrower to the extent of any direct damages
(as opposed to consequential damages, claims in respect of which are hereby
waived by the Borrower to the extent permitted by applicable law) suffered by
the Borrower that are caused by the Issuing Bank's failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or wilful misconduct on the part of an
Issuing Bank (as finally determined by a court of competent jurisdiction), each
Issuing Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented which appear on their
face to be in substantial compliance with the terms of a Letter of Credit, the
Issuing Bank may, in its sole discretion, either accept and make payment upon
such documents without responsibility for further investigation, regardless of
any notice or information to the contrary, or refuse to accept and make payment
upon such documents if such documents are not in strict compliance with the
terms of such Letter of Credit.


                                       44
<PAGE>


         (g) Disbursement Procedures. The applicable Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit. The applicable Issuing
Bank shall promptly notify the Administrative Agent and the Borrower by
telephone (confirmed by telecopy) of such demand for payment and whether the
Issuing Bank has made or will make an LC Disbursement thereunder; provided that
any failure to give or delay in giving such notice shall not relieve the
Borrower of its obligation to reimburse such Issuing Bank and the Revolving
Lenders with respect to any such LC Disbursement.

         (h) Interim Interest. If an Issuing Bank shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans;
provided that, if the Borrower fails to reimburse such LC Disbursement when due
pursuant to Section 2.05(e), then Section 2.13(c) shall apply. Interest accrued
pursuant to this paragraph shall be for the account of the applicable Issuing
Bank, except that interest accrued on and after the date of payment by any
Revolving Lender pursuant to Section 2.05(e) to reimburse the applicable Issuing
Bank shall be for the account of such Lender to the extent of such payment.

         (i) Replacement of the Issuing Bank. An Issuing Bank may be replaced at
any time by written agreement among the Borrower, the Administrative Agent, the
replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent
shall notify the Lenders of any such replacement of an Issuing Bank. At the time
any such replacement shall become effective, the Borrower shall pay all unpaid
fees accrued for the account of the replaced Issuing Bank pursuant to Section
2.12(b). From and after the effective date of any such replacement, (i) the
successor Issuing Bank shall have all the rights and obligations of an Issuing
Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed
to refer to such successor, to any other Issuing Bank or to any previous Issuing
Bank, or to such successor, all other Issuing Banks and all previous Issuing
Banks, as the context shall require. After the replacement of an Issuing Bank
hereunder, the replaced Issuing Bank shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Bank under this
Agreement with respect to Letters of Credit issued by it prior to such
replacement, but shall not be required to issue additional Letters of Credit.

         (j) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Lenders with LC Exposure representing greater
than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, the Borrower shall deposit in an account with the
Administrative Agent, in the name of


                                       45
<PAGE>


the Administrative Agent and for the benefit of the Lenders, an amount in cash
equal to 105% of the LC Exposure as of such date plus any accrued and unpaid
interest thereon; provided that the obligation to deposit such cash collateral
shall become effective immediately, and such deposit shall become immediately
due and payable, without demand or other notice of any kind, upon the occurrence
of any Event of Default with respect to the Borrower described in Section
7.01(h) or 7.01(i). Each such deposit shall be held by the Administrative Agent
as collateral for the payment and performance of the obligations of the Borrower
under this Agreement. The Administrative Agent shall have exclusive dominion and
control, including the exclusive right of withdrawal, over such account. Other
than any interest earned on the investment of such deposits, which investments
shall be made at the option and sole discretion of the Administrative Agent and
at the Borrower's risk and expense, such deposits shall not bear interest.
Interest or profits, if any, on such investments shall accumulate in such
account. Moneys in such account shall be applied by the Administrative Agent to
reimburse the applicable Issuing Bank for LC Disbursements for which it has not
been reimbursed and, to the extent not so applied, shall be held for the
satisfaction of the reimbursement obligations of the Borrower for the LC
Exposure at such time or, if the maturity of the Loans has been accelerated (but
subject to the consent of Revolving Lenders with LC Exposure representing
greater than 50% of the total LC Exposure), be applied to satisfy other
obligations of the Borrower under this Agreement. If the Borrower is required to
provide an amount of cash collateral hereunder as a result of the occurrence of
an Event of Default, such amount (to the extent not applied as aforesaid) shall
be returned to the Borrower within three Business Days after all Events of
Default have been cured or waived.

         SECTION 2.6. Funding of Borrowings. (a) Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 1:00 p.m., Dallas, Texas time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders; provided that Swingline Loans shall be made as provided
in Section 2.04. The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower maintained with the Administrative Agent in Dallas,
Texas and designated by the Borrower in the applicable Borrowing Request;
provided that ABR Revolving Loans made to finance the reimbursement of an LC
Disbursement as provided in Section 2.05(e) shall be remitted by the
Administrative Agent to the applicable Issuing Bank.

         (b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with Section 2.06(a) and may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount. In such event, if a Lender has not in fact made its share of the
applicable Borrowing available to the Administrative Agent,


                                       46
<PAGE>


then the applicable Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount with interest
thereon, for each day from and including the date such amount is made available
to the Borrower to but excluding the date of payment to the Administrative
Agent, at (i) in the case of such Lender, the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation or (ii) in the case of the
Borrower, the interest rate applicable to ABR Loans. If such Lender pays such
amount to the Administrative Agent, then such amount shall constitute such
Lender's Loan included in such Borrowing.

         SECTION 2.7. Interest Elections. (a) Each Revolving Borrowing,
Additional Incremental Revolving Borrowing, Term Borrowing, Incremental Term
Borrowing and Additional Incremental Term Borrowing initially shall be of the
Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing
to a different Type or to continue such Borrowing and, in the case of a
Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section. The Borrower may elect different options with respect to different
portions of a Borrowing, in which case each such portion shall be allocated
ratably among the Lenders holding the Loans comprising such Borrowing, and the
Loans comprising each such portion shall be considered a separate Borrowing.
This Section shall not apply to Swingline Borrowings, which may not be converted
or continued.

         (b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
Borrower.

         (c) Each telephonic and written Interest Election Request shall specify
the following information in compliance with Section 2.02 and Section 2.07(f):

                  (i) the Borrowing to which such Interest Election Request
         applies and, if different options are being elected with respect to
         different portions thereof, the portions thereof to be allocated to
         each resulting Borrowing (in which case the information to be specified
         pursuant to clauses (iii) and (iv) below shall be specified for each
         resulting Borrowing);

                  (ii) the effective date of the election made pursuant to such
         Interest Election Request, which shall be a Business Day;


                                       47
<PAGE>


                  (iii) whether the resulting Borrowing is to be an ABR
         Borrowing or a Eurodollar Borrowing; and

                  (iv) if the resulting Borrowing is a Eurodollar Borrowing, the
         Interest Period to be applicable thereto after giving effect to such
         election, which shall be a period contemplated by the definition of the
         term "Interest Period".

         If any such Interest Election Request requests a Eurodollar Borrowing
but does not specify an Interest Period, then the Borrower shall be deemed to
have selected an Interest Period of one month's duration.

         (d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each applicable Lender of the details thereof
and of such Lender's portion of each resulting Borrowing.

         (e) If the Borrower fails to deliver a timely Interest Election Request
with respect to a Eurodollar Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing, then, so long as an Event of Default is
continuing (i) no outstanding Borrowing may be converted to or continued as a
Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be
converted to an ABR Borrowing at the end of the Interest Period applicable
thereto.

         (f) A Borrowing of any Class may not be converted to or continued as a
Eurodollar Borrowing if after giving effect thereto (i) the Interest Period
therefor would commence before and end after a date on which any principal of
the Loans of such Class is scheduled to be repaid and (ii) the sum of the
aggregate principal amount of outstanding Eurodollar Borrowings of such Class
with Interest Periods ending on or prior to such scheduled repayment date plus
the aggregate principal amount of outstanding ABR Borrowings of such Class would
be less than the aggregate principal amount of Loans of such Class required to
be repaid on such scheduled repayment date.

         SECTION 2.8. Termination and Reduction of Commitments. (a) Unless
previously terminated, (i) the Term Commitments shall terminate on the Term
Commitment Termination Date, (ii) the Revolving Commitments shall terminate on
the Revolving Maturity Date, (iii) the Incremental Tranche A Commitments shall
terminate on the Incremental Tranche A Commitment Termination Date and (iv) the
Additional Incremental Commitments of any Class shall terminate on the date set
forth in the applicable Additional Incremental Facility Agreement.

         (b) Subject to adjustment pursuant to Section 2.08(h), the Revolving
Commitments outstanding on the Revolving Commitment Reduction Date shall be


                                       48
<PAGE>


automatically and permanently reduced in 12 consecutive installments on the last
day of each fiscal quarter (except with respect to the final reduction, which
shall be on the Revolving Maturity Date) set forth below in the percentage
amounts (expressed as a percentage of the aggregate amount of Revolving
Commitments outstanding on the Revolving Commitment Reduction Date) set forth
opposite such quarterly scheduled reduction date (or the Revolving Maturity
Date) below; provided that the final installment shall reduce the remaining
outstanding Revolving Commitments to zero on the Revolving Maturity Date and the
payment made in respect thereof shall equal the sum of (x) the then aggregate
unpaid principal amount of all Revolving Loans plus (y) all other unpaid amounts
owing in respect of Revolving Loans, which payment shall be due and payable not
later than the Revolving Maturity Date:

<Table>
<Caption>
            Scheduled Reduction Date                            Commitment Reduction
            ------------------------                            --------------------
<S>                                                             <C>
                4th Quarter 2002                                       5.00%
                1st Quarter 2003                                       5.00%
                2nd Quarter 2003                                       5.00%
                3rd Quarter 2003                                       5.00%

                4th Quarter 2003                                       7.50%
                1st Quarter 2004                                       7.50%
                2nd Quarter 2004                                       7.50%
                3rd Quarter 2004                                       7.50%

                4th Quarter 2004                                      12.50%
                1st Quarter 2005                                      12.50%
                2nd Quarter 2005                                      12.50%
             Revolving Maturity Date                                  12.50%
</Table>

         (c) Subject to adjustment pursuant to Section 2.08(h), the Additional
Incremental Revolving Commitments of any Class shall be automatically and
permanently reduced on the scheduled dates, and in the scheduled amounts, if
any, set forth in the applicable Additional Incremental Facility Agreement.

         (d) The Borrower may at any time terminate, or from time to time
reduce, the Commitments of any Class; provided that (i) each reduction of the
Commitments of any Class shall be in an amount that is an integral multiple of
$1,000,000 and not less than $10,000,000, (ii) the Borrower shall not terminate
or reduce the Revolving Commitments if, after giving effect to any concurrent
prepayment of the Revolving Loans in accordance with


                                       49
<PAGE>


Section 2.11, the sum of the Revolving Exposures would exceed the total
Revolving Commitments and (iii) the Borrower shall not terminate or reduce the
Additional Incremental Revolving Commitments of any Class if, after giving
effect to any concurrent prepayment of Additional Incremental Revolving Loans of
such Class in accordance with Section 2.11, the aggregate principal amount of
outstanding Additional Incremental Revolving Loans of such Class would exceed
the total Additional Incremental Revolving Commitments of such Class.

         (e) The Borrower shall notify the Administrative Agent of any election
to terminate or reduce the Commitments under Section 2.08(d) at least three
Business Days prior to the effective date of such termination or reduction,
specifying such election and the effective date thereof. Promptly following
receipt of any notice, the Administrative Agent shall advise the Lenders of the
contents thereof. Each notice delivered by the Borrower pursuant to this Section
shall be irrevocable; provided that a notice of termination of the Revolving
Commitments or the Additional Incremental Revolving Commitments of any Class
delivered by the Borrower may state that such notice is conditioned upon the
effectiveness of other credit facilities, in which case such notice may be
revoked by the Borrower (by notice to the Administrative Agent on or prior to
the specified effective date) if such condition is not satisfied. Any
termination or reduction of the Commitments of any Class shall be permanent.
Each reduction of the Commitments of any Class shall be made ratably among the
Lenders in accordance with their respective Commitments of such Class.

         (f) In the event and on each occasion that any Net Proceeds in excess
of $5,000,000 are received by or on behalf of Holdings or any Subsidiary in
respect of any Prepayment Event, there shall be a pro rata reduction of
Revolving Commitments, Term Borrowings, Incremental Tranche A Borrowings and, if
provided for in the applicable Additional Incremental Facility Agreement,
Additional Incremental Revolving Commitments and Additional Incremental Term
Borrowings as provided in this Section 2.08(f) and in Section 2.11(b). In such
event, the Revolving Commitments and, if provided for in the applicable
Additional Incremental Facility Agreement, Additional Incremental Revolving
Commitments shall, on the third Business Day after such Net Proceeds are
received, be automatically and permanently reduced in an aggregate amount equal
to the product of 100% (or, in the case of any Prepayment Event referred to in
clause (c) of the definition of Prepayment Event, if, on the date on which any
reduction would otherwise be made in respect of such Prepayment Event either (i)
the Facilities shall be rated not lower than BBB- by S&P and Baa3 by Moody's or
(ii) the Total Leverage Ratio as of such date is less than 3.5 to 1.0, 50%) of
such Net Proceeds and the Reduction Portion in respect of such Prepayment Event;
provided that, in the case of any event described in clause (a) or (c) of the
definition of Prepayment Event, if the Borrower shall deliver to the
Administrative Agent a certificate of a Financial Officer to the effect that the
Borrower intends to apply the Net Proceeds from such event (or a portion thereof
specified in such certificate) to invest in the Telecommunications Business of
the Borrower and the other Restricted Subsidiaries within 360 days of the
receipt thereof and certifying that no Default has occurred and is continuing,
then no reduction shall be required pursuant to this paragraph in respect of the
Net Proceeds in respect of such event (or the portion of such Net Proceeds
specified in such certificate, if applicable) except to the extent of any such
Net Proceeds therefrom that have not been so


                                       50
<PAGE>


applied by the end of such period, at which time a reduction shall be required
in accordance with this paragraph (f).

         (g) Following the end of each fiscal year of the Borrower, commencing
with the fiscal year ending December 31, 2002, the Revolving Commitments and, if
provided for in the applicable Additional Incremental Facility Agreement,
Additional Incremental Revolving Commitments shall be automatically and
permanently reduced in an aggregate amount equal to the product of 50% of Excess
Cash Flow for such fiscal year and the Reduction Portion in respect of such
Excess Cash Flow; provided that if, on the date on which any reduction would
otherwise be made pursuant to this Section 2.08(g), either (i) the Facilities
shall be rated not lower than BBB- by S&P and Baa3 by Moody's or (ii) the Total
Leverage Ratio as of such date is less than 3.5 to 1.0, no such reduction shall
be required pursuant to this Section 2.08(g). Each reduction pursuant to this
paragraph shall be made on the date on which financial statements are delivered
pursuant to Section 5.01 with respect to the fiscal year for which Excess Cash
Flow is being calculated (and in any event within 90 days after the end of such
fiscal year).

         (h) Any reduction of the Revolving Commitments, other than a reduction
pursuant to Section 2.08(a) or 2.08(b) above, shall be applied to reduce the
subsequent scheduled reductions of Revolving Commitments to be made pursuant to
Section 2.08(a) or 2.08(b) above in reverse chronological order. Any reduction
of the Additional Incremental Revolving Commitments of any Class, other than a
reduction pursuant to Section 2.08(a) or 2.08(c) above, shall be applied to
reduce the subsequent scheduled reductions of Additional Incremental Revolving
Commitments of such Class to be made pursuant to Section 2.08(a) or 2.08(c) as
set forth in the applicable Additional Incremental Facility Agreement.

         SECTION 2.9. Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay (i) to the Administrative Agent for the
account of each applicable Lender the then unpaid principal amount of each
Revolving Loan of such Lender on the Revolving Maturity Date, (ii) to the
Administrative Agent for the account of each applicable Lender the then unpaid
principal amount of each Term Loan of such Lender as provided in Section 2.10,
(iii) to the Administrative Agent for the account of each applicable Incremental
Lender the then unpaid principal amount of each Incremental Tranche A Term Loan
of such Incremental Lender as set forth in Section 2.10, (iv) to the
Administrative Agent for the account of each applicable Lender the then unpaid
principal amount of each Additional Incremental Loan of any Class of such Lender
as set forth in the applicable Additional Incremental Facility Agreement and (v)
to each Swingline Lender the then unpaid principal amount of each Swingline Loan
made by it on the earlier of the Revolving Maturity Date and the first date
after such Swingline Loan is made that is the 15th or last day of a calendar
month and is at least two Business Days after such Swingline Loan is made.


                                       51
<PAGE>


         (b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.

         (c) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Class and Type thereof
and the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender's share thereof.

         (d) The entries made in the accounts maintained pursuant to Section
2.09(b) and 2.09(c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.

         (e) No promissory notes evidencing Loans hereunder will be issued
unless a Lender requests that a promissory note be issued to it to evidence its
Loans of any Class. In such event, the Borrower shall prepare, execute and
deliver to such Lender a promissory note payable to the order of such Lender
(or, if requested by such Lender, to such Lender and its registered assigns) and
in a form approved by the Administrative Agent. Thereafter, the Loans evidenced
by such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 10.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).

         SECTION 2.10. Amortization of Term Loans and Incremental Term Loans.
(a) Subject to adjustment pursuant to Section 2.10(e), the Borrower shall repay
Term Borrowings outstanding on the Term Amortization Date in 16 consecutive
installments of principal, each of which will be due and payable on the last day
of each fiscal quarter (except with respect to the final installment, which
shall be on the Term Maturity Date) set forth below in the percentage amounts
(expressed as a percentage of the aggregate amount of Term Loans outstanding on
the Term Commitment Termination Date) set forth opposite such quarterly
installment date (or the Term Maturity Date) below; provided that the final
installment shall equal the sum of (x) the then aggregate unpaid principal
amount of all Term Loans plus (y) all other unpaid amounts owing in respect of
Term Loans and shall be due and payable not later than the Term Maturity Date:


                                       52
<PAGE>


<Table>
<Caption>
                  Payment Date                                         Amount
                  ------------                                         ------
<S>                                                                    <C>
                4th Quarter 2002                                       3.75%
                1st Quarter 2003                                       3.75%
                2nd Quarter 2003                                       3.75%
                3rd Quarter 2003                                       3.75%

                4th Quarter 2003                                       6.25%
                1st Quarter 2004                                       6.25%
                2nd Quarter 2004                                       6.25%
                3rd Quarter 2004                                       6.25%

                4th Quarter 2004                                       7.50%
                1st Quarter 2005                                       7.50%
                2nd Quarter 2005                                       7.50%
                3rd Quarter 2005                                       7.50%

                4th Quarter 2005                                       7.50%
                1st Quarter 2006                                       7.50%
                2nd Quarter 2006                                       7.50%
               Term Maturity Date                                      7.50%

</Table>

         (b) Subject to adjustment pursuant to Section 2.10(e), the Borrower
shall repay Incremental Tranche A Borrowings outstanding on the Incremental
Tranche A Amortization Date in 16 consecutive installments of principal, each of
which will be due and payable on the last day of each fiscal quarter (except
with respect to the final installment, which shall be on the Incremental Tranche
A Maturity Date) set forth below in the percentage amounts (expressed as a
percentage of the aggregate amount of Incremental Tranche A Term Loans
outstanding on the Incremental Tranche A Commitment Termination Date) set forth
opposite such quarterly installment date (or the Incremental Tranche A Maturity
Date) below; provided that the final installment shall equal the sum of (x) the
then aggregate unpaid principal amount of all Incremental Tranche A Term Loans
plus (y) all other unpaid amounts owing in respect of the Incremental Tranche A
Term Loans, and shall be due and payable not later than the Incremental Tranche
A Maturity Date:

<Table>
<Caption>
                  Payment Date                                         Amount
                  ------------                                         ------
<S>                                                                    <C>
                4th Quarter 2002                                       3.75%
                1st Quarter 2003                                       3.75%
                2nd Quarter 2003                                       3.75%
                3rd Quarter 2003                                       3.75%

                4th Quarter 2003                                       6.25%
                1st Quarter 2004                                       6.25%
</Table>


                                       53
<PAGE>


<Table>
<Caption>
                  Payment Date                                         Amount
                  ------------                                         ------
<S>                                                                    <C>
                2nd Quarter 2004                                       6.25%
                3rd Quarter 2004                                       6.25%

                4th Quarter 2004                                       7.50%
                1st Quarter 2005                                       7.50%
                2nd Quarter 2005                                       7.50%
                3rd Quarter 2005                                       7.50%

                4th Quarter 2005                                       7.50%
                1st Quarter 2006                                       7.50%
                2nd Quarter 2006                                       7.50%
               Incremental Tranche
                 A Maturity Date                                       7.50%
</Table>

         (c) Subject to adjustment pursuant to Section 2.10(e), the Borrower
shall repay Additional Incremental Term Borrowings of any Class on the scheduled
dates, and in the scheduled amounts, if any, set forth in the applicable
Additional Incremental Facility Agreement.

         (d) To the extent not previously paid, all Term Loans shall be due and
payable on the Term Maturity Date, all Revolving Loans shall be due and payable
on the Revolving Maturity Date, all Incremental Tranche A Term Loans shall be
due and payable on the Incremental Tranche A Maturity Date and all Additional
Incremental Loans of any Class shall be due and payable on the final maturity
date set forth in the applicable Additional Incremental Facility Agreement.

         (e) Any prepayment of a Term Borrowing or an Incremental Term Borrowing
shall be applied to reduce the subsequent scheduled repayments of Term
Borrowings or Incremental Term Borrowings, respectively to be made pursuant to
this Section in reverse chronological order. Any prepayment of an Additional
Incremental Term Borrowing of any Class shall be applied to reduce the
subsequent scheduled repayment of Additional Incremental Term Borrowings of such
Class to be made pursuant to this Section as set forth in the applicable
Additional Incremental Facility Agreement.

         (f) Prior to any repayment of any Term Borrowings or Incremental Term
Borrowings hereunder or any Additional Incremental Term Borrowings of any Class,
the Borrower shall select the Borrowing or Borrowings of such Class to be repaid
and shall notify the Administrative Agent by telephone (confirmed by telecopy)
of such selection not later than 11:00 a.m., Dallas, Texas time, three Business
Days before the scheduled date of such repayment; provided that each repayment
of Term Borrowings or Incremental Term Borrowings or any Additional Incremental
Term Borrowings of any Class shall be applied to repay any outstanding ABR Term
Borrowings or ABR



                                       54
<PAGE>

Incremental Term Borrowings or ABR Additional Incremental Term Borrowings of
such Class before any other Borrowings of such Class. Each repayment of a
Borrowing shall be applied ratably to the Loans included in the repaid
Borrowing. Repayments of Term Borrowings, Incremental Term Borrowings and
Additional Incremental Term Borrowings shall be accompanied by accrued interest
on the amount repaid.

         SECTION 2.11. Prepayment of Loans. (a) The Borrower shall have the
right at any time and from time to time to prepay any Borrowing in whole or in
part, subject to the requirements of this Section. All prepayments shall be made
without premium or penalty other than, to the extent applicable, amounts payable
under Section 2.16.

         (b) In the event and on each occasion that any Net Proceeds in excess
of $5,000,000 are received by or on behalf of Holdings or any Subsidiary in
respect of any Prepayment Event, there shall be a pro rata reduction of
Revolving Commitments, Term Borrowings, Incremental Tranche A Borrowings, and if
provided for in the applicable Additional Incremental Facility Agreement,
Additional Incremental Revolving Commitments and Additional Incremental Term
Borrowings as provided in this Section 2.11(b) and in Section 2.08(f). In such
event, the Borrower shall, within three Business Days after such Net Proceeds
are received, prepay Term Borrowings, Incremental Tranche A Borrowings and, if
provided for in the applicable Additional Incremental Facility Agreement,
Additional Incremental Term Borrowings in an aggregate amount equal to the
product of 100% (or, in the case of any Prepayment Event referred to in clause
(c) of the definition of Prepayment Event, if, on the date on which any
prepayment would otherwise be made in respect of such Prepayment Event either
(i) the Facilities shall be rated not lower than BBB- by S&P and Baa3 by Moody's
or (ii) the Total Leverage Ratio as of such date is less than 3.5 to 1.0, 50%)
of such Net Proceeds and the Prepayment Portion in respect of such Prepayment
Event (such product, the "Prepayment Amount"); provided that, in the case of any
event described in clause (a) or (c) of the definition of Prepayment Event, if
the Borrower shall deliver to the Administrative Agent a certificate of a
Financial Officer to the effect that the Borrower intends to apply the Net
Proceeds from such event (or a portion thereof specified in such certificate) to
invest in the Telecommunications Business of the Borrower and the other
Restricted Subsidiaries within 360 days of the receipt thereof and certifying
that no Default has occurred and is continuing, then no prepayment shall be
required pursuant to this paragraph in respect of the Net Proceeds in respect of
such event (or the portion of such Net Proceeds specified in such certificate,
if applicable) except to the extent of any such Net Proceeds therefrom that have
not been so applied by the end of such period, at which time a prepayment shall
be required in accordance with this paragraph (b).

         (c) Following the end of each fiscal year of the Borrower, commencing
with the fiscal year ending December 31, 2002, the Borrower shall prepay Term
Borrowings, Incremental Tranche A Borrowings and, if provided for in the
applicable Additional Incremental Facility Agreement, Additional Incremental
Term Borrowings in an aggregate amount equal to the product of (i) 50% of Excess
Cash Flow for such fiscal


                                       55
<PAGE>


year and (ii) the Prepayment Portion in respect of such Excess Cash Flow (such
product, the "Excess Cash Flow Prepayment Amount"); provided that if, on the
date on which any prepayment would otherwise be made pursuant to this Section
2.11(c), either (i) the Facilities shall be rated not lower than BBB- by S&P and
Baa3 by Moody's or (ii) the Total Leverage Ratio as of such date is less than
3.5 to 1.0, no such prepayment shall be required pursuant to this Section
2.11(c). Each prepayment pursuant to this paragraph shall be made on or before
the date on which financial statements are delivered pursuant to Section 5.01
with respect to the fiscal year for which Excess Cash Flow is being calculated
(and in any event within 90 days after the end of such fiscal year).

         (d) If, on any date, the aggregate Revolving Exposures of all Lenders
exceeds the aggregate Revolving Commitments of all Lenders, or the aggregate
principal amount of the Additional Incremental Revolving Loans of any Class of
all Lenders exceeds the aggregate Additional Incremental Revolving Commitments
of such Class of all Lenders, the Borrower shall immediately prepay Revolving
Loans or Additional Incremental Revolving Loans of such Class, as the case may
be (and, to the extent that any such excess remains after all Revolving Loans
have been prepaid, deposit cash collateral with the Administrative Agent to
secure outstanding LC Exposure), in an amount equal to such excess.

         (e) Prior to any optional or mandatory prepayment of Borrowings
hereunder, the Borrower shall select the Borrowing or Borrowings to be prepaid
and shall specify such selection in the notice of such prepayment pursuant to
Section 2.11(f); provided that each prepayment of Borrowings of any Class shall
be applied to prepay ABR Borrowings of such Class before any other Borrowings of
such Class.

         (f) The Borrower shall notify the Administrative Agent (and, in the
case of prepayment of a Swingline Loan, the applicable Swingline Lender) by
telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., Dallas, Texas
time, three Business Days before the date of prepayment, (ii) in the case of
prepayment of an ABR Borrowing, not later than 11:00 a.m., Dallas, Texas time,
one Business Day before the date of prepayment or (iii) in the case of
prepayment of a Swingline Loan, not later than 12:00 noon, Dallas, Texas time,
on the date of prepayment. Each such notice shall be irrevocable and shall
specify the prepayment date, the principal amount of each Borrowing or portion
thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably
detailed calculation of the amount of such prepayment; provided that, if a
notice of optional prepayment is given in connection with a conditional notice
of termination of the Revolving Commitments or any Additional Incremental
Revolving Commitments as contemplated by Section 2.08, then such notice of
prepayment may be revoked if such notice of termination is revoked in accordance
with Section 2.08. Promptly following receipt of any such notice (other than a
notice relating solely to Swingline Loans), the Administrative Agent shall
advise the Lenders of the contents thereof. Each partial prepayment of any
Borrowing shall be in an amount that would be


                                       56
<PAGE>


permitted in the case of an advance of a Borrowing of the same Type as provided
in Section 2.02, except as necessary to apply fully the required amount of a
mandatory prepayment. Each prepayment of a Borrowing shall be applied ratably to
the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by
accrued interest to the extent required by Section 2.13.

         SECTION 2.12. Fees. (a) The Borrower agrees to pay to the
Administrative Agent (i) in the case of Revolving Commitments and Term
Commitments for the account of each Lender fees for each day during the period
from and including the Effective Date to but excluding the date on which such
Commitment terminates at a rate equal to the applicable Commitment Fee Rate for
such day, (ii) in the case of Incremental Tranche A Commitments for the account
of each Incremental Tranche A Lender fees for each day during the period from
and including the Amendment No. 5 Effective Date but excluding the Incremental
Tranche A Commitment Termination Date at a rate equal to the applicable
Commitment Fee Rate for such day and (iii) in the case of any Additional
Incremental Facility Commitment, the rate set forth in the applicable Additional
Incremental Facility Agreement for such day, in each case on the unused amount
of each Commitment of such Lender on such day (collectively, the "COMMITMENT
FEES"). Accrued Commitment Fees shall be payable in arrears on the last day of
March, June, September and December of each year and on the date on which the
applicable Commitments terminate, commencing on the first such date to occur
after the date hereof. All Commitment Fees shall be computed on the basis of a
year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). For purposes of computing
commitment fees with respect to Revolving Commitments, a Revolving Commitment of
a Lender shall be deemed to be used to the extent of the outstanding Revolving
Loans and LC Exposure of such Lender (and the Swingline Exposure of such Lender
shall be disregarded for such purpose).

         (b) The Borrower agrees to pay (i) to the Administrative Agent for the
account of each Revolving Lender a participation fee with respect to its
participations in Letters of Credit for each day during the period from and
including the Effective Date to but excluding the later of the date on which
such Lender's Revolving Commitment terminates and the date on which such Lender
ceases to have any LC Exposure, which fee shall accrue at a rate equal to the
Applicable Margin on Eurodollar Revolving Loans for such day on the amount of
such Lender's LC Exposure on such day (excluding any portion thereof
attributable to unreimbursed LC Disbursements) and (ii) to the applicable
Issuing Bank a fronting fee in respect of Letters of Credit issued by such
Issuing Bank for each day during the period from and including the Effective
Date to but excluding the later of the date of termination of the Revolving
Commitments and the date on which there ceases to be any LC Exposure in respect
of Letters of Credit issued by such Issuing Bank, which shall accrue at the rate
or rates per annum separately agreed upon between the Borrower and such Issuing
Bank on the amount of the LC Exposure on such day (excluding any portion thereof
attributable to unreimbursed LC Disbursements) in respect of Letters of Credit
issued by such Issuing Bank, as well as the Issuing Bank's standard


                                       57
<PAGE>


fees with respect to the issuance, amendment, renewal or extension of any Letter
of Credit or processing of drawings thereunder. Participation fees and fronting
fees accrued through and including the last day of March, June, September and
December of each year shall be payable on the third Business Day following such
last day, commencing on the first such date to occur after the Effective Date;
provided that all such fees shall be payable on the date on which the Revolving
Commitments terminate and any such fees accruing after the date on which the
Revolving Commitments terminate shall be payable on demand. Any other fees
payable to an Issuing Bank pursuant to this paragraph shall be payable within 10
days after demand. All participation fees and fronting fees shall be computed on
the basis of a year of 360 days and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day).

         (c) The Borrower agrees to pay to the Administrative Agent, for its own
account, fees in the amounts and at the times separately agreed upon between the
Borrower and the Administrative Agent.

         (d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the applicable
Issuing Bank, in the case of fees payable to it) for distribution, in the case
of Commitment Fees and participation fees, to the Lenders entitled thereto. Fees
paid shall not be refundable under any circumstances.

         SECTION 2.13. Interest. (a) The Loans comprising each ABR Borrowing
shall bear interest at the Alternate Base Rate plus (i) in the case of any ABR
Borrowing under the Revolving Facility, the Term Facility or the Incremental
Facility (including each Swingline Loan), the ABR Spread and, if applicable to
any loan (other than an Incremental Term Loan), the Leverage Premium (each as
set forth in "Applicable Margin") and (ii) in the case of any ABR Borrowing
under any Additional Incremental Facility, the Applicable Margin for ABR
Borrowings set forth in the applicable Additional Incremental Facility
Agreement.

         (b) The Loans comprising each Eurodollar Borrowing shall bear interest
at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
plus (i) in the case of any Eurodollar Borrowing under the Revolving Facility,
the Term Facility or the Incremental Facility, the Eurodollar Spread and, if
applicable to any loan (other than an Incremental Term Loan), the Leverage
Premium (each as set forth in "Applicable Margin") and (ii) in the case of any
Eurodollar Borrowing under any Additional Incremental Facility, the Applicable
Margin for Eurodollar Borrowings set forth in the applicable Additional
Incremental Facility Agreement.

         (c) Notwithstanding the foregoing, if any principal of or interest on
any Loan or any fee or other amount payable by the Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case


                                       58
<PAGE>

of overdue principal of any ABR Loan under the Revolving Facility, the Term
Facility or the Incremental Facility, 2% plus the highest Applicable Margin for
ABR Loans plus the ABR, (ii) in the case of overdue principal of any Eurodollar
Loan under the Revolving Facility, the Term Facility or the Incremental
Facility, the higher of (x) 2% plus the highest Applicable Margin for Eurodollar
Loans plus the Adjusted LIBO Rate applicable to such Eurodollar Loan on the day
before payment was due and (y) the sum of 2% plus the highest Applicable Margin
for ABR Loans plus the ABR, (iii) in the case of overdue principal of or overdue
interest on any Additional Incremental Loan of any Class, the rate set forth in
the applicable Additional Incremental Facility Agreement and (iv) in the case of
any other amount, 2% plus the rate applicable to ABR Revolving Loans as provided
in Section 2.13(a).

         (d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and, in the case of Revolving Loans, upon
termination of the Revolving Commitments; provided that (i) interest accrued
pursuant to Section 2.13(c) shall be payable on demand, (ii) in the event of any
repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving
Loan prior to the end of the Revolving Availability Period), accrued interest on
the principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.

         (e) All interest hereunder shall be computed on the basis of a year of
360 days, except that interest computed by reference to the Alternate Base Rate
at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate or
Adjusted LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.

         SECTION 2.14. Alternate Rate of Interest. If prior to the commencement
of any Interest Period for a Eurodollar Borrowing:

         (a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or

         (b) the Administrative Agent is advised by the Required Lenders that
the Adjusted LIBO Rate for such Interest Period will not adequately and fairly
reflect the cost to such Lenders (or Lender) of making or maintaining their
Loans (or its Loan) included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the


                                       59
<PAGE>


Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.

         SECTION 2.15. Increased Costs.

         (a) If any Change in Law shall:

                  (i) impose, modify or deem applicable any reserve, special
         deposit or similar requirement against assets of, deposits with or for
         the account of, or credit extended by, any Lender (except any such
         reserve requirement reflected in the Adjusted LIBO Rate), Swingline
         Lender or Issuing Bank; or

                  (ii) impose on any Lender, Swingline Lender or Issuing Bank or
         the London interbank market any other condition affecting this
         Agreement or Eurodollar Loans made by such Lender or any Letter of
         Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost (other than
Taxes) to such Lender of making or maintaining any Eurodollar Loan (or of
maintaining its obligation to make any such Loan) or to increase the cost to
such Lender, Swingline Lender or Issuing Bank of participating in, issuing or
maintaining any Letter of Credit or to reduce the amount of any sum received or
receivable by such Lender, Swingline Lender or Issuing Bank hereunder (whether
of principal, interest or otherwise), then the Borrower will pay to such Lender,
Swingline Lender or Issuing Bank, as the case may be, such additional amount or
amounts as will compensate such Lender, Swingline Lender or Issuing Bank, as the
case may be, for such additional costs incurred or reduction suffered.

         (b) If any Lender, Swingline Lender or Issuing Bank determines that any
Change in Law regarding capital requirements has or would have the effect of
reducing the rate of return on such Lender's, Swingline Lender's or Issuing
Bank's capital or on the capital of such Lender's, Swingline Lender's or Issuing
Bank's holding company, if any, as a consequence of this Agreement or the Loans
made by, or participations in Letters of Credit held by, such Lender or
Swingline Lender, or the Letters of Credit issued by such Issuing Bank, to a
level below that which such Lender, Swingline Lender or Issuing Bank or such
Lender's, Swingline Lender's or Issuing Bank's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's,
Swingline Lender's or Issuing Bank's policies and the policies of such Lender's,
Swingline Lender's or Issuing Bank's holding company with respect to capital
adequacy), then from time to time the Borrower will pay to such Lender,
Swingline Lender or Issuing Bank, as the case may be, such additional amount or
amounts as will compensate such Lender, Swingline Lender or Issuing Bank or such
Lender's, Swingline Lender's or Issuing Bank's holding company for any such
reduction suffered.


                                       60
<PAGE>


         (c) A certificate of a Lender, Swingline Lender or Issuing Bank setting
forth the amount or amounts necessary to compensate such Lender, Swingline
Lender or Issuing Bank or its holding company, as the case may be, as specified
in Section 2.15(a) or 2.15(b) shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender or such
Issuing Bank, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.

         (d) Failure or delay on the part of any Lender, Swingline Lender or
Issuing Bank to demand compensation pursuant to this Section shall not
constitute a waiver of such Lender's, Swingline Lender's or Issuing Bank's right
to demand such compensation; provided that the Borrower shall not be required to
compensate a Lender, Swingline Lender or Issuing Bank pursuant to this Section
for any increased costs or reductions incurred more than 120 days prior to the
date that such Lender, Swingline Lender or Issuing Bank, as the case may be,
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender's, Swingline Lender's or Issuing Bank's
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 120-day period referred to above shall be extended to include the period of
retroactive effect thereof.

         SECTION 2.16. Break Funding Payments. In the event of (a) the payment
of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under Section
2.11(f) and is revoked in accordance therewith), or (d) the assignment of any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by the Borrower pursuant to Section 2.19, then,
in any such event, the Borrower shall compensate each Lender for the loss, cost
and expense attributable to such event. In the case of a Eurodollar Loan, such
loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the rate that would have been applicable to such Loan,
for the period from the date of such event to the last day of the then current
Interest Period therefor (or, in the case of a failure to borrow, convert or
continue, for the period that would have been the Interest Period for such
Loan), over (ii) the amount of interest which would accrue on such principal
amount for such period at the interest rate which such Lender would bid were it
to bid, at the commencement of such period, for dollar deposits of a comparable
amount and period from other banks in the eurodollar market. A certificate of
any Lender setting forth any amount or amounts that such Lender is entitled to
receive pursuant to this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender the amount
shown as due on any such certificate within 10 days after receipt thereof.


                                       61
<PAGE>


         SECTION 2.17. Taxes. (a) Any and all payments by or on account of any
obligation of the Borrower hereunder or under any other Loan Document shall be
made free and clear of and without deduction for any Indemnified Taxes or Other
Taxes; provided that if the Borrower shall be required to deduct any Indemnified
Taxes or Other Taxes from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) the
Administrative Agent, Lender or Issuing Bank (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower shall pay
the full amount deducted to the relevant Governmental Authority in accordance
with applicable law.

         (b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

         (c) The Borrower shall indemnify the Administrative Agent, each Lender
and Issuing Bank, within 15 days after the date of receipt of a written demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by
the Administrative Agent, such Lender or such Issuing Bank, as the case may be,
on or with respect to any payment by or on account of any obligation of the
Borrower hereunder or under any other Loan Document (including Indemnified Taxes
or Other Taxes imposed or asserted on or attributable to amounts payable under
this Section) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrower by a Lender or Issuing Bank, or by the
Administrative Agent on its own behalf or on behalf of a Lender or Issuing Bank,
shall be conclusive absent manifest error.

         (d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.

         (e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), on or prior to the first payment by the
Borrower under this Agreement to such Foreign Lender or Participant and from
time to time thereafter as prescribed by applicable law, such properly completed
and executed documentation prescribed by applicable law or


                                       62
<PAGE>

reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate.

         (f) If any Lender determines, in its sole discretion, that it has
received a refund of any Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 2.17, it shall pay over such refund
to the Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower under this Section 2.17 with respect to
the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Lender without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund); provided, however,
that the Borrower, upon request of such Lender, agrees to repay the amount paid
over to the Borrower (plus any penalties, interest or other charges imposed by
the relevant Governmental Authority) to the Lender in the event such Lender is
required to repay such refund to such Governmental Authority. Nothing contained
in this Section 2.17(f) shall require any Lender to make available its tax
returns (or any other information relating to its taxes which it deems
confidential) to the Borrower or any other Person.

         (g) Notwithstanding anything expressed or implied to the contrary in
this Agreement or any other Loan Document (including any schedule or exhibit to
any of the foregoing), this Section 2.17 (and Section 10.04 insofar as it
relates to this Section 2.17) shall constitute the complete and exclusive
understanding of the parties in respect of all matters relating to any Taxes
(including interest thereon, additions thereto and penalties in connection
therewith).

         SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs. (a) The Borrower shall make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal, interest, fees
or reimbursement of LC Disbursements, or of amounts payable under Section 2.15,
2.16 or 2.17, or otherwise) prior to 1:00 p.m., Dallas, Texas time, on the date
when due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at Dallas, Texas,
except that payments pursuant to Sections 2.15, 2.16, 2.17 and 10.03 shall be
made directly to the Persons entitled thereto and payments pursuant to other
Loan Documents shall be made to the Persons specified therein. The
Administrative Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment under any Loan Document shall be due on a day
that is not a Business Day, the date for payment shall be extended to the next
succeeding Business Day (unless, in the case of payments in respect of
Eurodollar Loans, such next succeeding Business Day would fall in the next
calendar month, in which case such payment shall be due on the next preceding
Business Day), and, in the case of any payment accruing interest, interest
thereon shall be payable for the


                                       63
<PAGE>


period of such extension. All payments under each Loan Document shall be made in
dollars.

         (b) If at any time insufficient funds are received by and available to
the Administrative Agent to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (ii) second, towards payment of principal
and unreimbursed LC Disbursements then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties.

         (c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans (other than Swingline Loans) or participations in
LC Disbursements or Swingline Loans resulting in such Lender receiving payment
of a greater proportion of the aggregate amount of its Loans (other than
Swingline Loans) and participations in LC Disbursements and Swingline Loans and
accrued interest thereon than the proportion received by any other Lender, then
the Lender receiving such greater proportion shall purchase (for cash at face
value) participations in the Loans (other than Swingline Loans) and
participations in LC Disbursements and Swingline Loans of other Lenders to the
extent necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans (other than Swingline Loans) and
participations in LC Disbursements and Swingline Loans; provided that (i) if any
such participations are purchased and all or any portion of the payment giving
rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement (including without limitation pursuant to Section 2.11)
or any payment obtained by a Lender as consideration for the assignment of or
sale of a participation in any of its Loans or participations in LC
Disbursements to any assignee or participant, other than to the Borrower or any
Subsidiary or Affiliate thereof (as to which the provisions of this paragraph
shall apply). The Borrower consents to the foregoing and agrees, to the extent
it may effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.

         (d) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or an Issuing Bank hereunder that the
Borrower will not make such payment, the Administrative Agent may assume that
the Borrower has made such


                                       64
<PAGE>


payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders or the applicable Issuing Bank or Banks,
as the case may be, the amount due. In such event, if the Borrower has not in
fact made such payment, then each of the Lenders or Issuing Banks, as the case
may be, severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender or Issuing Bank with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent, at the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation.

         (e) If any Lender shall fail to make any payment required to be made by
it pursuant to Section 2.04(c), 2.05(d) or 2.05(e), 2.06(b), 2.18(d) or
10.03(c), then the Administrative Agent may, in its discretion (notwithstanding
any contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender's
obligations under such Sections until all such unsatisfied obligations are fully
paid.

         SECTION 2.19. Mitigation Obligations; Replacement of Lenders. (a) If
any Lender requests compensation under Section 2.15, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.17, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.

         (b) If any Lender requests compensation under Section 2.15, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 10.04), all its interests, rights and obligations under this Agreement
to an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Borrower
shall have received the prior written consent of the Administrative Agent (and,
if a Revolving Commitment is being assigned, the Issuing Bank and Swingline
Lender), which consent shall not unreasonably be withheld, (ii) such Lender
shall have received payment of an amount equal to the outstanding principal of
its Loans and participations in LC Disbursements


                                       65
<PAGE>


and Swingline Loans, accrued interest thereon, accrued fees and all other
amounts payable to it hereunder, from the assignee (to the extent of such
outstanding principal and accrued interest and fees) or the Borrower (in the
case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.15 or payments required
to be made pursuant to Section 2.17, such assignment will result in a reduction
in such compensation or payments. A Lender shall not be required to make any
such assignment and delegation if, prior thereto, (i) as a result of a waiver by
such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply or (ii) such Lender elects to
withdraw its request.

         SECTION 2.20. Additional Incremental Facilities and Commitments. (a) At
any time prior to December 31, 2002, and so long as no Default or Event of
Default shall have occurred and be continuing or would result therefrom, the
Borrower may request, on one or more occasions, by notice to the Administrative
Agent and the Incremental Facility Arrangers, that one or more Lenders (and/or
one or more other Persons which shall become Lenders as provided in Section
2.20(d) below) provide one or more additional facilities (each, an "Additional
Incremental Facility"), each of which shall provide for commitments (the
"Additional Incremental Commitments") in an aggregate amount of not less than
$100,000,000 and all of which Additional Incremental Facilities shall provide
for Additional Incremental Commitments in an aggregate amount not in excess of
$500,000,000; provided that no Lender shall have any obligation to provide any
Additional Incremental Commitment and any Lender (or any other Person which
becomes a Lender pursuant to Section 2.20(d) below) may provide Additional
Incremental Commitments without the consent of any other Lender.

         (b) The maturity date, scheduled amortization and commitment
reductions, mandatory prepayments and commitment reductions, interest rate,
minimum borrowings and prepayments, commitment fees and other amounts payable in
respect of any Additional Incremental Facility, and certain agent
determinations, shall be as set forth in an agreement (an "Additional
Incremental Facility Agreement") among the Loan Parties, the Administrative
Agent, each Incremental Facility Arranger (but only if it is acting in the
capacity of joint lead arranger with respect to such Additional Incremental
Facility) and the Lenders and other Persons agreeing to provide Additional
Incremental Commitments thereunder; provided that any term Incremental Loans
(the "Additional Incremental Term Loans") shall have a Weighted Average Life to
Maturity of no less than the Weighted Average Life to Maturity of the Term Loans
then outstanding and any revolving Incremental Commitment (the "Additional
Incremental Revolving Commitments" and any loans made pursuant thereto, the
"Additional Incremental Revolving Loans") shall have a Weighted Average Life to
Maturity of not less than the Weighted Average Life to Maturity of the Revolving
Commitments then outstanding.

         (c) [Intentionally deleted]


                                       66
<PAGE>


         (d) The effectiveness of any Additional Incremental Facility to be
created under this Section 2.20, and the obligation of any Lender or other
Person providing any Additional Incremental Commitment thereunder to make any
Additional Incremental Loans pursuant thereto, is subject to, in addition to the
conditions set forth in Article 4, the satisfaction of each of the following
conditions: each Loan Party, the Administrative Agent, each Incremental Facility
Arranger (but only if it is acting in the capacity of joint lead arranger with
respect to such Additional Incremental Facility) and each Lender or other Person
providing Additional Incremental Commitments thereunder (each, an "Additional
Incremental Lender") shall have executed and delivered to the Administrative
Agent an Additional Incremental Facility Agreement with respect to such
Additional Incremental Facility, (x) the Administrative Agent shall have
received, and (y) the Administrative Agent shall have received for the
respective accounts of any other agents and the Additional Incremental Lenders,
all fees and other amounts payable by the Borrower in respect of such Additional
Incremental Facility on or prior to such date of effectiveness and the
Administrative Agent (or its counsel) shall have received such documents and
certificates, and such legal opinions, as the Administrative Agent and the
Incremental Facility Arrangers or their counsel shall reasonably request,
including documents, certificates and legal opinions relating to the
organization, existence and good standing of each Loan Party, the authorization
of such Additional Incremental Facility and other legal matters relating to the
Loan Parties or the Loan Documents (including the applicable Additional
Incremental Facility Agreement). The Administrative Agent shall notify each
Lender as to the effectiveness of each Additional Incremental Facility
hereunder.



                                    ARTICLE 3

                         REPRESENTATIONS AND WARRANTIES

         Each of Holdings and the Borrower represents and warrants to the
Lenders that:

         SECTION 3.1. Organization; Powers. Each of Holdings and the Restricted
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.

         SECTION 3.2. Authorization; Enforceability. The Transactions to be
entered into by each Loan Party are within such Loan Party's corporate powers
and have been duly authorized by all necessary corporate and, if required,
stockholder action. This Agreement has been duly executed and delivered by each
of Holdings and the Borrower and constitutes, and each other Loan Document to
which any Loan Party is to be a party,


                                       67
<PAGE>


when executed and delivered by such Loan Party, will constitute, a legal, valid
and binding obligation of Holdings, the Borrower or such Loan Party (as the case
may be), enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.

         SECTION 3.3. Governmental Approvals; No Conflicts. The Transactions (a)
do not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority, except such as have been obtained
or made and are in full force and effect and except filings necessary to perfect
Liens created under the Loan Documents (if any), (b) will not violate any
applicable law or regulation or the charter, by-laws or other organizational
documents of Holdings or any Restricted Subsidiary or any order of any
Governmental Authority, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon Holdings or any Restricted
Subsidiary or any of their respective assets, or give rise to a right thereunder
to require any payment to be made by Holdings or any Restricted Subsidiary, and
(d) will not result in the creation or imposition of any Lien on any asset of
Holdings or any Restricted Subsidiary, except Liens created under the Loan
Documents (if any).

         SECTION 3.4. Financial Condition; No Material Adverse Change. (a)
Holdings has heretofore furnished to the Lenders Holdings' consolidated balance
sheet and statements of operations, stockholders equity and cash flows as of and
for the fiscal years ended December 31, 1998, December 31, 1999 and December 31,
2000, reported on by Ernst & Young LLP, independent public accountants. Such
financial statements present fairly, in all material respects, the financial
position and results of operations and cash flows of Holdings and the
Subsidiaries as of such dates and for such periods in accordance with GAAP.

         (b) Holdings has heretofore furnished to the Lenders its pro forma
consolidated balance sheet as of December 31, 2000 and projected pro forma
statements of operations and cash flows for the fiscal year ended December 31,
2001, prepared giving effect to (x) the Transactions under the Incremental
Facility and the Structured Note Financing and (y) the transactions described in
clause (x) and, in addition, the sale of its Williams Communications Solutions
business unit, as if such events had occurred on such date or on the first day
of such fiscal year, as the case may be. Such projected pro forma consolidated
balance sheets and statements of operations and cash flows (i) have been
prepared in good faith based on the same assumptions used to prepare the pro
forma financial statements included in the Information Memorandum (which
assumptions are believed by Holdings and the Borrower to be reasonable), (ii)
are based on the best information available to Holdings and the Borrower after
due inquiry, (iii) accurately reflect all adjustments necessary to give effect
to the Transactions under the Incremental Facility and the Structured Note
Financing and, in the case of one such set of financial statements, the sale of
its Williams Communications Solutions business unit, and (iv) present fairly, in
all material respects, the pro forma financial position of Holdings and


                                       68
<PAGE>


the Subsidiaries as of such date and for such periods as if the Transactions,
the Structured Note Financing and, in the case of one such set of financial
statements, the sale of its Williams Communications Solutions business unit had
occurred on such date or at the beginning of such period, as the case may be.

         (c) Except as disclosed in the financial statements referred to above
or the notes thereto or in the Information Memorandum and except for the
Disclosed Matters, after giving effect to the Transactions, none of Holdings or
any Restricted Subsidiary has, as of the Effective Date, any material contingent
liabilities, unusual material long-term commitments or unrealized material
losses.

         (d) The projections delivered to the Lenders on the Amendment No. 5
Effective Date (the "Projections") were based on assumptions believed by the
Borrower and Holdings in good faith to be reasonable when made and as of their
date represented the Borrower's and Holdings' good faith estimate of future
performance of Holdings and the Subsidiaries and of the Borrower and its
consolidated subsidiaries.

         (e) Since December 31, 2000, there has been no Material Adverse Change.

         SECTION 3.5. Properties. (a) Each of Holdings and the Restricted
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business (including its Mortgaged
Properties, if any), except for minor defects in title that do not interfere
with its ability to conduct its business as currently conducted or to utilize
such properties for their intended purposes. None of the properties and assets
of Holdings or any Restricted Subsidiary is subject to any Lien other than
Permitted Encumbrances, Liens created by the Collateral Documents (if any) and
other Liens permitted under Section 6.02.

         (b) Each of Holdings and the Subsidiaries owns, or is licensed to use,
all trademarks, trade names, copyrights, patents and other intellectual property
material to its business, and the use thereof by Holdings and the Subsidiaries
does not infringe upon the rights of any other Person, except for any such
infringements that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.

         (c) Schedule 3.05 sets forth the address of each real property that is
owned or leased by Holdings, the Borrower or any other Loan Party (other than
the Parent) as of the Effective Date after giving effect to the Transactions.

         SECTION 3.6. Litigation and Environmental Matters. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of Holdings or the Borrower,
threatened against or affecting Holdings or any Subsidiary (i) as to which there
is a reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected,


                                       69
<PAGE>


individually or in the aggregate, to result in a Material Adverse Effect (other
than the Disclosed Matters) or (ii) that involve any of the Loan Documents or
the Transactions.

         (b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, neither Holdings nor any
Subsidiary (i) has failed to comply with any Environmental Law or to obtain,
maintain or comply with any permit, license or other approval required under any
Environmental Law, (ii) has become subject to any Environmental Liability, (iii)
has received written notice of any claim with respect to any Environmental
Liability or (iv) knows of any basis for any violations of any Environmental Law
or any release, threatened release or exposure to any Hazardous Materials that
is likely to form the basis of any Environmental Liability.

         (c) Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.

         SECTION 3.7. Compliance with Laws and Agreements. Each of Holdings and
the Subsidiaries is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.

         SECTION 3.8. Investment and Holding Company Status. Neither Holdings
nor any Restricted Subsidiary is (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.

         SECTION 3.9. Taxes. Each of Holdings and the Subsidiaries has timely
filed or caused to be filed (or the Parent has filed or caused to be filed) all
Tax returns and reports required to have been filed and has paid or caused to be
paid (or the Parent has paid or caused to be paid) all Taxes required to have
been paid by or with respect to it, except (a) Taxes that are being contested in
good faith by appropriate proceedings and for which Holdings or such Subsidiary,
as applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.

         SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting


                                       70
<PAGE>


such amounts, exceed by more than $25,000,000 the fair market value of the
assets of such Plan, and the present value of all accumulated benefit
obligations of all underfunded Plans (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $25,000,000 the fair market value of the assets of all such underfunded
Plans.

         SECTION 3.11. Disclosure. Holdings and the Borrower have disclosed to
the Lenders all agreements, instruments and corporate or other restrictions to
which Holdings or any Restricted Subsidiary is subject, and all other matters
known to any of them, that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect. Neither the Information
Memorandum nor any of the other reports, financial statements, certificates or
other information furnished by or on behalf of any Loan Party to any Agent or
any Lender in connection with the negotiation of this Agreement or any other
Loan Document or delivered hereunder or thereunder (as modified or supplemented
by other information so furnished) contains any material misstatement of fact or
omits to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided that, with respect to projected financial information, Holdings and the
Borrower represent only that such information was prepared in good faith based
upon assumptions believed to be reasonable at the time.

         SECTION 3.12. Subsidiaries. Schedule 3.12 sets forth the name of, and
the direct or indirect ownership interest of Holdings or the Borrower in, each
Subsidiary and identifies each Subsidiary that is a Subsidiary Loan Party, in
each case as of the Effective Date.

         SECTION 3.13. Insurance. Schedule 3.13 sets forth a description of all
insurance maintained by or on behalf of Holdings and the Restricted Subsidiaries
as of the Effective Date. As of the Effective Date, all premiums in respect of
such insurance have been paid.

         SECTION 3.14. Labor Matters. As of the Effective Date, there are no
strikes, lockouts or slowdowns against Holdings or any Restricted Subsidiary
pending or, to the knowledge of Holdings or the Borrower, threatened. The hours
worked by and payments made to employees of Holdings and the Restricted
Subsidiaries have not been in violation of the Fair Labor Standards Act or any
other applicable Federal, state, local or foreign law dealing with such matters.
All payments due from Holdings or any Restricted Subsidiary, or for which any
claim may be made against Holdings or any Restricted Subsidiary, on account of
wages and employee health and welfare insurance and other benefits, have been
paid or accrued as a liability on the books of Holdings or such Restricted
Subsidiary. The consummation of the Transactions and the Reorganization has not
and will not give rise to any right of termination or right of renegotiation on
the part of any union under any collective bargaining agreement by which
Holdings or any Restricted Subsidiary is bound.


                                       71
<PAGE>


         SECTION 3.15. Solvency. Immediately after the consummation of the
Transactions to occur on the Effective Date and immediately following the making
of each Loan made on the Effective Date and after giving effect to the
application of the proceeds of such Loans, (a) the fair value of the assets of
each Loan Party will exceed its debts and liabilities, subordinated, contingent
or otherwise; (b) the present fair saleable value of the property of each Loan
Party will be greater than the amount that will be required to pay the probable
liability of its debts and other liabilities, subordinated, contingent or
otherwise, as such debts and other liabilities become absolute and matured; (c)
each Loan Party will be able to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured; and (d) each Loan Party will not have unreasonably small capital with
which to conduct the business in which it is engaged as such business is now
conducted and is proposed to be conducted following the Effective Date.

         SECTION 3.16. No Burdensome Restrictions. No contract, lease, agreement
or other instrument to which Holdings or any Restricted Subsidiary is a party or
by which any of their property is bound or affected, no charge, corporate
restriction, judgment, decree or order and no provision of applicable law or
governmental regulation could reasonably be expected to have Material Adverse
Effect.

         SECTION 3.17. Representations in Loan Documents True and Correct. As of
the dates when made and as of the Effective Date, each representation and
warranty of Holdings or any Restricted Subsidiary party thereto contained in any
Loan Document is true and correct.


                                    ARTICLE 4

                                   CONDITIONS

         SECTION 4.1. Effective Date. [Intentionally deleted]

         SECTION 4.2. Each Credit Event. The obligation of each Lender to make a
Loan on the occasion of any Borrowing, and of each Issuing Bank to issue, amend,
renew or extend any Letter of Credit, is subject to the satisfaction of the
following conditions:

         (a) The representations and warranties of each Loan Party set forth in
the Loan Documents (excluding Section 3.04(b)) shall be true and correct on and
as of the date of such Borrowing or the date of issuance, amendment, renewal or
extension of such Letter of Credit, as applicable.

         (b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Default shall have occurred and be continuing.


                                       72
<PAGE>


         Each Borrowing and each issuance, amendment, renewal or extension of a
Letter of Credit shall be deemed to constitute a representation and warranty by
Holdings and the Borrower on the date thereof as to the matters specified in
Sections 4.02(a), 4.02(b) and 4.03.

         SECTION 4.3. First Incremental Borrowing Date with Respect to the
Incremental Facility. The obligation of each Incremental Lender to make a Loan
on the occasion of the First Incremental Borrowing Date is subject to the
satisfaction of the following conditions (in addition to the conditions set
forth in Section 4.02):

         (a) The Spin-Off shall have been consummated.

         (b) The Initial Collateral Date shall have occurred (or shall occur on
the date of such Borrowing) and, prior to the making of any Loan on the occasion
of such Borrowing, Holdings and the Borrower shall have complied with all of the
provisions of Section 5.11A.

         (c) The First Incremental Borrowing Date shall be no later than the
date that is 180 days after the date of Amendment No. 5 Effective Date.

         (d) The Administrative Agent shall have received a certificate, in form
and substance reasonably satisfactory to the Administrative Agent, from the
Financial Officer of each of Holdings and the Borrower, certifying as to
compliance of the matters specified in Sections 4.03(a) and 4.03(b).


                                    ARTICLE 5

                              AFFIRMATIVE COVENANTS

         Until the Commitments have expired or been terminated and the principal
of and interest on each Loan and all fees payable hereunder shall have been paid
in full and all Letters of Credit shall have expired or terminated and all LC
Disbursements shall have been reimbursed, each of Holdings and the Borrower
covenants and agrees with the Lenders that:

         SECTION 5.1. Financial Statements and Other Information. Holdings and
the Borrower will furnish to the Administrative Agent and each Lender:

         (a) (i) within 90 days after the end of each fiscal year of Holdings,
its audited consolidated balance sheets and related audited consolidated
statements of operations, stockholders' equity and cash flows as of the end of
and for such fiscal year (including segment reporting with respect to each of
Holdings' and the Subsidiaries' business segments consistent with that provided
in the Notes Offering Registration Statement),


                                       73
<PAGE>


setting forth in each case in comparative form the figures for the previous
fiscal year, all reported on by Ernst & Young LLP or other independent public
accountants of recognized national standing (without a "going concern" or like
qualification or exception and without any qualification or exception as to the
scope of such audit) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and results of
operations of Holdings and the Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, (ii) within 90 days after the end of
each fiscal year of the Borrower, its audited consolidated balance sheets and
related audited consolidated statements of operations, stockholders' equity and
cash flows as of the end of and for such fiscal year (including segment
reporting with respect to each of the Borrower's and its consolidated
subsidiaries' business segments consistent with that provided with respect to
the Borrower's and its consolidated subsidiaries' business segments in the Notes
Offering Registration Statement), setting forth in each case in comparative form
the figures for the previous fiscal year, all reported on by Ernst & Young LLP
or other independent public accountants of recognized national standing (without
a "going concern" or like qualification or exception and without any
qualification or exception as to the scope of such audit) to the effect that
such consolidated financial statements present fairly in all material respects
the financial condition and results of operations of the Borrower and its
consolidated subsidiaries on a consolidated basis in accordance with GAAP
consistently applied and (iii) within 90 days after the end of each fiscal year
of Holdings and the Borrower, (x) supplemental unaudited balance sheets and
related unaudited statements of operations, stockholders' equity and cash flows
as of the end of and for such fiscal year, setting forth in tabular form in each
case the figures for the previous year, for the Borrower and Holdings and the
consolidating adjustments with respect thereto and (y) segment reporting of
EBITDA and Adjusted EBITDA with respect to each business segment of Holdings and
the Subsidiaries and the Borrower and its consolidated subsidiaries consistent
with the business segments reported on in the Notes Offering Registration
Statement;

         (b) (i) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of Holdings, unaudited consolidated and
consolidating balance sheets and related consolidated and consolidating
statements of operations, stockholders' equity and cash flows of Holdings and
the Subsidiaries as of the end of and for such fiscal quarter and the then
elapsed portion of the fiscal year, setting forth in each case in comparative
form the figures for the corresponding period or periods of the previous fiscal
year (or in the case of the balance sheet, as of the end of the previous fiscal
year) (including segment reporting with respect to each of Holdings' and the
Subsidiaries' business segments consistent with that provided in the Notes
Offering Registration Statement and also including segment reporting of EBITDA
and Adjusted EBITDA), all certified by a Financial Officer of Holdings as
presenting fairly in all material respects the financial condition and results
of operations of Holdings and the Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes and (ii) within 45 days after the end
of each of the first three fiscal quarters of each fiscal year of the Borrower,
unaudited consolidated


                                       74
<PAGE>


balance sheets and related statements of operations, stockholders' equity and
cash flows of the Borrower and its consolidated subsidiaries as of the end of
and for such fiscal quarter and the then elapsed portion of the fiscal year,
setting forth in each case in comparative form the figures for the corresponding
period or periods of the previous fiscal year (or, in the case of the balance
sheet, as of the end of the previous fiscal year) (including segment reporting
with respect to each of the Borrower's and its consolidated subsidiaries'
business segments consistent with that provided with respect to the Borrower's
and its consolidated subsidiaries' business segments in the Notes Offering
Registration Statement and also including segment reporting of EBITDA and
Adjusted EBITDA), all certified by a Financial Officer of the Borrower as
presenting fairly in all material respects the financial condition and results
of operations of the Borrower and its consolidated subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;

         (c) concurrently with any delivery of financial statements under
Section 5.01(a) or 5.01(b) above, a certificate of a Financial Officer of the
Borrower (i) certifying as to whether a Default has occurred and, if a Default
has occurred, specifying the details thereof and any action taken or proposed to
be taken with respect thereto, (ii) setting forth in reasonable detail
calculations demonstrating (x) compliance with Section 6.08 and Sections 6.15
through 6.19, including, if applicable, calculations showing capital
contributions made by the Parent pursuant to Section 6.20 and the resulting
effects on the Borrower's compliance with Section 6.08 and Sections 6.15 through
6.19 and (y) Additional Capital at such date, including detail as to the sources
and uses of Additional Capital since June 30, 1999 and (iii) stating whether any
change in GAAP or in the application thereof has occurred since the date of
Holdings' audited financial statements referred to in Section 3.04 and, if any
such change has occurred, specifying the effect of such change on the financial
statements accompanying such certificate;

         (d) concurrently with any delivery of financial statements under clause
5.01(a) above, a certificate of the accounting firm that reported on such
financial statements stating whether they obtained knowledge during the course
of their examination of such financial statements of any Default (which
certificate may be limited to the extent required by accounting rules or
guidelines);

         (e) as soon as practicable after approval by the Board of Directors of
the Parent and in any event not later than 120 days after the commencement of
each fiscal year of the Borrower, a consolidated and consolidating budget of
Holdings for such fiscal year and a consolidated budget of the Borrower for such
fiscal year (including projected consolidated (and, in the case of Holdings,
consolidating) balance sheets, related consolidated (and, in the case of
Holdings, consolidating) statements of projected operations and cash flow as of
the end of and for such fiscal year and segment information with respect to each
of Holdings' and the Subsidiaries' and the Borrower's and its consolidated
subsidiaries' business segments consistent with the categories of information
provided with respect to Holdings' and the Subsidiaries' business segments


                                       75
<PAGE>


in the Notes Offering Registration Statement, together with projected EBITDA and
Adjusted EBITDA for such segments) and, promptly when available, any significant
revisions of such budget;

         (f) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
Holdings or any Restricted Subsidiary with the Commission, or any Governmental
Authority succeeding to any or all of the functions of the Commission, or with
any national securities exchange, or distributed by Holdings to its shareholders
generally, as the case may be, except to the extent any such report, proxy
statement or other material is available electronically on a publicly-accessible
website; and

         (g) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of Holdings
or any Restricted Subsidiary, or compliance with the terms of any Loan Document,
as the Administrative Agent or any Lender may reasonably request.

         SECTION 5.2. Notices of Material Events. Upon knowledge thereof,
Holdings or the Borrower will furnish to the Administrative Agent and each
Lender prompt written notice of the following:

         (a) the occurrence of any Default;

         (b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting Holdings,
the Borrower or any Affiliate thereof that could reasonably be expected to
result in a Material Adverse Effect;

         (c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
a Material Adverse Effect;

         (d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.

         Each notice delivered under this Section shall be accompanied by a
statement of a Financial Officer or other executive officer of the Borrower
setting forth the details of the event or development requiring such notice and
any action taken or proposed to be taken with respect thereto.

         SECTION 5.3. Existence; Conduct of Business. Each of Holdings and the
Borrower will, and will cause each other Restricted Subsidiary to, (i) continue
to engage in business of the same general type as now conducted and (ii) do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect its legal existence and the rights, licenses, permits, privileges,
franchises, patents, copyrights, trademarks


                                       76
<PAGE>


and trade names material to the conduct of its business; provided that the
foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 6.03.

         SECTION 5.4. Payment of Obligations. Each of Holdings and the Borrower
(i) will, and will cause each other Restricted Subsidiary to, pay its
Indebtedness and other material obligations, including tax liabilities, before
the same shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
Holdings, the Borrower or such other Restricted Subsidiary has set aside on its
books adequate reserves with respect thereto in accordance with GAAP, (c) such
contest effectively suspends collection of the contested obligation and the
enforcement of any Lien securing such obligation and (d) the failure to make
payment pending such contest could not reasonably be expected to result in a
Material Adverse Effect and (ii) shall not breach, or permit any other
Restricted Subsidiary to breach, in any material respect, or permit to exist any
material default under, the terms of any material lease, commitment, contract,
instrument or obligation to which it is a party, or by which its properties or
assets are bound, except where the failure to do the foregoing would not in the
aggregate have a Material Adverse Effect.

         SECTION 5.5. Maintenance of Properties. Each of Holdings and the
Borrower will, and will cause each other Restricted Subsidiary to, keep and
maintain all property material to the conduct of its business in good working
order and condition, ordinary wear and tear excepted.

         SECTION 5.6. Insurance. Holdings and the Borrower will, and will cause
each other Restricted Subsidiary to, maintain, with financially sound and
reputable insurance companies, insurance in such amounts and against such risks
as are customarily maintained by companies engaged in the same or similar
businesses operating in the same or similar locations.

         SECTION 5.7. Casualty and Condemnation. The Borrower will (a) furnish
to the Administrative Agent and the Lenders prompt written notice of any
casualty or other insured damage to any portion of any of Holdings' and the
Restricted Subsidiaries' property or assets or the commencement of any action or
proceeding for the taking of any of Holdings' and the Restricted Subsidiaries'
property or assets or any part thereof or interest therein under power of
eminent domain or by condemnation or similar proceeding (in each case with a
value in excess of $10,000,000) and (b) ensure that the Net Proceeds of any such
event (whether in the form of insurance proceeds, condemnation awards or
otherwise) are applied, to the extent such Net Proceeds have not been utilized
to repair, restore or replace such property or assets or to acquire other
Telecommunications Assets within 360 days after such event, to prepay Loans and
reduce Commitments as provided in Sections 2.11(b) and 2.08(f), respectively.

         SECTION 5.8. Books and Records; Inspection and Audit Rights. Each of
Holdings and the Borrower will, and will cause each other Restricted Subsidiary
to, keep proper


                                       77
<PAGE>


books of record and account in which materially full, true and correct entries
are made of all dealings and transactions in relation to its business and
activities. Each of Holdings and the Borrower will, and will cause each other
Restricted Subsidiary to, permit any representatives designated by the
Administrative Agent or any Lender at the expense of the Administrative Agent or
Lender, as the case may be, or, if an Event of Default shall have occurred and
be continuing, at the expense of the Borrower, upon reasonable prior notice, to
visit and inspect its properties, to examine and make extracts from its books
and records, and to discuss its affairs, finances and condition with its
officers and independent accountants, all at such reasonable times and as often
as reasonably requested, subject to Section 10.12.

         SECTION 5.9. Compliance with Laws. Each of Holdings and the Borrower
will, and will cause each other Subsidiary to, comply with all laws, rules,
regulations and orders of any Governmental Authority applicable to it or its
property (including, without limitation, Environmental Laws and ERISA and the
rules and regulations thereunder), except where the necessity of compliance
therewith is contested in good faith by appropriate action and such failure to
comply, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.

         SECTION 5.10. Use of Proceeds and Letters of Credit. (a) The proceeds
of Loans will be used (i) for working capital requirements and general corporate
purposes of the Borrower and the other Restricted Subsidiaries and (ii) to pay
the fees and expenses associated with the Facilities.

         (b) No part of the proceeds of any Loan will be used, whether directly
or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board, including Regulations U and X.

         SECTION 5.11A. Initial Collateral Date. On the Initial Collateral Date,
Holdings and the Borrower hereby agree that they will, and will cause each other
Restricted Subsidiary to:

         (a) Deliver to the Administrative Agent duly executed counterparts of
the Security Agreement, together with the following:

                (i) duly executed counterparts of each supplemental agreement
                required to be executed and delivered by the terms of the
                Security Agreement (including, without limitation, any Patent
                Security Agreement, and Trademark Security Agreement and any
                Control Agreement, in each case as defined in the Security
                Agreement);

                (ii) stock certificates representing any or all of the
                outstanding shares of capital stock or other Equity Interests of
                the Borrower and each Restricted Subsidiary and stock powers and
                instruments of transfer, endorsed in blank, with respect to such
                stock certificates;


                                       78
<PAGE>


                (iii) any or all documents and instruments, including Uniform
                Commercial Code financing statements, required by law or
                reasonably requested by the Administrative Agent to be filed,
                registered or recorded to create or perfect the Liens intended
                to be created under the Security Agreement; and

                (iv) a completed perfection certificate dated the Initial
                Collateral Date, in form and substance reasonably satisfactory
                to the Administrative Agent and the Incremental Facility
                Arrangers and signed by an executive officer or Financial
                Officer of Holdings, together with all attachments contemplated
                thereby, including the results of a search of the Uniform
                Commercial Code (or equivalent) filings made with respect to the
                Loan Parties in the jurisdictions contemplated by such
                perfection certificate and copies of the financing statements
                (or similar documents) disclosed by such search and evidence
                reasonably satisfactory to the Administrative Agent and the
                Incremental Facility Arrangers that the Liens indicated by such
                financing statements (or similar documents) are permitted by
                Section 6.02 or have been released.

         (b) Deliver to the Administrative Agent a favorable written opinion
(addressed to the Agents, the Issuing Banks, the Swingline Lenders and the
Lenders and dated the Initial Collateral Date) of each of (i) counsel for
Holdings, the Borrower and each Subsidiary Loan Party reasonably acceptable to
the Administrative Agent and the Incremental Facility Arrangers, (ii) the
general counsel of Holdings and (iii) local counsel in the jurisdictions where
the Borrower is incorporated and where its chief executive office is located
and, in the case of each such opinion required by this paragraph, covering such
matters relating to the Loan Parties, the Loan Documents, the Collateral and the
Transactions as the Administrative Agent (or its counsel), the Incremental
Facility Arrangers (or its counsel) or the Required Lenders shall reasonably
request.

         SECTION 5.11B. Collateral Event. If a Collateral Event shall have
occurred and be continuing, the Administrative Agent, the Incremental Facility
Arrangers or the Required Lenders may by written notice to the Borrower (a
"Collateral Notice"), request, and Holdings and the Borrower hereby agree that
they will, and will cause each other Restricted Subsidiary to, within 30 days of
the Borrowers' receipt of such Collateral Notice (such thirtieth day, a
"Collateral Establishment Date"):

         (a) Subject to subsection (d) of this Section 5.11B, deliver to the
Administrative Agent duly executed counterparts of the Security Agreement (to
the extent not previously delivered pursuant to Section 5.11A) and each other
Collateral Document reasonably requested by the Administrative Agent, the
Incremental Facility Arrangers or the Required Lenders, in form and substance
satisfactory to the Administrative Agent, the Incremental Facility Arrangers or
the Required Lenders, signed on behalf of Holdings, the Borrower and each
Subsidiary Loan Party requested by the Administrative Agent, the Incremental
Facility Arrangers or the Required Lenders, together with (to the extent not


                                       79
<PAGE>


previously delivered pursuant to Section 5.11A) such of the following as shall
have been so requested:

                (i) stock certificates representing any or all of the
                outstanding shares of capital stock of the Borrower and each
                other Subsidiary of Holdings owned by or on behalf of any Loan
                Party as of such Collateral Establishment Date (except that
                stock certificates representing shares of common stock of a
                Foreign Subsidiary may be limited to 66% of the outstanding
                shares of common stock of such Foreign Subsidiary) and stock
                powers and instruments of transfer, endorsed in blank, with
                respect to such stock certificates;

                (ii) any or all documents and instruments, including Uniform
                Commercial Code financing statements, required by law or
                reasonably requested by the Administrative Agent to be filed,
                registered or recorded to create or perfect the Liens intended
                to be created under the Collateral Documents; and

                (iii) a completed perfection certificate dated such Collateral
                Establishment Date, in form and substance reasonably
                satisfactory to the Administrative Agent and the Incremental
                Facility Arrangers and signed by an executive officer or
                Financial Officer of Holdings, together with all attachments
                contemplated thereby, including the results of a search of the
                Uniform Commercial Code (or equivalent) filings made with
                respect to the Loan Parties in the jurisdictions contemplated by
                such perfection certificate and copies of the financing
                statements (or similar documents) disclosed by such search and
                evidence reasonably satisfactory to the Administrative Agent and
                the Incremental Facility Arrangers that the Liens indicated by
                such financing statements (or similar documents) are permitted
                by Section 6.02 or have been released.

         (b) If requested by the Administrative Agent, the Incremental Facility
Arrangers or the Required Lenders, on or before the thirtieth day following any
Collateral Establishment Date or such later day as shall be acceptable to the
Administrative Agent, the Incremental Facility Arrangers or the Required Lenders
(a "Mortgage Establishment Date"), Holdings and the Borrower shall, and shall
cause each other Restricted Subsidiary to, deliver to the Administrative Agent
(i) counterparts of a Mortgage with respect to each Mortgaged Property as to
which such request is made, in each case signed on behalf of the record owner of
such Mortgaged Property, (ii) a policy or policies of title insurance issued by
a nationally recognized title insurance company, insuring the Lien of each such
Mortgage as a valid first Lien on the Mortgaged Property described therein, free
of any other Liens except as permitted by Section 6.02, together with such
endorsements, coinsurance and reinsurance as the Collateral Agent, the
Incremental Facility Arrangers or the Required Lenders may reasonably request,
and (iii) such surveys, abstracts and appraisals as may be required pursuant to
such Mortgages or as the Administrative Agent, the Incremental Facility
Arrangers or the Required Lenders may reasonably request.


                                       80
<PAGE>


         (c) On or before any Collateral Establishment Date or Mortgage
Establishment Date, Holdings and the Borrower shall deliver a favorable written
opinion (addressed to the Agents, the Incremental Facility Arrangers, the
Issuing Banks, the Swingline Lenders and the Lenders and dated on or prior to
such Collateral Establishment Date or Mortgage Establishment Date) of each of
(i) counsel for Holdings, the Borrower and each Subsidiary Loan Party reasonably
acceptable to the Administrative Agent, (ii) the general counsel of Holdings and
(iii) local counsel in each jurisdiction where any Collateral or Mortgaged
Property is located and, in the case of each such opinion required by this
paragraph, covering such matters relating to the Loan Parties, the Loan
Documents, the Collateral and the Transactions as the Administrative Agent (or
its counsel), the Incremental Facility Arrangers (or its counsel) or the
Required Lenders shall reasonably request.

         (d) Anything in this Agreement to the contrary notwithstanding, the
Liens created under any Collateral Document may also secure, to the extent, but
only to the extent, required under the indentures and other documents governing
such Indebtedness (without taking into account any general exceptions to any
such requirements contained in any such indentures and other documents), equally
and ratably with some or all of the Obligations, the obligations of the Parent
and Holdings under any public Indebtedness of either of them that, by its terms,
requires that such Indebtedness be equally and ratably secured by such Liens.

         (e) None of the Borrower, Holdings or any Restricted Subsidiary of
Holdings shall be required to grant to the Administrative Agent or any Lender,
pursuant to the provisions of this Section 5.11B, a Lien on any of the following
assets: (i) voting Equity Interests of any Foreign Subsidiary representing in
excess of 66% of the outstanding voting Equity Interests of such Foreign
Subsidiary, (ii) any ADP Property to the extent such ADP Property secures any
ADP Obligation and (iii) any other asset subject to a security interest
permitted by clauses (iv), (v), (viii), or (ix) of Section 6.02 but only, in the
case of any asset described in clauses (ii) or (iii), to the extent the granting
of such Lien is prohibited by the terms of the agreement pursuant to which such
security interest has been granted.

         SECTION 5.12. Information Regarding Collateral. (a) (i) The Borrower
will furnish to the Administrative Agent prompt written notice of any change (A)
in any Loan Party's corporate name or in any trade name used to identify it in
the conduct of its business or in the ownership of its properties, (B) in the
location of any Loan Party's chief executive office, its principal place of
business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility), (C)
in any Loan Party's identity or corporate structure or (D) in any Loan Party's
Federal Taxpayer Identification Number; (ii) Holdings and the Borrower will not,
and will not permit any other Restricted Subsidiary to, effect or permit any
change referred to in the preceding sentence unless all filings have been made
under the Uniform Commercial Code or otherwise that are required in order for
the Administrative Agent to continue at


                                       81
<PAGE>


all times following such change to have a valid, legal and perfected security
interest in all the Collateral; and (iii) Holdings and the Borrower will, and
will cause each other Restricted Subsidiary to, promptly notify the
Administrative Agent if any material portion of the Collateral owned by it is
damaged or destroyed.

         (b) At the time of the delivery of annual financial statements with
respect to the preceding fiscal year pursuant to Section 5.01(a), the Borrower
shall also deliver to the Administrative Agent a certificate of a Financial
Officer or the chief legal officer of the Borrower (i) setting forth the
information required pursuant to the perfection certificate or confirming that
there has been no change in such information since the date of the perfection
certificate most recently delivered or the date of the most recent certificate
delivered pursuant to this Section and (ii) certifying that all Uniform
Commercial Code financing statements (including fixture filings, as applicable)
or other appropriate filings, recordings or registrations, including all
refilings, rerecordings and reregistrations, containing a description of the
Collateral have been filed of record in each governmental, municipal or other
appropriate office in each jurisdiction identified pursuant to Section 5.12 to
the extent necessary to protect and perfect the security interests under the
Collateral Documents for a period of not less than 18 months after the date of
such certificate (except as noted therein with respect to any continuation
statements to be filed within such period).

         SECTION 5.13. Additional Subsidiaries. (a) If any additional Subsidiary
is formed or acquired, Holdings and the Borrower will notify the Administrative
Agent and the Lenders thereof and if such Subsidiary is a Subsidiary Loan Party,
(i) cause such Subsidiary, within ten Business Days after such Subsidiary Loan
Party is formed or acquired, to become a party to the Subsidiary Guarantee as an
additional guarantor thereunder and to the Security Agreement as a "Lien
Grantor" thereunder, (ii) deliver all stock certificates representing the
capital stock or other Equity Interests of such Subsidiary to the Administrative
Agent, together with stock powers and instruments of transfer, endorsed in
blank, with respect to such certificates and (iii) take all actions required
under the Security Agreement to perfect, register and/or record the Liens
granted by it thereunder and the Lien on such capital stock or other Equity
Interests or as may be reasonably requested by the Administrative Agent, the
Incremental Facility Arrangers or the Required Lenders.

         (b) If a Collateral Establishment Date has occurred and any Collateral
Event is then continuing, such Subsidiary is a Subsidiary Loan Party and the
Administrative Agent, the Incremental Facility Arrangers or the Required Lenders
so request in writing, Holdings and the Borrower shall (i) within 30 days after
such Subsidiary is formed or acquired, cause such Subsidiary to become a party
to such Collateral Documents (in addition to the Security Agreement) as the
Administrative Agent, the Incremental Facility Arrangers or the Required Lenders
shall request and promptly take such actions as the Administrative Agent, the
Incremental Facility Arrangers or the Required Lenders shall reasonably request
to create and perfect Liens on such of such Subsidiary's assets (in accordance
with the standards set forth in Section 5.11B(a)) as the Administrative Agent,


                                       82
<PAGE>


the Incremental Facility Arrangers or the Required Lenders shall so request to
secure its obligations under the Subsidiary Guarantee, and (ii) within 60 days
after such Subsidiary is formed or acquired, cause such Subsidiary to enter into
such Mortgage or Mortgages as the Administrative Agent, the Incremental Facility
Arrangers or the Required Lenders shall so request with respect to any or all
material real property owned by such Subsidiary to secure some or all of its
obligations under the Subsidiary Guarantee and to take such actions (including,
without limitation, actions of the type referred to in Section 5.11B(a)) with
respect thereto as the Administrative Agent, the Incremental Facility Arrangers
or the Required Lenders shall reasonably request.

         (c) None of the Borrower, Holdings or any Subsidiary Loan Party shall
be required to grant to the Administrative Agent or any Lender, pursuant to the
provisions of this Section 5.13, a Lien on any of the following assets: (i)
voting Equity Interests of any Foreign Subsidiary representing in excess of 66%
of the outstanding voting Equity Interests of such Foreign Subsidiary, (ii) any
ADP Property to the extent such ADP Property secures any ADP Obligation and
(iii) any other asset subject to a security interest permitted by clauses (iv),
(v), (viii), or (ix) of Section 6.02 but only, in the case of any asset
described in clauses (ii) or (iii), to the extent the granting of such Lien is
prohibited by the terms of the agreement pursuant to which such security
interest has been granted.

         SECTION 5.14. Further Assurances. (a) On any date each of Holdings and
the Borrower will, and will cause each Subsidiary Loan Party to, execute any and
all further documents, financing statements, agreements and instruments, and
take all such further actions (including the filing and recording of financing
statements, fixture filings, mortgages, deeds of trust and other documents),
which may be required under any applicable law, or which the Administrative
Agent, the Incremental Facility Arrangers or the Required Lenders may reasonably
request, to effectuate the transactions contemplated by the Loan Documents or to
grant, preserve, protect or perfect the Liens created or intended to be created
by the Collateral Documents required to be in effect on such date or the
validity or priority of any such Lien, all at the expense of the Loan Parties.
Holdings and the Borrower also agree to provide to the Administrative Agent,
from time to time upon request, evidence reasonably satisfactory to the
Administrative Agent as to the perfection and priority of the Liens created or
intended to be created by the Collateral Documents required to be in effect on
such date.

         (b) If any material assets (including any real property or improvements
thereto or any interest therein) are acquired by Holdings, the Borrower or any
Subsidiary Loan Party (other than assets constituting Collateral under any
Collateral Document that become subject to the Lien of such Collateral Document
automatically upon the acquisition thereof), the Borrower will notify the
Administrative Agent and the Lenders thereof, and, if requested by the
Administrative Agent, the Incremental Facility Arrangers or the Required
Lenders, Holdings and the Borrower will, or will cause the applicable Restricted
Subsidiary to, cause such assets to be subjected to a Lien securing some or all
of the Obligations, as requested by the Administrative Agent, the Incremental
Facility


                                       83
<PAGE>


Arrangers or the Required Lenders, and will take, and cause such Subsidiary Loan
Parties to take, such actions as shall be necessary or reasonably requested by
the Administrative Agent, the Incremental Facility Arrangers or the Required
Lenders to grant and perfect such Liens, including actions described in Section
5.11B, all at the expense of the Loan Parties; provided that, none of the
Borrower, Holdings or any Subsidiary Loan Party shall be required to grant to
the Administrative Agent or any Lender, pursuant to the provisions of this
Section 5.14, a Lien on any of the following assets: (i) at any time prior to
any Collateral Establishment Date, any assets of a type other than a type
constituting "Collateral" under the form of Security Agreement set forth on
Exhibit K hereto as in effect on the Amendment No. 4 Effective Date, (ii) voting
Equity Interests of any Foreign Subsidiary representing in excess of 66% of the
outstanding voting Equity Interests of such Foreign Subsidiary, (iii) any ADP
Property to the extent such ADP Property secures any ADP Obligation and (iv) any
other asset subject to a security interest permitted by clauses (iv), (v),
(viii), or (ix) of Section 6.02 but only, in the case of any asset described in
clauses (iii) or (iv), to the extent the granting of such Lien is prohibited by
the terms of the agreement pursuant to which such security interest has been
granted.

         SECTION 5.15. Concentration Accounts. At all times after any Collateral
Establishment Date and before a Collateral Release Date, Holdings and the
Borrower will maintain Holdings' and each Restricted Subsidiary's principal
concentration account with one or more Lenders.

         SECTION 5.16. [Intentionally deleted]

         SECTION 5.17. Sale of Solutions and ATL(a) Not later than September 30,
2001, Holdings and the Borrower shall have sold, or caused to be sold, to one or
more Persons that are not Affiliates of Holdings or any of its Subsidiaries, in
one or more transactions (x) its Williams Communications Solutions business unit
in existence on the Amendment No. 4 Effective Date (except for the portion of
such unit described in clause (b) below) and (y) all of the capital stock of ATL
held by the Borrower, Holdings or any of its Subsidiaries for fair market value
and for Net Proceeds in cash in an aggregate amount of at least $700,000,000.

         (b) Not later than December 31, 2001, Holdings and the Borrower shall
have sold or otherwise disposed of, or caused to be sold or otherwise disposed
of, to one or more Persons that are not Affiliates of Holdings or any of its
Subsidiaries, in one or more transactions, substantially all of the Canadian
assets of its Williams Communications Solutions business unit in existence on
the Amendment No. 4 Effective Date.

         SECTION 5.18. Qualifying Issuances. Not later than December 31, 2001,
the Borrower and/or Holdings shall have consummated Qualifying Issuances for Net
Proceeds in cash in an aggregate amount of at least $500,000,000; provided that
Net Proceeds in cash in an aggregate amount of not more than $350,000,000 shall
have resulted from Qualifying Issuances described in clause (ii) or (iii) of the
definition thereof.


                                       84
<PAGE>


                                    ARTICLE 6

                               NEGATIVE COVENANTS

         Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full
and all Letters of Credit have expired or terminated and all LC Disbursements
shall have been reimbursed, each of Holdings and the Borrower covenants and
agrees with the Lenders that:

         SECTION 6.1. Indebtedness; Certain Equity Securities. Holdings and the
Borrower will not, and will not permit any other Restricted Subsidiary to,
create, incur, assume or permit to exist any Indebtedness, except:

         (a) Indebtedness under the Loan Documents;

         (b) Indebtedness of Holdings under Qualifying Holdings Debt;

         (c) Indebtedness of Holdings under the High Yield Notes and
refinancings thereof, provided that any Indebtedness issued in any such
refinancing shall be on terms no less favorable to Holdings and its Restricted
Subsidiaries than the High Yield Notes, shall be in an aggregate principal
amount no greater than the High Yield Notes refinanced and shall not require any
payment of principal thereof (upon maturity or by mandatory sinking fund,
mandatory redemption, mandatory prepayment or otherwise) prior to the date that
is one year after the Term Maturity Date;

         (d) ADP Outstandings in an aggregate amount not to exceed $750,000,000
at any time outstanding;

         (e) Indebtedness existing on the date hereof and set forth in Schedule
6.01 and extensions, renewals and replacements of any such Indebtedness that do
not increase the outstanding principal amount thereof or result in an earlier
maturity date or decrease the Weighted Average Life to Maturity thereof;

         (f) Indebtedness of Holdings to any Subsidiary and of any Restricted
Subsidiary to any other Subsidiary; provided that Indebtedness of any Subsidiary
that is not a Loan Party to any Loan Party shall be subject to Section 6.04;

         (g) Guarantees by Holdings of Indebtedness of any Subsidiary and by any
Subsidiary of Indebtedness of the Borrower or any other Subsidiary; provided
that Guarantees by Holdings, the Borrower or any Subsidiary Loan Party of
Indebtedness of any Subsidiary that is not a Loan Party shall be subject to
Section 6.04;


                                       85
<PAGE>


         (h) Indebtedness of any Person that becomes a Restricted Subsidiary or
is merged into a Restricted Subsidiary after the date hereof (provided that such
Indebtedness exists at the time such Person becomes a Restricted Subsidiary and
is not created in contemplation of or in connection with such Person becoming a
Restricted Subsidiary) and extensions, renewals or replacements of any such
Indebtedness that do not increase the principal amount thereof or result in an
earlier maturity date or decreased Weighted Average Life to Maturity thereof;

         (i) Indebtedness in respect of performance, surety or appeal bonds and
Guarantees incurred or provided in the ordinary course of business securing the
performance of contractual, franchise, lease, self-insurance or license
obligations and not in connection with an incurrence of Indebtedness;

         (j) Indebtedness in respect of customary agreements providing for
indemnification, purchase price adjustments after closing or similar obligations
in connection with the disposition of any assets (other than Guarantees of
Indebtedness incurred by any Person acquiring all or any portion of such assets
for the purpose of financing such acquisition); provided that (i) any such
disposition is permitted by Section 6.05, (ii) the aggregate principal amount of
such Indebtedness does not exceed the gross proceeds actually received by
Holdings or any Restricted Subsidiary in connection with such disposition and
(iii) to the extent the gross proceeds thereof constitute Net Proceeds
hereunder, such Net Proceeds are applied in accordance with Sections 2.08(f) and
2.11(b);

         (k) Indebtedness of Holdings and the Restricted Subsidiaries pursuant
to Hedging Agreements entered into with Lenders or their affiliates in the
ordinary course of business and not for speculative purposes;

         (l) [Intentionally deleted];

         (m) [Intentionally deleted];

         (n) [Intentionally deleted];

         (o) other Indebtedness of Holdings or any Restricted Subsidiary in an
aggregate principal amount at any time outstanding, together with the aggregate
amount of Attributable Debt in respect of all Sale and Leaseback Transactions
then outstanding, not exceeding 15% of the consolidated net property, plant and
equipment of Holdings and the Restricted Subsidiaries at such time;

         (p) Indebtedness of the Borrower consisting of Qualifying Borrower
Indebtedness;

         (q) Permitted Specified Security Hedging Transactions;


                                       86
<PAGE>


         (r) Indebtedness of Holdings or the Borrower incurred pursuant to a
Qualifying Issuance; provided that the aggregate Net Proceeds in cash received
by Holdings and/or the Borrower from the issuance of such Indebtedness, plus the
Net Proceeds in cash from any Sale and Leaseback Transaction constituting a
Qualifying Issuance shall not exceed $350,000,000;

         (s) Indebtedness with respect to industrial revenue bonds issued for
the benefit of the Borrower, Holdings or any Restricted Subsidiary in an
aggregate principal or face amount not to exceed $50,000,000;

         (t) unsecured Indebtedness of Holdings in an aggregate principal amount
not to exceed $100,000,000 incurred prior to the consummation of the Structured
Note Financing so long as (i) the proceeds of such Indebtedness are used solely
to make the capital contributions described in Section 6.04(u) and (ii) the
terms and conditions of any such Indebtedness shall have been approved by all
the Incremental Facility Arrangers (if any) and the Administrative Agent prior
to the issuance thereof;

         (u) unsecured Indebtedness of Holdings owed to the Structured Note
Trust in an aggregate principal amount up to $1,500,000,000 in connection with
the consummation of the Structured Note Financing, so long as the terms and
conditions of such Indebtedness shall have been approved by all the Incremental
Facility Arrangers (if any) and the Administrative Agent prior to the issuance
thereof; and

         (v) on any date on or after the Leverage Target Date, Indebtedness of
the Borrower owing to a Receivables Subsidiary under a Permitted Receivables
Financing;

provided that, notwithstanding anything in this Agreement to the contrary, the
Borrower and the other Restricted Subsidiaries may not Guarantee any
Indebtedness of Holdings under (i) the High Yield Notes or (ii) any Qualifying
Holdings Debt.

         SECTION 6.2. Liens. (a) Holdings and the Borrower will not, and will
not permit any other Restricted Subsidiary to, create, incur, assume or permit
to exist any Lien on any property or asset now owned or hereafter acquired by
it, or assign or sell any income or revenues or rights in respect of any
thereof, except:

                  (i) Liens created under the Loan Documents (including, without
         limitation, Liens securing Indebtedness of Holdings and the Parent
         created thereunder in accordance with Section 5.11B(d));

                  (ii) Permitted Encumbrances;

                  (iii) Liens on any ADP Property securing only ADP Obligations;


                                       87
<PAGE>


                  (iv) any Lien on any property or asset of Holdings or any
         Restricted Subsidiary existing on the date hereof and set forth in
         Schedule 6.02; provided that (A) such Lien shall not apply to any other
         property or asset of Holdings or any Restricted Subsidiary and (B) such
         Lien shall secure only those obligations which it secures on the date
         hereof and extensions, renewals and replacements thereof that do not
         increase the outstanding principal amount thereof or decrease the
         Weighted Average Life to Maturity thereof;

                  (v) any Lien existing on any property or asset prior to the
         acquisition thereof by Holdings or any Restricted Subsidiary or
         existing on any property or asset of any Person that becomes a
         Restricted Subsidiary after the date hereof prior to the time such
         Person becomes a Subsidiary; provided that (A) such Lien is not created
         in contemplation of or in connection with such acquisition or such
         Person becoming a Restricted Subsidiary, as the case may be, (B) such
         Lien shall not apply to any other property or assets of Holdings or any
         Restricted Subsidiary and (C) such Lien shall secure only those
         obligations which it secures on the date of such acquisition or the
         date such Person becomes a Restricted Subsidiary, as the case may be,
         and extensions, renewals and replacements thereof that do not increase
         the outstanding principal amount thereof or decrease the Weighted
         Average Life to Maturity thereof;

                  (vi) Liens in favor of the Borrower or any Subsidiary Loan
         Party;

                  (vii) Liens on property of Holdings or any Restricted
         Subsidiary consisting of, or securing, licenses of such property;

                  (viii) Liens of a Specified Security securing Permitted
         Specified Security Hedging Transactions with respect to such Specified
         Security;

                  (ix) on any date on or after the Leverage Target Date, Liens
         created in connection with Permitted Receivables Financings, including,
         without limitation, Liens on proceeds in any form and bank accounts in
         which any such proceeds are deposited; provided that, except for the
         assets transferred pursuant to Permitted Receivables Dispositions made
         in connection with such Permitted Receivables Financings, no such Lien
         may extend to any assets of Borrower or any Subsidiary of the Borrower
         that is not a Receivables Subsidiary; and

                  (x) other Liens securing Indebtedness at any time outstanding
         that, together with the aggregate amount of Attributable Debt in
         respect of all Sale and Leaseback Transactions then outstanding, does
         not exceed 5% of the consolidated net property, plant and equipment of
         Holdings and the Restricted Subsidiaries at such time.

         (b) Notwithstanding anything to the contrary contained herein, Holdings
and the Borrower will not, and will not permit any other Restricted Subsidiary
to, create, incur,


                                       88
<PAGE>


assume or permit to exist any Lien on any of its assets to
secure (i) except in accordance with Section 5.11B(d), any obligations in
respect of the High Yield Notes or any refinancing thereof, permitted under
Section 6.01(c), or (ii) except in accordance with Section 5.11B(d), any
Qualifying Holdings Debt.

         SECTION 6.3. Fundamental Changes. (a) Neither Holdings nor the Borrower
will, nor will they permit any other Restricted Subsidiary to, merge into or
consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, or liquidate or dissolve, except that, if at the time
thereof and immediately after giving effect thereto no Default shall have
occurred and be continuing (i) any Person may merge into the Borrower in a
transaction in which the Borrower is the surviving corporation, (ii) any Person
may merge into any Restricted Subsidiary in a transaction in which the surviving
entity is a Restricted Subsidiary and (iii) any Restricted Subsidiary may
liquidate or dissolve if the Borrower determines in good faith that such
liquidation or dissolution is in the best interests of the Borrower and is not
materially disadvantageous to the Lenders; provided that any such merger
involving a Person that is not a wholly owned Restricted Subsidiary immediately
prior to such merger shall not be permitted unless also permitted by Section
6.04.

         (b) The Borrower will not, and will not permit any other Restricted
Subsidiary to, engage to any material extent in any business other than
businesses of the type conducted by the Borrower and its Subsidiaries on the
date of execution of this Agreement and businesses reasonably related thereto.

         (c) Holdings will not engage in any business or activity other than (i)
the ownership of all of the outstanding Equity Interests in the Borrower, (ii)
the issuance of the High Yield Notes, (iii) issuances of Qualifying Holdings
Debt, (iv) issuances of its Equity Interests, (v) the holding of 100% of the
Equity Interests of any Unrestricted Subsidiary which is engaged exclusively in
the buying, selling and trading of telecommunications services as a commodity on
a developing or an established market (a "Trading Subsidiary") and (vi) the
holding of Qualifying Borrower Indebtedness permitted under Section 6.01(q) and,
with respect to each of the foregoing, activities incidental thereto. Holdings
will not own or acquire any assets (other than Qualifying Equity Interests in
the Borrower, Qualifying Borrower Indebtedness, Equity Interests in any Trading
Subsidiary, cash and Cash Equivalent Investments) or incur any liabilities
(other than liabilities under the Loan Documents, liabilities in respect of the
High Yield Notes, liabilities in respect of Qualified Holdings Debt permitted
hereunder, liabilities in respect of the Structured Note Financing, liabilities
imposed by law, including tax liabilities, and other liabilities incidental to
its existence and permitted business and activities).

         SECTION 6.4. Investments, Loans, Advances, Guarantees and Acquisitions.
Holdings will not, and will not permit any Restricted Subsidiary to, purchase,
hold or acquire (including pursuant to any merger with any Person that was not a
wholly owned Restricted Subsidiary prior to such merger) any capital stock,
evidences of indebtedness


                                       89
<PAGE>


or other securities (including any option, warrant or other right to acquire any
of the foregoing) of, make or permit to exist any loans or advances to,
Guarantee any obligations of, or make or permit to exist any investment or any
other interest in, any other Person, or purchase or otherwise acquire (in one
transaction or a series of transactions) any assets of any other Person
constituting a business unit (collectively, "Investments"), except:

         (a) Cash Equivalent Investments;

         (b) Investments existing on the date hereof and set forth on Schedule
6.04;

         (c) Investments by Holdings and the Restricted Subsidiaries in Equity
Interests in Subsidiaries; provided that, (i) the aggregate amount of
Investments by Loan Parties in, and Guarantees by Loan Parties of Indebtedness
of, Subsidiaries that are not Loan Parties (including, without limitation, any
Deemed Subsidiary Investment pursuant to Section 6.14) shall be subject to the
proviso to this Section 6.04 and (ii) all Equity Interests acquired or held by
Holdings pursuant to this Section 6.04(c) shall be Qualifying Equity Interests
in the Borrower or Equity Interests in a Trading Subsidiary;

         (d) loans or advances made by Holdings to any Restricted Subsidiary and
made by any Restricted Subsidiary to any other Restricted Subsidiary; provided
that the amount of such loans and advances made by Loan Parties to Subsidiaries
that are not Loan Parties shall be subject to the proviso to this Section 6.04;

         (e) Guarantees constituting Indebtedness permitted by Section 6.01;
provided that (i) no Restricted Subsidiary shall Guarantee any High Yield Notes,
any Indebtedness of Holdings or the Borrower constituting a Qualifying Issuance
or Qualifying Holdings Debt and (ii) the aggregate principal amount of
Indebtedness of Subsidiaries that are not Loan Parties that is Guaranteed by any
Loan Party shall be subject to the proviso to this Section 6.04;

         (f) Investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;

         (g) acquisitions by the Borrower of ADP Property for consideration paid
on and prior to any date not exceeding Additional Capital as of such date; minus
(i) Investments permitted under clause (ii) of the proviso to this Section 6.04
made on or prior to such date and (iii) Capital Expenditures permitted under
Section 6.08(b) made on or prior to such date;

         (h) Hedging Agreements permitted under Section 6.01(k);

         (i) Capital Expenditures made in accordance with Section 6.08;


                                       90
<PAGE>


         (j) subject to the proviso to this Section 6.04, Investments in the
Telecommunications Business;

         (k) subject to the proviso to this Section 6.04, Investments in
Existing International Joint Ventures; provided that the acquisition by Holdings
or any Restricted Subsidiary of any equity interest in Algar Telecom S.A.
(formerly known as Lightel S.A.) owned by the Parent or its subsidiaries (other
than Holdings and the Subsidiaries) shall not be permitted under this clause (k)
but shall only be permitted under clause (p) of this Section 6.04;

         (l) exchanges and substitutions of ADP Property for like property which
take place prior to the occurrence of the Completion Date, the Expiration Date,
the Termination Date, or an ADP Event of Default, Environmental Trigger or
Unwind Event under the Operative Documents;

         (m) any Investment by a Restricted Subsidiary in any Person engaged in
the Telecommunication Business if such Investment is made in connection with an
agreement by such Person to utilize certain of the Borrower's or the Subsidiary
Loan Parties' Telecommunications Business, provided that, at any date, (i) the
aggregate amount of Investments made in all such Persons at any time outstanding
pursuant to this paragraph (m) (valued at the cost of acquisition thereof,
without regard to any increase or decrease in the value thereof based on
subsequent performance of such Person, but net of any distributions received by
the Borrower or any Subsidiary Loan Party in respect of such Investment) shall
not exceed 15% of Consolidated Assets at such time and (ii) the aggregate amount
of such Investments made in all such Persons with cash or Cash Equivalent
Investments that are at any time outstanding pursuant to this paragraph (m)
shall not exceed 5% of Consolidated Assets;

         (n) (i) loans to directors, officers and employees of Holdings or any
Restricted Subsidiary all of the proceeds of which are used (A) to pay
relocation expenses of any such director, officer or employee or (B) to purchase
Equity Interests in Holdings pursuant to and in accordance with stock option
plans or other benefit plans for directors, officers and employees of Holdings
and its Restricted Subsidiaries, provided that, in the case of any of the Loans
referred to in this subclause (B), any proceeds to Holdings of any such
purchases of Equity Interests shall be contributed to the Borrower and (ii)
other loans to directors, officers and employees of Holdings and its Restricted
Subsidiaries made in the ordinary course of business in an aggregate principal
amount not to exceed $5,000,000 at any time outstanding;

         (o) trade accounts receivable for goods sold or services provided
arising in the ordinary course of business and on customary payment terms (not
to exceed 120 days after the date such receivables are accrued in accordance
with GAAP);

         (p) Investments for which the consideration paid by Holdings and its
Restricted Subsidiaries consists exclusively of Qualifying Equity Interests in
Holdings;


                                       91
<PAGE>


         (q) Investments made in any Person (a "REINVESTMENT PERSON") in whom
the Borrower or any of its Subsidiaries has, or at any time after the Closing
Date had, an Investment permitted under clause (b), (f) or (p) above or this
clause (q) (an "ORIGINAL INVESTMENT"); provided that the aggregate amount of
Investments in any Reinvestment Person permitted under this clause (q) may not
exceed the aggregate amount of the cash proceeds received, within 270 days prior
to the making of such Investment, by the Borrower and its Subsidiaries from
sales or other dispositions of, or distributions with respect to Original
Investments in such Reinvestment Person;

         (r) Permitted Specified Security Hedging Transactions; and

         (s) Investments in Persons that become Subsidiary Loan Parties if such
Persons, prior to such Investments, were engaged principally in the transmission
of voice, video or data through or over owned or leased fiber optic cable and/or
the holding, developing or constructing of assets or technology used therein;

         (t) Letters of Credit to support obligations of a Trading Subsidiary
incurred in the ordinary course of business; and

         (u) capital contributions made by Holdings to the Borrower and by the
Borrower to the Structured Note Trust, in each case in an aggregate principal
amount not to exceed $100,000,000 and in order to consummate the Structured Note
Financing;

         (v) Investments in Receivables Subsidiaries made in connection with
Permitted Receivables Financings;

provided that the aggregate amount of all Investments (valued at the cost of
acquisition thereof, without regard to any increase or decrease in the value
thereof based on subsequent performance of the Person in which such Investment
is held), but net, in case of each such Investment (but not below zero), of any
distributions received by the Borrower or any Subsidiary Loan Party in respect
of such Investment and any proceeds received upon any disposition (other than a
disposition to Holdings or any of its Subsidiaries or the Parent or any of its
Subsidiaries) of such Investment, made pursuant to Sections 6.04(j) and 6.04(k)
on or prior to any date, or referred to in Section 6.04(c)(i), the proviso to
Section 6.04(d) and Section 6.04(e)(ii) and made on or prior to such date, shall
not exceed the sum of an amount (which amount, for purposes of this proviso
only, shall not be less than zero) equal to (x) the amount of Additional Capital
as of such date minus (y) (A) acquisitions of ADP Property permitted under
Section 6.04(g) made on or prior to such date and (B) Capital Expenditures
permitted under Section 6.08(b) made on or prior to such date.

         SECTION 6.5. Asset Sales. Holdings and the Borrower will not, and will
not permit any other Restricted Subsidiary to, sell, transfer, lease or
otherwise dispose of any


                                       92
<PAGE>


asset, including any Equity Interests owned by it, nor will Holdings permit any
of its Restricted Subsidiaries to issue any additional Equity Interests, except:

         (a) sales, transfers, leases or other dispositions of fiber optic cable
capacity, sales of inventory, and sales of used or surplus equipment and Cash
Equivalent Investments, in each case in the ordinary course of business;

         (b) sales, transfers and dispositions to the Borrower or a Subsidiary;
provided that any such sales, transfers or dispositions involving a Subsidiary
that is not a Loan Party shall be made in compliance with Section 6.09;

         (c) issuances to the Borrower or any other Restricted Subsidiary of
Equity Interests in any Restricted Subsidiary other than the Borrower;

         (d) issuances to Holdings by the Borrower of Qualifying Equity
Interests in the Borrower;

         (e) Permitted Telecommunications Asset Dispositions;

         (f) sales, transfers and dispositions of assets to the extent
constituting Investments permitted under Section 6.04;

         (g) Restricted Payments permitted under Section 6.07(a) and payments of
principal and interest permitted under Section 6.07(b);

         (h) the sale, transfer or other dispositions required by Section 5.17
or 5.18;

         (i) any transfer of Receivables and Related Transferred Rights (each as
defined in the Security Agreement attached hereto as Exhibit K) in order to
consummate a Permitted Receivables Transaction or to transfer such assets
pursuant to a factoring arrangement; and

         (j) sales, transfers and dispositions of assets (other than
Telecommunications Assets) that are not permitted by any other clause of this
Section; provided that the aggregate fair market value of all assets sold,
transferred or otherwise disposed of in reliance upon this Section 6.05(j) shall
not exceed $25,000,000 during any fiscal year of the Borrower;

provided that all sales, transfers, leases and other dispositions permitted
under Sections 6.05(e) and 6.05(j) shall be made (x) for fair value and (y) only
if at least 75% of the consideration paid therefor is cash or Cash Equivalent
Investments (or, if less than 75%, the remainder of such consideration consists
of Telecommunications Assets).

         SECTION 6.6. Sale and Leaseback Transactions. Holdings and the Borrower
will not, and will not permit any other Restricted Subsidiary to, enter into any
arrangement,


                                       93
<PAGE>


directly or indirectly, whereby it shall (a) sell or transfer any
property, real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other property
that it intends to use for substantially the same purpose or purposes as the
property sold or transferred or (b) lease any property, real or personal, from
any entity substantially all of whose activities consist of acquiring,
constructing or developing property to be leased to Holdings and the Restricted
Subsidiaries pursuant to leases intended to cover, and measured by the cost of
or the financing incurred by such entity to finance, such property (the
transactions referred to in clause (a) and (b) being collectively referred to as
"Sale and Leaseback Transactions"), except for (i) sales and leases of ADP
Property pursuant to the ADP in respect of ADP Outstandings not to exceed
$750,000,000 at any time outstanding and (ii) (x) any such sale referred to in
clause (a) above of any fixed or capital assets that is made for cash
consideration in an amount not less than the cost of such fixed or capital asset
and is consummated within 270 days after the Borrower or such other Restricted
Subsidiary acquires or completes the construction of such fixed or capital asset
and (y) any such lease referred to in clause (b) above providing for rental
payments measured by the cost of the property leased or the financing incurred
by the lessor thereof to acquire, construct or develop the property so leased;
provided that the sum of the aggregate amount of Attributable Debt in respect of
all such Sale and Leaseback Transactions permitted under this clause (ii) at any
time outstanding (other than any such Attributable Debt with respect to any Sale
and Leaseback Transaction constituting a Qualifying Issuance) and the aggregate
amount of Indebtedness secured by Liens permitted by Section 6.02(a)(viii) at
such time outstanding shall not exceed 5% of consolidated net property, plant
and equipment of Holdings and the Restricted Subsidiaries at such time. For
purposes of determining compliance with the proviso set forth in the immediately
preceding sentence, Capital Lease Obligations shall not in any event be included
in the calculation of "Attributable Debt."

         SECTION 6.7. Restricted Payments; Certain Payments of Indebtedness. (a)
Neither Holdings nor the Borrower will, nor will they permit any other
Restricted Subsidiary to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, or enter into any transaction the economic
effect of which is substantially similar to any Restricted Payment, except (i)
Holdings and the Borrower may declare and pay dividends with respect to their
capital stock payable solely in additional shares of their respective common
stock, (ii) Restricted Subsidiaries (other than the Borrower) may declare and
pay dividends ratably with respect to their capital stock, (iii) Holdings may
make Restricted Payments, not exceeding $3,000,000 during any fiscal year,
pursuant to and in accordance with stock option plans or other benefit plans for
management or employees of Holdings and the Restricted Subsidiaries; (iv) so
long as no Default shall have occurred and be continuing or result from the
making of such payment, the Borrower may pay dividends to Holdings at such times
and in such amounts as shall be necessary to permit Holdings to discharge, to
the extent permitted hereunder, its permitted liabilities; (v) on and after the
Leverage Target Date, Holdings may declare and pay dividends in cash with
respect to its convertible preferred stock outstanding as of the Amendment No. 4
Effective Date in an amount not exceeding


                                       94
<PAGE>


$40,000,000 in any fiscal year and the Borrower may declare and pay dividends to
Holdings to permit Holdings to declare and pay such dividends and (vi) at any
time after the consummation of the Structured Note Financing, the Borrower may
declare and pay a dividend to Holdings so long as (x) the aggregate amount of
such dividend shall not exceed the principal amount of the Structured Note
Bridge Indebtedness outstanding at the time such dividend is paid plus accrued
interest thereon, (y) no Default has occurred and is continuing or would result
therefrom and (z) immediately upon receipt thereof, Holdings shall apply all of
the proceeds of such dividend to repay in full the Structured Note Bridge
Indebtedness then outstanding.

         (b) Neither Holdings nor the Borrower will, nor will they permit any
Restricted Subsidiary to, make, directly or indirectly, any voluntary payment or
other distribution (whether in cash, securities or other property) of or in
respect of principal of or interest on any High Yield Notes, any Qualifying
Holdings Debt or any Qualifying Borrower Indebtedness (collectively "Specified
Indebtedness"), or any voluntary payment or other distribution (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any Specified Indebtedness (or enter into any transaction the
economic effect of which is substantially similar to any of the foregoing),
except, provided no Default has occurred and is continuing or would result
therefrom, payments of regularly scheduled interest as and when due in respect
of any Specified Indebtedness other than Qualifying Borrower Indebtedness.

         SECTION 6.8. Limitation on Capital Expenditures. (a) Capital
Expenditures (other than Capital Expenditures permitted under Section 6.08(b)
below) for any fiscal year set forth below shall not exceed the amount set forth
below opposite such fiscal year:

<Table>
<Caption>
FISCAL YEAR                                               AMOUNT
- -----------                                               ------
<S>                                                   <C>
2001                                                  $2,750,000,000
2002                                                  $2,500,000,000
2003                                                  $2,250,000,000
2004                                                  $2,250,000,000
2005                                                  $2,250,000,000
2006 and each fiscal year thereafter                  $2,800,000,000
</Table>

provided that if the aggregate amount of Capital Expenditures (other than
Capital Expenditures permitted under Section 6.08(b) below) actually made in any
such period or fiscal year shall be less than the limit with respect thereto set
forth above (before giving effect to any increase therein pursuant to this
proviso) (the "Base Amount"), then an amount equal to 50% of such shortfall may
be added to the amount of such Capital Expenditures permitted for the
immediately succeeding fiscal year (such amount to be added for any fiscal year,
the "Rollover Amount"); provided further that any Capital Expenditures (other
than Capital Expenditures permitted under Section 6.08(b) below) made during any
fiscal year for which any Rollover Amount shall have been so added


                                       95
<PAGE>

shall be applied, first, to the Rollover Amount added for such fiscal year and,
second, to the Base Amount for such fiscal year.

         (b) In addition to Capital Expenditures permitted under Section 6.08(a)
above, Holdings and the Restricted Subsidiaries may make (i) Capital
Expenditures consisting of acquisitions of ADP Property permitted under Section
6.04(g) or 6.04(l) and (ii) Capital Expenditures on any date after the Amendment
No. 4 Effective Date in an aggregate amount not to exceed Additional Capital as
of such date minus (A) Investments permitted under clause (ii) of the proviso to
Section 6.04 made on or prior to such date and (B) purchases of ADP Property
permitted under Section 6.04(g) made on or prior to such date.

         SECTION 6.9. Transactions with Affiliates. Neither Holdings nor the
Borrower will, nor will they permit any other Restricted Subsidiary to, sell,
lease or otherwise transfer any property or assets to, or purchase, lease or
otherwise acquire any property or assets from, or otherwise engage in any other
transactions with, any of their respective Affiliates, except (a) transactions
that are at prices and on terms and conditions not less favorable to Holdings,
the Borrower or such other Restricted Subsidiary than could be obtained on an
arm's-length basis from unrelated third parties, (b) transactions between or
among the Borrower and the Subsidiary Loan Parties not involving any other
Affiliate, (c) any Restricted Payment permitted by Section 6.07 and (d)
transactions required to be effected pursuant to, and on terms provided for in,
existing agreements (as in effect on the date hereof) listed in Schedule 6.09
hereto.

         SECTION 6.10. Restrictive Agreements. Neither Holdings nor the Borrower
will, nor will they permit any other Restricted Subsidiary to, directly or
indirectly, enter into, incur or permit to exist any agreement or other
arrangement that prohibits, restricts or imposes any condition upon (a) the
ability of Holdings or any Restricted Subsidiary to create, incur or permit to
exist any Lien upon any of its property or assets, or (b) the ability of any
Restricted Subsidiary to pay dividends or other distributions with respect to
any shares of its capital stock or to make or repay loans or advances to the
Borrower or any other Restricted Subsidiary or to Guarantee Indebtedness of the
Borrower or any other Restricted Subsidiary; provided that (i) the foregoing
shall not apply to restrictions and conditions imposed by law or by any Loan
Document, the High Yield Notes or, to the extent that any such restrictions
therein, taken as a whole, are no more restrictive than those contained in the
High Yield Notes, any Qualifying Holdings Debt, (ii) the foregoing shall not
apply to restrictions and conditions existing on the date hereof identified on
Schedule 6.10 (but shall apply to any extension or renewal of, or any amendment
or modification expanding the scope of, any such restriction or condition),
(iii) the foregoing shall not apply to customary restrictions and conditions
contained in agreements relating to the sale of a Subsidiary pending such sale,
provided such restrictions and conditions apply only to the Subsidiary that is
to be sold and such sale is permitted hereunder, (iv) Section 6.10(a) of the
foregoing shall not apply to restrictions or conditions imposed by any agreement
relating to secured Indebtedness permitted by this Agreement if such
restrictions or conditions apply only to the property or assets securing such
Indebtedness


                                       96
<PAGE>

and (v) Section 6.10(a) of the foregoing shall not apply to customary provisions
in leases and other contracts restricting the assignment thereof.

         SECTION 6.11. Fiscal Year. Holdings and the Borrower will not, and will
not permit any other Restricted Subsidiary to, change its fiscal year from a
fiscal year ending December 31.

         SECTION 6.12. Change in Business. Holdings and the Borrower will not,
and will not permit any other Restricted Subsidiary to, engage in any material
line of business other than the Telecommunications Business.

         SECTION 6.13. Amendment of Material Documents. Holdings and the
Borrower will not, and will not permit any other Restricted Subsidiary to,
without the prior written consent of the Required Lenders, consent to any
amendment, modification or waiver of (a) its certificate of incorporation,
by-laws or other organizational documents (except for the filing of a
Certificate of Designation with the Secretary of State of Delaware relating to
the issuance of preferred securities that are Qualifying Equity Interests of
such Person, to the extent provided for in its certificate of incorporation,
by-laws or other organizational documents), (b) the Other Financing Documents,
(c) any agreements governing any Qualifying Holdings Debt, (d) the Parent
Indemnity or (e) the Operative Documents, in each of the foregoing cases if such
amendment, modification of waiver could reasonably be expected to have (i) an
adverse effect on the ability of any Loan Party to perform any of its
obligations under any Loan Document or the rights of, or benefits available to,
the Lenders under any Loan Document or (ii) a Material Adverse Effect.

         SECTION 6.14. Designation of Unrestricted Subsidiaries. Holdings and
the Borrower will not designate any Restricted Subsidiary (other than a newly
created Subsidiary in which no Investment has previously been made) as an
Unrestricted Subsidiary (a "Subsidiary Designation") unless:

         (i)      no Default shall have occurred and be continuing at the time
                  of or after giving effect to such Subsidiary Designation;

         (ii)     after giving effect to such Subsidiary Designation, Holdings
                  would be in compliance with the covenants contained in Section
                  6.08 and Sections 6.15 through 6.19 on a pro forma basis as if
                  such Subsidiary Designation had been made on the first day of
                  the period of four fiscal quarters most recently ended in
                  respect of which financial statements have been delivered by
                  the Company pursuant to Section 5.01(a) or 5.01(b);

         (iii)    Holdings has delivered to the Administrative Agent (x) written
                  notice of such Subsidiary Designation and (y) a certificate of
                  a Financial Officer setting forth in reasonable detail
                  calculations demonstrating pro forma compliance with the
                  financial covenants contained in Section 6.08 and Sections
                  6.15 through 6.19, as required by clause (ii) above; and


                                       97
<PAGE>

         (iv)     on the date of such Subsidiary Designation, Holdings and the
                  Borrower would not be prohibited by Section 6.04(c) and the
                  proviso to Section 6.04 from making an Investment (a "Deemed
                  Subsidiary Investment") in an aggregate amount equal to the
                  fair market value (valued at the date of such Subsidiary
                  Designation) of (x) the net assets of such Restricted
                  Subsidiary or (y) if less than 100% of the Equity Interests in
                  such Restricted Subsidiary are held by Holdings and its
                  Restricted Subsidiaries, in an aggregate amount equal to the
                  percentage interest of Holdings and the Restricted
                  Subsidiaries in such net assets.

         Holdings and the Borrower will not, and will not permit any other
Restricted Subsidiary to (x) Guarantee any Indebtedness of any Unrestricted
Subsidiary, (y) be directly or indirectly liable for any Indebtedness of any
Unrestricted Subsidiary or (z) be directly or indirectly liable for any other
Indebtedness which provides that the holder thereof may (upon notice, lapse of
time or both) declare a default thereon (or cause such Indebtedness or the
payment thereof to be accelerated, payable or subject to repurchase prior to its
final scheduled maturity) upon the occurrence of a default with respect to any
other Indebtedness that is Indebtedness of an Unrestricted Subsidiary, except in
the case of clause (x) or (y) to the extent permitted under Section 6.01 and
Section 6.04 hereof. In no event may the Borrower be designated as an
Unrestricted Subsidiary.

         SECTION 6.15. Total Net Debt to Contributed Capital Ratio. The Total
Net Debt to Contributed Capital Ratio shall at no time prior to January 1, 2002
exceed .65 to 1.00.

         SECTION 6.16. Minimum EBITDA. The amount equal to (i) EBITDA for the
period of four fiscal quarters ending during any period set forth below plus
(ii) ADP Interest Expense for such period minus (iii) gains for such period
attributable to Dark Fiber and Capacity Dispositions plus (iv) Dark Fiber and
Capacity Proceeds for such period shall not be less than the amount set forth
below opposite such period:

<Table>
<Caption>
PERIOD                                                AMOUNT
- ------                                                ------
<S>                                                   <C>
January 1, 2001-March 31, 2001                        $200,000,000
April 1, 2001-June 30, 2001                           $300,000,000
July 1, 2001-September 30, 2001                       $350,000,000
October 1, 2001-December 31, 2001                     $350,000,000
</Table>

         SECTION 6.17. Total Leverage Ratio. (a) The Total Leverage Ratio during
any period set forth below shall not exceed the ratio set forth below opposite
such period:

<Table>
<Caption>
                                                      TOTAL
PERIOD                                                LEVERAGE RATIO
- ------                                                --------------
<S>                                                   <C>
March 31, 2002-December 30, 2002                      12.50:1.00
December 31, 2002-December 30, 2003                   9.50:1.00
December 31, 2003 and thereafter                      4.00:1.00
</Table>


                                       98
<PAGE>

         SECTION 6.18. Senior Leverage Ratio. The Senior Leverage Ratio during
any period set forth below shall not exceed the ratio set forth below opposite
such period:

<Table>
<Caption>
                                                      SENIOR
PERIOD                                                LEVERAGE RATIO
- ------                                                --------------
<S>                                                   <C>
March 31, 2002-December 30, 2002                      5.25:1.00
December 31, 2002-December 30, 2003                   3.25:1.00
December 31, 2003 and thereafter                      2.50:1.00
</Table>

         SECTION 6.19. Interest Coverage Ratio. The Interest Coverage Ratio for
any period of four consecutive fiscal quarters ending during any period set
forth below shall not be less than the ratio set forth below opposite such
period:

<Table>
<Caption>
                                                     INTEREST
PERIOD                                               COVERAGE RATIO
- ------                                               --------------
<S>                                                  <C>
June 30, 2002-June 29, 2003                          1.00:1.00
June 30, 2003-December 30, 2003                      1.50:1.00
December 31, 2003 and thereafter                     2.00:1.00
</Table>

         SECTION 6.20. Financial Covenant Non-Compliance Cure. (a) At any time
prior to the consummation of the Spin-Off, in the event that Holdings and the
Restricted Subsidiaries fail to comply with any of Sections 6.15 through 6.19,
inclusive, for any period or on any date set forth therein, the Parent shall
have the right, but not the obligation, to make, within three Business Days of
the date upon which financial statements as of the last day of such period are
delivered or required to be delivered pursuant to Section 5.01(a) or (b), a cash
equity contribution to Holdings in exchange for Qualifying Equity Interests of
Holdings (which Holdings shall thereupon contribute to the Borrower, in exchange
for Qualifying Equity Interests of the Borrower) to cure such failure.

         (b) If such contribution is made to cure a failure to comply with the
covenant contained in Section 6.16, such contribution shall be in an amount
sufficient, when added to EBITDA for the applicable period, to enable Holdings
and the Restricted Subsidiaries to comply with such covenant on a consolidated
basis. Upon the making of any such capital contribution to Holdings and to the
Borrower in the amount specified above, the amount so contributed (to the
extent, but only to the extent, of the shortfall in EBITDA for the applicable
period) shall thereafter be deemed to have been EBITDA in the last fiscal
quarter of such period for purposes of all calculations in respect of compliance
with Section 6.16 thereafter.


                                       99
<PAGE>

         (c) If such contribution is made to cure a failure to comply with a
covenant contained in Section 6.15, 6.17, 6.18 or 6.19, such contribution shall
be in an amount sufficient, when applied to repay or prepay Indebtedness of
Holdings and the Restricted Subsidiaries, to enable Holdings and the Restricted
Subsidiaries, on a pro forma basis after giving effect to such contribution and
application, to comply with such covenant on a consolidated basis.

         (d) The right to cure provided in this Section 6.20 may not be
exercised in respect of more than two consecutive quarters or more than three
times in the aggregate during the term of the Facilities.


                                    ARTICLE 7

                                EVENTS OF DEFAULT

         SECTION 7.1. Events of Default. If any of the following events ("Events
of Default") shall occur:

         (a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise;

         (b) the Borrower shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount referred to in Section 7.01(a))
payable under this Agreement or any other Loan Document, when and as the same
shall become due and payable, and such failure shall continue unremedied for a
period of three Business Days;

         (c) any representation or warranty made or deemed made by or on behalf
of the Parent or any Loan Party in or in connection with any Loan Document or
any amendment or modification thereof or waiver thereunder, or in any report,
certificate, financial statement or other document furnished pursuant to or in
connection with any Loan Document or any amendment or modification thereof or
waiver thereunder, shall prove to have been incorrect in any material respect
when made or deemed made;

         (d) (i) Holdings or the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.02, 5.03 (with respect
to the existence of Holdings or the Borrower), 5.10, 5.11A, 5.11B, 5.13, 5.17,
5.18 or in Article 6, or (i) such failure shall continue unremedied for a period
of 30 days after the earlier to occur of (x) knowledge thereof by any Loan Party
or (y) notice thereof from the Administrative Agent to the Borrower (which
notice will be given at the request of any Lender);


                                      100
<PAGE>

         (e) any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in any Loan Document (other than those
specified in Sections 7.01(a), 7.01(b) or 7.01(d)), and such failure shall
continue unremedied for a period of 30 days after the earlier to occur of (i)
knowledge thereof by any Loan Party or (ii) notice thereof from the
Administrative Agent to the Borrower (which notice will be given at the request
of any Lender);

         (f) Holdings or any Restricted Subsidiary shall fail to make any
payment (whether of principal or interest and regardless of amount) in respect
of any Material Indebtedness, when and as the same shall become due and payable
(subject to any applicable grace period);

         (g) any event or condition occurs that results in any Material
Indebtedness or Permitted Receivables Financing becoming due prior to its
scheduled maturity or that enables or permits (with or without the giving of
notice, the lapse of time or both) the holder or holders of any Material
Indebtedness or Permitted Receivables Financing or any trustee or agent on its
or their behalf to cause any Material Indebtedness or Permitted Receivables
Financing to become due, or to require the prepayment, repurchase, redemption or
defeasance thereof, prior to its scheduled maturity; provided that this Section
7.01(g) shall not apply to secured Indebtedness permitted hereunder that becomes
due as a result of the voluntary sale or transfer of the property or assets
securing such Indebtedness;

         (h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of Holdings or any Restricted Subsidiary or its debts, or of a
substantial part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for Holdings or any Restricted Subsidiary or for a substantial
part of its assets, and, in any such case, such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or ordering any
of the foregoing shall be entered;

         (i) Holdings or any Restricted Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation, reorganization
or other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in Section 7.01(h), (iii) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for Holdings or any Restricted Subsidiary or for a
substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;


                                      101
<PAGE>

         (j) Holdings or any Restricted Subsidiary shall become unable, admit in
writing its inability or fail generally, to pay its debts as they become due;

         (k) one or more judgments for the payment of money in an aggregate
amount in excess of $25,000,000 shall be rendered against Holdings, any
Restricted Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution shall
not be effectively stayed, or any action shall be legally taken by a judgment
creditor to attach or levy upon any assets of Holdings or any Restricted
Subsidiary to enforce any such judgment;

         (l) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of Holdings and
the Restricted Subsidiaries in an aggregate amount exceeding $25,000,000 for all
periods;

         (m) any Lien (if any) purported to be created under any Collateral
Document shall cease to be, or shall be asserted by any Loan Party not to be, a
valid and perfected Lien on any Collateral having a fair market value in excess
of $1,000,000, with the priority required by the applicable Collateral Document,
except (i) as a result of the sale or other disposition of the applicable
Collateral in a transaction permitted under the Loan Documents or (ii) pursuant
to a Collateral Release Event;

         (n) any Guarantee by Holdings or any Subsidiary Loan Party under any
Loan Document shall cease for any reason (other than the merger out of existence
of such Guarantor pursuant to a transaction permitted hereunder or pursuant to
the express terms of such Guarantee) to be in full force and effect, or Holdings
or any Subsidiary Loan Party shall so assert in writing;

         (o) a Change in Control shall occur; and

         (p) at any time prior to the consummation of the Spin-Off, the senior
unsecured long-term debt of the Parent shall be rated less than BBB- by S&P or
less than Baa3 by Moody's;

then, and in every such event (other than an event with respect to Holdings or
the Borrower described in Section 7.01(h) or 7.01(i)), and at any time
thereafter during the continuance of such event, the Administrative Agent may,
and at the request of the Required Lenders shall, by notice to the Borrower,
take either or both of the following actions, at the same or different times:
(i) terminate the Commitments, and thereupon the Commitments shall terminate
immediately, and (ii) declare the Loans then outstanding to be due and payable
in whole (or in part, in which case any principal not so declared to be due and
payable may thereafter be declared to be due and payable), and thereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon and all fees and other obligations of the Borrower accrued
hereunder, shall become due and payable immediately, without presentment,
demand, protest or other


                                      102
<PAGE>

notice of any kind, all of which are hereby waived by Holdings and the Borrower;
and in the case of any event with respect to Holdings or the Borrower described
in Section 7.01(h) or 7.01(i), the Commitments shall automatically terminate and
the principal of the Loans then outstanding, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall automatically become due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by Holdings and the
Borrower.


                                    ARTICLE 8

                                   THE AGENTS

         SECTION 8.1. Appointment, Powers, Immunities. (a) Each Lender,
Swingline Lender and Issuing Bank hereby irrevocably appoints the Administrative
Agent as its agent and authorizes the Administrative Agent to take such actions
on its behalf and to exercise such powers as are delegated to the Administrative
Agent by the terms of the Loan Documents, together with such actions and powers
as are reasonably incidental thereto.

         (b) The institutions serving as Agents hereunder shall have the same
rights and powers in their capacities as Lenders, Swingline Lenders or Issuing
Banks, as the case may be, as any other Lenders, Swingline Lenders or Issuing
Banks and may exercise the same as though they were not Agents, and each such
institution and its affiliates may accept deposits from, lend money to and
generally engage in any kind of business with Holdings or any Subsidiary or
other Affiliate thereof as if it were not an Agent hereunder.

         (c) The Agents shall not have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the generality of
the foregoing, (i) the Agents shall not be subject to any fiduciary or other
implied duties, regardless of whether a Default has occurred and is continuing,
(ii) the Agents shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated by the Loan Documents that an Agent is required to
exercise in writing by the Required Lenders (or such other number or percentage
of the Lenders as shall be necessary under the circumstances as provided in
Section 10.02), and (iii) except as expressly set forth in the Loan Documents,
the Agents shall not have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to Holdings or any Subsidiary that
is communicated to or obtained by any institution serving as an Agent or any of
its affiliates in any capacity.

         (d) No Agent shall be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 10.02) or in the absence of its own gross negligence or
wilful misconduct.


                                      103
<PAGE>

         (e) No Agent shall be deemed to have knowledge of any Default unless
and until written notice thereof is given to such Agent by Holdings, the
Borrower or a Lender, and no Agent shall be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with any Loan Document, (ii) the contents of any certificate,
report or other document delivered thereunder or in connection therewith, (iii)
the performance or observance of any of the covenants, agreements or other terms
or conditions set forth in any Loan Document, (iv) the validity, enforceability,
effectiveness or genuineness of any Loan Document or any other agreement,
instrument or document, or (v) the satisfaction of any condition set forth in
Article 4 or elsewhere in any Loan Document, other than, in the case of the
Administrative Agent, to confirm receipt of items expressly required to be
delivered to the Administrative Agent.

         SECTION 8.2. Reliance by Agents. Each Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person. Each
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to be made by the proper Person, and shall not incur any
liability for relying thereon. Each Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.

         SECTION 8.3. Delegation to Sub-Agents. Each Agent may perform any and
all of its duties and exercise any of its rights and powers by or through any
one or more sub-agents appointed by such Agent. The Agents and any such
sub-agents may perform any and all of their duties and exercise rights and
powers through their respective Related Parties. The exculpatory provisions of
the preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of each Agent and any such sub-agent, and shall apply to their
respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Agent.

         SECTION 8.4. Resignation of Agents. Subject to the appointment and
acceptance of a successor Agent as provided in this paragraph, any Agent may
resign at any time by notifying the Lenders, the Issuing Banks and the Borrower.
Upon any such resignation, the Required Lenders shall have the right, in
consultation with the Borrower, to appoint a successor. If no successor shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Agent gives notice of its
resignation, then the retiring Agent may, on behalf of the Lenders and the
Issuing Banks, appoint a successor Agent which shall be a bank organized under
the laws of the United States or any State thereof, having (x) an office in any
State of the United States and (y) capital, surplus and undivided profits
aggregating at least $200,000,000, or an affiliate of any such bank. Upon the
acceptance of its appointment as Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights,


                                      104
<PAGE>

powers, privileges and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations hereunder. The fees payable
by the Borrower to a successor Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such successor.
After the Agent's resignation hereunder, the provisions of this Article and
Section 10.03 shall continue in effect for the benefit of such retiring Agent,
its sub-agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while it was acting as Agent.

         SECTION 8.5. Non-reliance on Agents or other Lenders. Each Lender
acknowledges that it has, independently and without reliance upon any Agent or
any other Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon any Agent, any Issuing Bank or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any other Loan Document or related agreement or any
document furnished hereunder or thereunder.

         SECTION 8.6. Syndication Agent, Incremental Facility Arrangers and
Co-Documentation Agents. Notwithstanding anything in this Agreement or any Loan
Document to the contrary, the Syndication Agent, the Incremental Facility
Arrangers and the Co-Documentation Agents shall have no obligation or
responsibility as such hereunder other than, in the case of the Syndication
Agent or the Incremental Facility Arrangers, as expressly set forth herein.


                                    ARTICLE 9

                               HOLDINGS GUARANTEE

         SECTION 9.1. The Guarantee. Holdings unconditionally and irrevocably
guarantees the full and punctual payment of all present and future indebtedness
and other obligations of the Borrower evidenced by or arising under any Loan
Document and all present and future indebtedness and other obligations of the
Borrower or any other Restricted Subsidiary under any Hedging Agreement
permitted under Section 6.01 (a "Specified Hedging Agreement") as and when the
same shall become due and payable, whether at maturity or by declaration or
otherwise, according to the terms hereof and thereof (including, without
limitation, any Post-Petition Interest). If the Borrower or any other Restricted
Subsidiary fails punctually to pay any indebtedness or other obligation
guaranteed hereby which is due and payable, Holdings unconditionally agrees to
cause such payment to be made punctually as and when the same shall become due
and payable, whether at maturity or by declaration or otherwise, and as if such
payment were made by the Borrower or such other Restricted Subsidiary.


                                      105
<PAGE>

         SECTION 9.2. Guarantee Unconditional. The obligations of Holdings under
this Article 9 shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:

                  (a) any extension, renewal, settlement, compromise, waiver or
         release in respect of any obligation of the Borrower or any other Loan
         Party under any Loan Document or Specified Hedging Agreement, by
         operation of law or otherwise;

                  (b) any modification, amendment or waiver of or supplement to
         any Loan Document or Specified Hedging Agreement;

                  (c) any release, impairment, non-perfection or invalidity of
         any direct or indirect security, or of any guarantee or other liability
         of any third party, for any obligation of the Borrower or any Loan
         Party under any Loan Document or Specified Hedging Agreement;

                  (d) any change in the corporate existence, structure or
         ownership of the Borrower or any other Loan Party or any insolvency,
         bankruptcy, reorganization or other similar proceeding affecting the
         Borrower or any other Loan Party or its assets, or any resulting
         release or discharge of any obligation of the Borrower or any other
         Loan Party contained in any Loan Document or Specified Hedging
         Agreement;

                  (e) the existence of any claim, set-off or other rights which
         Holdings may have at any time against the Borrower or any other Loan
         Party, any Agent, any Issuing Bank, any Lender or any other Person,
         whether or not arising in connection herewith or any unrelated
         transaction; provided that nothing herein shall prevent the assertion
         of any such claim by separate suit or compulsory counterclaim;

                  (f) any invalidity or unenforceability relating to or against
         the Borrower or any other Loan Party for any reason of any Loan
         Document or Specified Hedging Agreement, or any provision of applicable
         law or regulation purporting to prohibit the payment by any other Loan
         Party of any amount payable by it under any Loan Document or Specified
         Hedging Agreement; or

                  (g) any other act or omission to act or delay of any kind by
         any other Loan Party, any Lender or any other Person or any other
         circumstance that might, but for the provisions of this Section,
         constitute a legal or equitable discharge of Holdings' obligations
         under this Article 9.

         SECTION 9.3. Discharge Only Upon Payment in Full; Reinstatement in
Certain Circumstances. Holdings' obligations under this Article 9 constitute a
continuing guaranty and shall remain in full force and effect until the
Commitments shall have been terminated, all Letters of Credit shall have expired
or been terminated, all Specified


                                      106
<PAGE>

Hedging Agreements shall have been terminated and all amounts payable under the
Loan Documents and the Specified Hedging Agreements shall have been indefeasibly
paid in full. If at any time any amount payable by the Borrower under any Loan
Document or by the Borrower or any other Restricted Subsidiary under any
Specified Hedging Agreement is rescinded or must be otherwise restored or
returned upon the insolvency, bankruptcy or reorganization of any Loan Party or
otherwise, Holdings' obligations under this Article 9 with respect to such
payment shall be reinstated at such time as though such payment had become due
but had not been made at such time.

         SECTION 9.4. Waiver. Holdings irrevocably waives acceptance hereof,
presentment, demand, protest and any notice not provided for herein, as well as
any requirement that at any time any action be taken by any Person against the
Borrower or any other Restricted Subsidiary or any other Person.

         SECTION 9.5. Subrogation. When Holdings makes any payment under this
Article 9 with respect to the obligations of the Borrower or any other
Restricted Subsidiary, Holdings shall be subrogated to the rights of the payee
against the Borrower or such other Restricted Subsidiary with respect to the
portion of such obligations paid by Holdings; provided that Holdings shall not
enforce any payment by way of subrogation or contribution against the Borrower
or any Subsidiary so long as any amount payable under any Loan Document or
Specified Hedging Agreement remains unpaid.

         SECTION 9.6. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by any Loan Party under any Loan Document or
Specified Hedging Agreement is stayed upon the insolvency, bankruptcy or
reorganization of such Loan Party, all such amounts otherwise subject to
acceleration under the terms of such Loan Document or Specified Hedging
Agreement shall nonetheless be payable by Holdings under this Article 9
forthwith on demand by the Administrative Agent made, in the case of any Loans,
at the request of the requisite number of Lenders specified in Section 7.01
hereof or, in the case of obligations under a Specified Hedging Agreement, at
the request of the relevant Lender or Lenders or affiliate or affiliates of such
Lender or Lenders.

         SECTION 9.7. Successors and Assigns. This guarantee is for the benefit
of the Lenders, the Hedge Counterparties and their respective successors and
assigns. If any Loans, participations in Letters of Credit or Swingline Loans or
other amounts payable under the Loan Documents are assigned pursuant to Section
10.04 of the Credit Agreement, or any rights under any Specified Hedging
Agreement are assigned pursuant thereto, the rights under this Article 9, to the
extent applicable to the indebtedness so assigned, shall be transferred with
such indebtedness.


                                      107
<PAGE>


                                   ARTICLE 10

                                  MISCELLANEOUS


         SECTION 10.1. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

         (a) if to Holdings or the Borrower, to it at Williams Communications
Group, Inc., One Williams Center, Suite 2600, Tulsa, Oklahoma 74172, Attention
of (other than administrative notices) Scott E. Schubert (Telecopy No.
918-573-6024) or (for administrative notices) Attention of Kerri Lyle (Telecopy
No. 918-573-6558);

         (b) if to the Administrative Agent, to it at Bank of America, N.A., 901
Main Street, Dallas, Texas 75202, Attention of (other than Borrowing Requests)
Pamela Kurtzman, 64th Floor (Telecopy No. (214) 209-9390) or (for Borrowing
Requests) Judy Schneidmiller, 14th Floor (Telecopy No. 214-209-2118);

         (c) if to Bank of America, as Issuing Bank, to it at 901 Main Street,
64th Floor, Main Street, Dallas, Texas 75202, Attention of Pamela Kurtzman
(Telecopy No. 214-209-9390);

         (d) if to Chase, as Issuing Bank, to it at 270 Park Avenue, 37th Floor,
New York, New York 10017, Attention of Joe Brusco (Telecopy No. 212-270-4164);

         (e) if to Bank of America, as Swingline Lender, to it at 901 Main
Street, 64th Floor, Main Street, Dallas, Texas 75202, Attention of Pamela
Kurtzman (Telecopy No. 214-209-9390);

         (f) if to Chase, as Swingline Lender, to it at One Chase Manhattan
Plaza, 8th Floor, New York, New York 10081, Attention of Winslowe Ogbourne
(Telecopy No. 212-552-5700); and

         (g) if to any other Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.

         Any party hereto may change its address or telecopy number for notices
and other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.

         SECTION 10.2. Waivers; Amendments. (a) No failure or delay by the
Administrative Agent, any Issuing Bank, any Swingline Lender or any Lender in
exercising any right or power hereunder or under any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Administrative Agent, the Issuing Banks, the Swingline


                                      108
<PAGE>

Lenders and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of any Loan Document or consent to
any departure by any Loan Party therefrom shall in any event be effective unless
the same shall be permitted by Section 10.02(b), and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent, any Lender, any Issuing
Bank or any Swingline Lender may have had notice or knowledge of such Default at
the time.

         (b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by Holdings, the Borrower and the Required Lenders or, in the case
of any other Loan Document, pursuant to an agreement or agreements in writing
entered into by the Administrative Agent and the Loan Party or Loan Parties that
are parties thereto, in each case with the consent of the Required Lenders;
provided that no such agreement shall (i) increase the Commitment of any Lender
without the written consent of such Lender, (ii) reduce the principal amount of
any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce
any fees payable hereunder, without the written consent of each Lender affected
thereby, (iii) postpone the scheduled date of payment of the principal amount of
any Loan or LC Disbursement, or any interest thereon, or any fees payable
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the written
consent of each Lender affected thereby, (iv) change Section 2.18(b) or 2.18(c)
in a manner that would alter the pro rata sharing of payments required thereby,
without the written consent of each Lender, (v) change any of the provisions of
this Section or the definition of "Required Lenders" or any other provision of
any Loan Document specifying the number or percentage of Lenders (or Lenders of
any Class) required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, without the written consent of
each Lender (or each Lender of such Class, as the case may be), (vi) release
Holdings or substantially all of the Subsidiary Loan Parties from their
respective Guarantees hereunder under the Subsidiary Guarantee (except as
expressly provided herein or therein), or limit its liability in respect of such
Guarantee, without the written consent of each Lender, (vii) change any
condition set forth in Section 4.03 without the written consent of each
Incremental Lender, or (viii) change any provisions of any Loan Document in a
manner that by its terms adversely affects the rights in respect of payments due
to, or requirements to make loans by, Lenders holding Loans of any Class
differently than those holding Loans of any other Class, without the written
consent of Lenders holding a majority in interest of the outstanding Loans and
unused Commitments of each affected Class; provided further that (A) no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent, any Issuing Bank or any Swingline Lender without the prior
written consent of the Administrative Agent, the affected Issuing Bank or the
affected Swingline Lender, as the case may be, and (B) any


                                      109
<PAGE>

waiver, amendment or modification of this Agreement that by its terms affects
the rights or duties under this Agreement of the Lenders with Commitments or
Loans of any Class or Classes (but not Lenders with Commitments or Loans of any
other Class or Classes) may be effected by an agreement or agreements in writing
entered into by Holdings, the Borrower and the requisite percentage in interest
of the Lenders with Commitments or Loans of the affected Class or Classes.

         SECTION 10.3. Expenses; Indemnity; Damage Waiver. (a) The Borrower
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent, the Syndication Agent and the Incremental Facility
Arrangers and their respective affiliates, including the reasonable fees,
charges and disbursements of counsel for the Administrative Agent, the
Syndication Agent and the Incremental Facility Arrangers in connection with the
syndication of the credit facilities provided for herein, the preparation and
administration of the Loan Documents or any amendments, modifications or waivers
of the provisions thereof (whether or not the transactions contemplated hereby
or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses
incurred by any Issuing Bank in connection with the issuance, amendment, renewal
or extension of any Letter of Credit or any demand for payment thereunder and
(iii) all out-of-pocket expenses incurred by the Administrative Agent, the
Syndication Agent, the Incremental Facility Arrangers, any Issuing Bank, any
Swingline Lender or any Lender, including the fees, charges and disbursements of
any counsel for the Administrative Agent, the Incremental Facility Arrangers and
the Syndication Agent, any Issuing Bank, any Swingline Lender or any Lender, in
connection with the enforcement or protection of its rights in connection with
the Loan Documents, including its rights under this Section, or in connection
with the Loans made or Letters of Credit issued hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.

         (b) The Borrower shall indemnify the Administrative Agent, the
Syndication Agent, the Incremental Facility Arrangers, the Issuing Banks, the
Swingline Lenders and each Lender, and each Related Party of any of the
foregoing Persons (each such Person being called an "Indemnitee") against, and
hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including the fees, charges and disbursements
of any counsel for any Indemnitee, incurred by or asserted against any
Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of any Loan Document or any other agreement or instrument
contemplated hereby, the performance by the parties to the Loan Documents of
their respective obligations thereunder or the consummation of the Transactions
or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit
or the use of the proceeds therefrom (including any refusal by any Issuing Bank
to honor a demand for payment under a Letter of Credit if the documents
presented in connection with such demand do not strictly comply with the terms
of such Letter of Credit), (iii) any actual or alleged presence or release of
Hazardous Materials on or from any property owned or operated by Holdings or any
Subsidiary, or any Environmental Liability related in any way to Holdings or any
Subsidiary, or (iv) any actual or prospective claim, litigation,


                                      110
<PAGE>

investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of such Indemnitee.

         (c) To the extent that the Borrower fails to pay any amount required to
be paid by it to the Administrative Agent, the Incremental Facility Arrangers,
any Issuing Bank or any Swingline Lender under Sections 10.03(a) or 10.03(b),
each Lender severally agrees to pay to the Administrative Agent, the Syndication
Agent, the Incremental Facility Arrangers, any Issuing Bank or any Swingline
Lender, as the case may be, such Lender's pro rata share (determined as of the
time that the applicable unreimbursed expense or indemnity payment is sought) of
such unpaid amount; provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Administrative Agent, the Syndication Agent, the
Incremental Facility Arrangers, any Issuing Bank or any Swingline Lender in its
capacity as such. For purposes hereof, a Lender's "pro rata share" shall be
determined based upon its share of the sum of the total Revolving Exposures,
outstanding Loans (other than Revolving Loans) and unused Commitments (other
than Revolving Commitments) at the time.

         (d) To the extent permitted by applicable law, Holdings and the
Borrower will not and will not permit any other Restricted Subsidiary to assert,
and each hereby waives for itself and on behalf of its subsidiaries, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the Transactions, any Loan or
Letter of Credit or the use of the proceeds thereof.

         (e) All amounts due under this Section shall be payable promptly after
written demand therefor.

         SECTION 10.4. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including any
affiliate of any Issuing Bank that issues any Letter of Credit), except that the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender, each Issuing Bank
and each Swingline Lender (and any attempted assignment or transfer by the
Borrower without such consent shall be null and void). Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby (including any affiliate of any Issuing Bank that issues any
Letter of Credit) and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative


                                      111
<PAGE>

Agent, the Issuing Banks, the Swingline Lenders and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.

          (b) (1) Any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitments and the Loans at the time owing to it); provided that
(i) each of the Borrower (except in the case of an assignment to a Lender or an
affiliate of a Lender) and Administrative Agent (except in the case of an
assignment to an affiliate of a Lender) (and, in the case of an assignment of
all or a portion of a Revolving Commitment or any Lender's obligations in
respect of its LC Exposure or Swingline Exposure, the Issuing Banks and the
Swingline Lenders) must give its prior written consent to such assignment (which
consent shall not be unreasonably withheld), (ii) except in the case of an
assignment to a Lender or an affiliate of a Lender or an assignment of the
entire remaining amount of the assigning Lender's Commitments or Loans, after
giving effect to such assignment, the amount of the Commitments or Loans of each
Class held by each of the assignor Lender and its affiliates and the assignee
Lender and its affiliates (determined in each case as of the date the Assignment
and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $1,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, (iii) each partial
assignment shall be made as an assignment of a proportionate part of all the
assigning Lender's rights and obligations under this Agreement, except that this
Section 10.04(b)(iii) shall not be construed to prohibit the assignment of a
proportionate part of all the assigning Lender's rights and obligations in
respect of one Class of Commitments or Loans, (iv) the parties to each
assignment (excluding any assignment by a Lender to an affiliate of such Lender)
shall execute and deliver to the Administrative Agent an Assignment and
Acceptance, together with a processing and recordation fee of $3,500, (v) the
parties to each assignment by a Lender to an affiliate of such Lender shall
execute and deliver to the Administrative Agent an Assignment and Acceptance,
together with a processing and recordation fee of $1,500, (vi) the assignee, if
it shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire and (vii) the Incremental Facility Arrangers shall
be notified by the Administrative Agent of any assignment of the Incremental
Facility; and provided further that any consent of the Borrower otherwise
required under this paragraph shall not be required if an Event of Default has
occurred and is continuing. Subject to acceptance and recording thereof pursuant
to Section 10.04(d), from and after the effective date specified in each
Assignment and Acceptance the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Acceptance, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all of the assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Sections
2.15, 2.16, 2.17 and 10.03). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this paragraph shall
be treated for purposes of this Agreement as a sale by such Lender of a


                                      112
<PAGE>

participation in such rights and obligations in accordance with Section
10.04(e). Each Lender that is an investment fund hereby agrees to notify the
Administrative Agent and the Incremental Facility Arrangers of any change of the
identity of the investment manager for such fund.

         (2) Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Lender") may grant to a special purpose funding vehicle (an
"SPC") identified as such in writing from time to time by the Granting Lender to
the Administrative Agent and the Borrower, the option to provide to the Borrower
all or any part of any Loan that such Granting Lender would otherwise be
obligated to make to the Borrower pursuant to this Agreement; provided that (i)
nothing herein shall constitute a commitment by any SPC to make any Loan, (ii)
if an SPC elects not to exercise such option or otherwise fails to provide all
or any part of such Loan, the Granting Lender shall be obligated to make such
Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder
shall utilize the Commitment of the Granting Lender to the same extent, and as
if, such Loan were made by such Granting Lender. Each party hereto hereby agrees
that no SPC shall be liable for any indemnity or similar payment obligation
under this Agreement (all liability for which shall remain with the Granting
Lender). In furtherance of the foregoing, each party hereto hereby agrees (which
agreement shall survive the termination of this Agreement) that, prior to the
date that is one year and one day after the payment in full of all outstanding
commercial paper or other senior indebtedness of any SPC, it will not institute
against, or join any other person in instituting against, such SPC any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under the laws of the United States or any State thereof. In addition,
notwithstanding anything to the contrary contained in this Section 10.04, any
SPC may (i) with notice to, but without the prior written consent of, the
Borrower and the Administrative Agent and without paying any processing fee
therefor, assign all or a portion of its interests in any Loans to the Granting
Lender or to any financial institutions (consented to by the Borrower and
Administrative Agent) providing liquidity and/or credit support to or for the
account of such SPC to support the funding or maintenance of Loans and (ii)
disclose on a confidential basis any non-public information relating to its
Loans to any rating agency, commercial paper dealer or provider of any surety,
guarantee or credit or liquidity enhancement to such SPC. This section may not
be amended without the written consent of each SPC that, at the time of such
proposed amendment, has an outstanding Loan or Loans to the Borrower. For
purposes of Section 10.02 of this Agreement and any other provision of any Loan
Document requiring the consent or approval of any Lender, the Granting Lender
shall, notwithstanding the funding of any Loans by any SPC, have the sole right
to consent to or approve any waiver or amendment of any provision of this
Agreement or any other Loan Document or to exercise any other right to consent
or to grant approval under any Loan Document.

         (c) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in any State of the United
States, a copy of each Assignment and Acceptance delivered to it and a register
for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amount of


                                      113
<PAGE>

the Loans and LC Disbursements owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall be
conclusive, and Holdings, the Borrower, the Administrative Agent, the Issuing
Banks, the Swingline Lenders and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Borrower, any Issuing Bank,
any Swingline Lender and any Lender, at any reasonable time and from time to
time upon reasonable prior notice.

         (d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in Section 10.04(b)
and any written consent to such assignment required by Section 10.04(b), the
Administrative Agent shall accept such Assignment and Acceptance and record the
information contained therein in the Register. No assignment shall be effective
for purposes of this Agreement unless it has been recorded in the Register as
provided in this paragraph.

         (e) Any Lender may, without the consent of the Borrower, the
Administrative Agent, any Issuing Bank or any Swingline Lender, sell
participations to one or more banks or other entities (a "Participant") in all
or a portion of such Lender's rights and obligations under this Agreement
(including all or a portion of its Commitments and the Loans owing to it);
provided that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) Holdings, the Borrower,
the Administrative Agent, the Issuing Banks, the Swingline Lenders and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce the Loan
Documents and to approve any amendment, modification or waiver of any provision
of the Loan Documents; provided that such agreement or instrument may provide
that such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section
10.02(b) that affects such Participant. Subject to Section 10.04(f), the
Borrower agrees that each Participant shall be entitled to the benefits of
Sections 2.15, 2.16 and 2.17 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to Section 10.04(b). To the extent
permitted by law, each Participant also shall be entitled to the benefits of
Section 10.08 as though it were a Lender, provided such Participant agrees to be
subject to Section 2.18(c) as though it were a Lender.

         (f) A Participant shall not be entitled to receive any greater payment
under Section 2.15 or 2.17 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Borrower's
prior written consent. A Participant that


                                      114
<PAGE>

would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 2.17 unless the Borrower is notified of the participation
sold to such Participant and such Participant agrees, for the benefit of the
Borrower, to comply with Section 2.17(e) as though it were a Lender.

         (g) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.

         SECTION 10.5. Survival. All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, any Issuing
Bank, any Swingline Lender or any Lender may have had notice or knowledge of any
Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount
payable under this Agreement is outstanding and unpaid or any Letter of Credit
is outstanding and so long as the Commitments have not expired or terminated.
The provisions of Sections 2.15, 2.16, 2.17 and 10.03 and Article 8 shall
survive and remain in full force and effect regardless of the consummation of
the transactions contemplated hereby, the repayment of the Loans, the expiration
or termination of the Letters of Credit and the Commitments or the termination
of this Agreement or any provision hereof.

         SECTION 10.6. Counterparts; Integration; Effectiveness. This Agreement
may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and any separate letter agreements with respect to fees payable
to the Administrative Agent or any Issuing Bank constitute the entire contract
among the parties relating to the subject matter hereof and supersede any and
all previous agreements and understandings, oral or written, relating to the
subject matter hereof. Except as provided in Section 4.01, this Agreement shall
become effective when it shall have been executed by the Administrative Agent
and when the Administrative Agent shall have received counterparts hereof which,
when taken together, bear the signatures of each of the other parties hereto,
and thereafter shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. Delivery of an executed
counterpart of a signature page of this Agreement


                                      115
<PAGE>

by telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.

         SECTION 10.7. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

         SECTION 10.8. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender, Issuing Bank and Swingline Lender and
each of their respective affiliates is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other obligations at any time owing by such Lender, Issuing
Bank, Swingline Lender or affiliate to or for the credit or the account of the
Borrower or Holdings against any and all of the obligations of the Borrower or
Holdings, as the case may be, now or hereafter existing under this Agreement
held by such Lender, Issuing Bank or Swingline Lender, irrespective of whether
or not such Lender, Issuing Bank or Swingline Lender shall have made any demand
under this Agreement and although such obligations may be unmatured. The rights
of each Lender, Issuing Bank and Swingline Lender under this Section are in
addition to other rights and remedies (including other rights of setoff) which
such Lender, Issuing Bank or Swingline Lender may have.

         SECTION 10.9. Governing Law; Jurisdiction; Consent to Service of
Process. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.

         (b) Each of Holdings and the Borrower hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to any Loan Document, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement or any other Loan Document shall
affect any right that the Administrative Agent, any Issuing Bank, any Swingline
Lender or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or any other Loan Document against Holdings, the
Borrower or their respective properties in the courts of any jurisdiction.


                                      116
<PAGE>

         (c) Each of Holdings and the Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
any other Loan Document in any court referred to in Section 10.09(b). Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.

         (d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 10.01. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.

         SECTION 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.

         SECTION 10.11. Headings. Article and Section headings used herein and
the Table of Contents are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

         SECTION 10.12. Confidentiality. Each of the Administrative Agent, the
Issuing Banks, the Swingline Lenders and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its affiliates' (other than affiliates that are
direct competitors of any material business of Holdings and the Restricted
Subsidiaries) directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit,


                                      117
<PAGE>

action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to any
assignee of or Participant in, or any prospective assignee of or Participant in,
any of its rights or obligations under this Agreement (other than a direct
competitor of any material business of Holdings and the Restricted
Subsidiaries), (g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) becomes available to the Administrative Agent, any Issuing
Bank, any Swingline Lender or any Lender on a nonconfidential basis from a
source other than Holdings or the Borrower. For the purposes of this Section,
"Information" means all information received from Holdings or the Borrower
relating to Holdings or the Borrower or its business, other than any such
information that is available to the Administrative Agent, any Issuing Bank, any
Swingline Lender or any Lender on a nonconfidential basis prior to disclosure by
Holdings or the Borrower; provided that, in the case of information received
from Holdings or the Borrower after the date hereof, such information is clearly
identified at the time of delivery as confidential. Any Person required to
maintain the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

         SECTION 10.13. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.


                                      118
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.


                               WILLIAMS COMMUNICATIONS, LLC


                               By /s/ Scott E. Schubert
                                  ----------------------------------------------
                                  Title: Senior Vice President and Chief
                                               Financial Officer


                               WILLIAMS COMMUNICATIONS GROUP, INC.


                               By /s/ Scott E. Schubert
                                  ----------------------------------------------
                                  Title: Senior Vice President and Chief
                                              Financial Officer


                               BANK OF AMERICA, N.A.


                               By /s/ Pamela S. Kurtzman
                                  ----------------------------------------------
                                  Title: Principal


                               THE CHASE MANHATTAN BANK


                               By /s/ Constance M. Coleman
                                  ----------------------------------------------
                                  Title: Vice President


                               BANK OF MONTREAL


                               By /s/ W.T. Calder
                                  ----------------------------------------------
                                  Title: Managing Director


                                      119
<PAGE>


                               THE BANK OF NEW YORK


                               By /s/ Brendan T. Nedzi
                                  ----------------------------------------------
                                  Title: Senior Vice President


                               SCOTIABANC INC.


                               By /s/ M. D. Smith
                                  ----------------------------------------------
                                  Title: Treasurer


                               ABN AMRO BANK, N.V.


                               By /s/
                                  ----------------------------------------------
                                  Title:


                               By /s/
                                  ----------------------------------------------
                                  Title:


                               FLEET NATIONAL BANK


                               By /s/ Suzanne M. MacKay
                                  ----------------------------------------------
                                  Title: Vice President


                               CIBC INC.


                               By /s/ Amy V. Kothari
                                  ----------------------------------------------
                                  Title: Executive Director


                                      120
<PAGE>

                               CREDIT SUISSE FIRST BOSTON


                               By /s/ David L. Sawyer
                                  ----------------------------------------------
                                  Title: Vice President


                               By /s/ Lalita Advani
                                  ----------------------------------------------
                                  Title: Assistant Vice President


                               DEUTSCHE BANK AG
                               NEW YORK BRANCH AND/OR CAYMAN ISLANDS BRANCH


                               By /s/ Steve M. Godeke
                                  ----------------------------------------------
                                  Title: Director


                               By /s/ Alexander Richarz
                                  ----------------------------------------------
                                  Title: Vice President


                               CREDIT LYONNAIS NEW YORK BRANCH


                               By /s/ Jeremy Horn
                                  ----------------------------------------------
                                  Title: Authorized Signature


                                      121
<PAGE>

                               BANK AUSTRIA CREDIT ANSTALT
                               CORPORATE FINANCE, INC.


                               By /s/ John T. Murphy
                                  ----------------------------------------------
                                  Title: Senior Vice President

                               By /s/ William W. Hunter
                                  ----------------------------------------------
                                  Title: Vice President


                               FIRST UNION NATIONAL BANK


                               By /s/ Brand Hosford
                                  ----------------------------------------------
                                  Title: Vice President


                               IBM CREDIT CORPORATION


                               By /s/ Thomas S. Curcio
                                  ----------------------------------------------
                                  Title: Manager of Credit


                               THE INDUSTRIAL BANK OF JAPAN,
                               LIMITED, NEW YORK BRANCH


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


                                      122
<PAGE>

                               BANK OF OKLAHOMA N.A.


                               By /s/ Robert D. Mattax
                                  ----------------------------------------------
                                  Title: Senior Vice President


                               BANK ONE, N.A.


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


                               KBC BANK, N.V.


                               By /s/ Robert Snauffer
                                  ----------------------------------------------
                                  Title: First Vice President


                               By /s/ Eric Raskin
                                  ----------------------------------------------
                                  Title: Assistant Vice President


                               THE FUJI BANK, LIMITED


                               By /s/ Nobuoki Koike
                                  ----------------------------------------------
                                  Title: Vice President & Senior Team Leader


                                      123
<PAGE>

                               INCREMENTAL TRANCHE A LENDERS:


                               BANK OF AMERICA, N.A.


                               By /s/ Pamela S. Kurtzman
                                  ----------------------------------------------
                                  Title: Principal


                               THE CHASE MANHATTAN BANK


                               By /s/ Constance M. Coleman
                                  ----------------------------------------------
                                  Title: Vice President


                               LEHMAN COMMERCIAL PAPER INC.


                               By /s/ G. Andrew Keith
                                  ----------------------------------------------
                                  Title: Authorized Signatory


                               CITICORP USA, INC.


                               By /s/ Caesar W. Wyszomirski
                                  ----------------------------------------------
                                  Title: Vice President


                               MERRILL LYNCH & CO., INC.


                               By /s/ Merrill Lynch & Co., Inc.
                                  ----------------------------------------------
                                  Name:  Parker A. Weil
                                  Title: Managing Director


                                      124
<PAGE>


Acknowledged and agreed:

CRITICAL CONNECTIONS, INC.
SBCI - PACIFIC NETWORKS, INC.
WCS COMMUNICATIONS SYSTEMS, INC.
WCS, INC.
WILLIAMS COMMUNICATIONS OF
     VIRGINIA, INC.
WILLIAMS COMMUNICATIONS
     PROCUREMENT, L.L.C.
WILLIAMS COMMUNICATIONS
     PROCUREMENT, L.P.
WILLIAMS GLOBAL COMMUNICATIONS
     HOLDINGS, INC.
WILLIAMS INTERNATIONAL
     VENTURES COMPANY
WILLIAMS LEARNING NETWORK, INC.
WILLIAMS LOCAL NETWORK, INC.
WILLIAMS WIRELESS, INC.
WILLIAMS TECHNOLOGY CENTER, LLC
WILLIAMS COMMUNICATIONS AIRCRAFT, LLC


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


                                      125
<PAGE>

                                  SCHEDULE 2.01
                                   COMMITMENTS

<Table>
<Caption>
REVOLVING AND TERM                         REVOLVING         TERM
LENDERS                                   COMMITMENT      COMMITMENT
<S>                                      <C>            <C>
Bank of America, N.A.                     32,500,000       32,500,000
The Chase Manhattan Bank                  50,000,000       50,000,000
Bank of Montreal                          42,625,000       42,625,000
The Bank of New York                      42,625,000       42,625,000
ABN AMRO Bank N.V.                        34,250,000       34,250,000
CIBC Inc.                                 34,250,000       34,250,000
Credit Lyonnais
   New York Branch                        34,250,000       34,250,000
Credit Suisse First Boston                34,250,000       34,250,000
Deutsche Bank AG
   New York Branch and/or
   Cayman Islands Branch                  34,250,000       34,250,000
Fleet National Bank                       34,250,000       34,250,000
Scotiabanc Inc.                           34,250,000       34,250,000
Bank Austria Creditanstalt
   Corporate Finance, Inc.                17,500,000       17,500,000
First Union National Bank                 17,500,000       17,500,000
The Fuji Bank, Limited                    17,500,000       17,500,000
IBM Credit Corporation                    17,500,000       17,500,000
The Industrial Bank of Japan, Limited
   New York Branch                        17,500,000       17,500,000
Bank of Oklahoma N.A.                     10,000,000       10,000,000
Bank One, N.A.                            10,000,000       10,000,000
KBC Bank N.V.                             10,000,000       10,000,000
                           Total         525,000,000      525,000,000

         GRAND TOTAL                                    1,050,000,000


INCREMENTAL LENDERS

Citicorp USA, Inc.                                        150,000,000
Lehman Commercial Paper, Inc.                             150,000,000
Merrill Lynch & Co., Inc.                                  75,000,000
The Chase Manhattan Bank                                   40,000,000
Bank of America, N.A.                                      35,000,000

         GRAND TOTAL                                      450,000,000
</Table>


                                      126

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(X)
<SEQUENCE>15
<FILENAME>d93687ex10-x.txt
<DESCRIPTION>AGREEMENT OF PURCHASE AND SALE DATED 9/13/01
<TEXT>
<PAGE>
                                                                   EXHIBIT 10(x)


================================================================================



                         AGREEMENT OF PURCHASE AND SALE


                                      AMONG


                        WILLIAMS TECHNOLOGY CENTER, LLC,
                                   as Seller,

                     WILLIAMS HEADQUARTERS BUILDING COMPANY,
                                  as Purchaser,

                                       and

                          WILLIAMS COMMUNICATIONS, LLC,
                                  as Guarantor


                            EXECUTED EFFECTIVE AS OF
                               SEPTEMBER 13, 2001


================================================================================



<PAGE>

                                TABLE OF CONTENTS
<Table>
<Caption>
                                                                                                   Page
                                                                                                   ----
<S>               <C>                                                                              <C>
                                               ARTICLE I

                                              DEFINITIONS

Section 1.01.     Definitions........................................................................2
Section 1.02.     References.........................................................................67

                                              ARTICLE II

                                    AGREEMENT OF PURCHASE AND SALE

Section 2.01.     Agreement..........................................................................7

                                              ARTICLE III

                                             CONSIDERATION

Section 3.01.     Purchase Price.....................................................................7
Section 3.02.     Agreed Allocation..................................................................7

                                              ARTICLE IV

                                           INDEMNIFICATIONS

Section 4.01.     Seller's Indemnification...........................................................8
Section 4.02.     Purchaser's Indemnification........................................................8
Section 4.03.     Insurance Claims...................................................................8
Section 4.04.     Survival...........................................................................8

                                               ARTICLE V

                                     EVALUATION OF ACQUIRED ASSETS

Section 5.01.     Purchaser's Evaluation.............................................................8

                                              ARTICLE VI

                                       TITLE AND SURVEY MATTERS

Section 6.01.     Title Commitment...................................................................9
Section 6.02.     Survey.............................................................................9
</Table>



                                       ii
<PAGE>

<Table>
<S>               <C>                                                                              <C>
                                              ARTICLE VII

                                    REPRESENTATIONS AND WARRANTIES

Section 7.01.     Seller's Representations and Warranties............................................9
Section 7.02.     Purchaser's Representations and Warranties.........................................11
Section 7.03.     Survival...........................................................................11

                                             ARTICLE VIII

                                                CLOSING

Section 8.01.     Conditions to Obligations of Seller................................................11
Section 8.02      Conditions to Obligations of Purchaser.............................................12

                                              ARTICLE IX

                                                CLOSING

Section 9.01.     Closing............................................................................13
Section 9.02.     Seller's Closing Obligations.......................................................13
Section 9.03.     Purchaser's Closing Obligations....................................................14
Section 9.04      Ad Valorem Taxes...................................................................15
Section 9.05.     Closing Costs......................................................................15
Section 9.06.     Documents and Data Access and Delivery.............................................15

                                               ARTICLE X

                                               BROKERAGE

Section 10.01.    Brokers............................................................................15

                                              ARTICLE XI

                                         DEFAULTS AND REMEDIES

Section 11.01.    Default by Seller..................................................................16
Section 11.02.    Default by Purchaser...............................................................16
Section 11.03.    Notice and Cure....................................................................16
Section 11.04     Remedies...........................................................................16

                                              ARTICLE XII

                                                NOTICES

Section 12.01.    Notices............................................................................17
</Table>



                                       iii
<PAGE>

<Table>
<S>               <C>                                                                              <C>
                                             ARTICLE XIII

                     LIMITED SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 13.01.    Survival of Representations, Warranties and Covenants..............................18

                                              ARTICLE XIV

                                             MISCELLANEOUS

Section 14.01.    Waivers............................................................................18
Section 14.02     Recovery of Certain Fees...........................................................18
Section 14.03     Time of Essence....................................................................18
Section 14.04.    Construction.......................................................................18
Section 14.05.    Counterparts.......................................................................19
Section 14.06.    Severability.......................................................................19
Section 14.07.    Entire Agreement...................................................................19
Section 14.08.    Governing Law......................................................................19
Section 14.09.    No Recording.......................................................................19
Section 14.10     No Merger..........................................................................19

                                              ARTICLE XV

                                   CONSTRUCTION COMPLETION AGREEMENT

Section 15.01.    Survival...........................................................................20
</Table>



                                       iv
<PAGE>

                         LIST OF EXHIBITS AND SCHEDULES


SCHEDULE I        Form of Deed to Real Property and Improvements
SCHEDULE II       Form of Non-Foreign Entity Certification
SCHEDULE III      Form of Bill of Sale and Assignment
SCHEDULE IV       Form of Easement for Backup Generation Facility
SCHEDULE V        Form of Master Lease

EXHIBIT A         Center Parcel
EXHIBIT B         Central Plant Space
EXHIBIT C         Litigation and Claims
EXHIBIT D         Parking Garage Parcel
EXHIBIT E         Cooling Tower Parcel
EXHIBIT F         Title Commitment and Title Objections
EXHIBIT G         Agreed Allocation
EXHIBIT H         Ancillary Contracts



                                        v
<PAGE>

                         AGREEMENT OF PURCHASE AND SALE


         THIS AGREEMENT OF PURCHASE AND SALE (this "Agreement") is entered into
and effective for all purposes as of Effective Date as hereinbelow defined, by
and among WILLIAMS TECHNOLOGY CENTER, LLC, a Delaware limited liability company
(the "Seller"), WILLIAMS COMMUNICATIONS, LLC, a Delaware limited liability
company (the ("Guarantor" or "WCLLC"), and WILLIAMS HEADQUARTERS BUILDING
COMPANY, a Delaware corporation (the "Purchaser").

                                    RECITALS

         A. Seller is the owner of the partially completed office building and
related facilities presently under construction in Tulsa, Oklahoma, commonly
known as the Williams Technology Center, which constitutes the Improvements
Under Construction as hereinbelow defined.

         B. Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller the Improvements Under Construction, the Real Property and
the other Acquired Assets each as hereinbelow defined, and to enter into
agreements relating to the construction, management and operation of the
foregoing.

         C. In order to induce Purchaser to enter into the transaction
contemplated herein, Guarantor desires to guaranty the performance by Seller of
all of the duties and obligations set forth in this Agreement.

         D. Upon Closing, Purchaser desires to lease to Seller, and Seller
desires to lease from Purchaser, the Real Property, Improvements and other
Acquired Assets pursuant to the terms, covenants, and conditions of the Master
Lease as herein below defined.

         E. The parties understand that (i) the construction of the Improvements
Under Construction will not be completed until some time after the Closing Date,
and (ii) certain portions of the Personal Property as hereinbelow defined will
not be acquired by Seller until after the Closing Date but notwithstanding such
fact, Seller desires that such after-acquired Personal Property is to be the
subject of the transfers as contemplated by this Agreement, as specifically
transferred by the Bill of Sale as hereinbelow defined.

         IN CONSIDERATION of the foregoing, the mutual promises, covenants and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:



                                       1
<PAGE>

                                    ARTICLE I

                                   DEFINITIONS

         SECTION 1.01. Definitions. For purposes of this Agreement, capitalized
terms used herein and not otherwise defined herein shall have the meanings
ascribed to such terms in this Section 1.01:

         Acquired Assets. The term "Acquired Assets" shall mean collectively the
         fee simple title to the Real Property and the Improvements, including
         but not limited to the Improvements Under Construction; all contract
         rights, air rights, easements, privileges, servitudes, appurtenances
         and other rights belonging to or inuring to the benefit of Seller and
         pertaining to the Real Property and Improvements; all documents,
         specifications and plans related to the Real Property and Improvements;
         all licenses, permits, building permits, certificates of occupancy,
         approvals, governmental orders, resolutions, dedications, subdivision
         maps and entitlements issued, approved or granted by any of the
         Authorities in connection with the Real Property and Improvements or
         the construction thereof, together with all renewals and modifications
         thereof; all other rights, titles, interests, privileges and
         appurtenances related to and used exclusively in connection with the
         ownership, construction, use, operation or management of the Real
         Property and Improvements, as specifically described in this Agreement;
         and all Personal Property.

         Agreed Allocation. The term "Agreed Allocation" shall have the meaning
         ascribed to such term in Section 3.02.

         Aircraft Transaction. The term "Aircraft Transaction" shall mean
         collectively, the transactions set forth in (i) the three (3) Aircraft
         Dry Leases to be between Williams Communications Aircraft, LLC, a
         Delaware limited liability company ("WC Aircraft"), as Lessor, and
         WCLLC, as Lessee, covering the aircraft described therein, and (ii) the
         Membership Interest Purchase Agreement to be between Williams Aircraft,
         Inc., a Delaware corporation, as Buyer, and WCLLC, as Seller, covering
         all of the membership interests in WC Aircraft.

         Ancillary Contracts. The term "Ancillary Contracts" shall mean
         collectively the agreements set forth on EXHIBIT H.

         Authorities. The term "Authorities" shall mean collectively the various
         governmental and quasi-governmental bodies or agencies having
         jurisdiction over the asset, entity or matter in question.

         Best Knowledge. The term "Best Knowledge" shall mean the knowledge of
         the party in question's current employees who, in the normal scope of
         their employment, would have knowledge of the subject matter in
         question.



                                       2
<PAGE>

         Bill of Sale. The term "Bill of Sale" shall mean the Bill of Sale and
         Assignment covering all of the Personal Property, to be executed by
         Seller in favor of Purchaser in the form of SCHEDULE III.

         BOK Tower. The term "BOK Tower" shall mean the multi-story office
         building owned by Purchaser located immediately to the west of the
         Center.

         Business Day. The term "Business Day" shall mean any day other than a
         Saturday, Sunday or nationally recognized holiday.

         Center. The term "Center" shall mean the structure currently under
         construction on the Center Parcel.

         Center Parcel. The term "Center Parcel" shall mean that portion of the
         Real Property more particularly described in EXHIBIT A, which shall
         include the air rights associated with the Skywalk .

         Central Plant. The term "Central Plant" shall mean the equipment,
         fixtures, piping, wiring, machinery, and all other items of personal
         property comprising the plant for chilled and hot water production and
         circulation, and electricity generation and transmission, currently
         being constructed in the basement of the Center in the Central Plant
         Space and on the Cooling Tower Parcel.

         Central Plant Space. The term "Central Plant Space" shall mean that
         portion of the basement of the Center set forth on EXHIBIT B.

         Central Plant Lease. The term "Central Plant Lease" shall have the
         meaning ascribed to such term on Exhibit H.

         Closing. The term "Closing" shall mean the consummation of the purchase
         and sale of the Acquired Assets contemplated by this Agreement.

         Closing Date. The term "Closing Date" shall mean the date on which the
         Closing occurs, which date shall be no later than September 13, 2001.

         Closing Surviving Obligations. The term "Closing Surviving Obligations"
         shall mean collectively the rights, liabilities and obligations set
         forth in Sections 3.02, 6.01, 6.02, 10.01, 11.03, 11.04, 13.01 and
         14.02, and Articles IV and VII, which are specifically designated as
         surviving the Closing.

         Construction Completion. The term "Construction Completion" shall have
         the meaning ascribed to such term in the Construction Completion
         Agreement.

         Construction Completion Agreement. The term "Construction Completion
         Agreement" shall mean that certain Agreement of Purchase and Sale and
         Construction Completion



                                       3
<PAGE>

         dated February 26, 2001, between Purchaser, as Seller, and WCLLC, as
         Purchaser, covering the Acquired Assets and the completion of
         construction of portions thereof.

         Cooling Tower Parcel. The term "Cooling Tower Parcel" shall mean the
         real property upon which the cooling towers relating to the Central
         Plant are located, as described on Exhibit E.

         Credit Agreement. The term "Credit Agreement" shall mean the Amended
         and Restated Credit Agreement dated as of September 8, 1999, among
         Williams Communications Group, Inc., a Delaware corporation, WCLLC,
         Bank of America, N.A., The Chase Manhattan Bank, and other parties.

         Data. The term "Data" shall have the meaning ascribed to such term in
         the Construction Completion Agreement.

         Declaration. The term "Declaration" shall mean that certain Declaration
         of Reciprocal Easements with Covenants and Restrictions dated February
         26, 2001, executed by Purchase and Seller, recorded in Book 6521 at
         Page 2670 of the records of the County Clerk of Tulsa, Oklahoma.

         Deed. The term "Deed" shall mean the General Warranty Deed covering the
         Real Property, the Improvements Under Construction and all of Seller's
         right, title and interest in and to and the Skywalk, specifically
         excluding however, all interest in and to the Central Plant which is
         currently owned by Purchaser, to be executed by Seller in favor of
         Purchaser or Purchaser's Designee, in the form of SCHEDULE I.

         Documents. The term "Documents" shall mean the following types of
         information relating to the Acquired Assets, maintained in any format:
         (i) all documents that are referenced and/or incorporated in any of the
         contracts; (ii) all financial data, including but not limited to
         records, statements, and invoices; (iii) physical inspections, studies
         or reports; (iv) appraisals; (v) surveys; and (vi) policies and/or
         commitments of title insurance; (vii) relevant correspondence;
         provided, however, items (i) through (vii) hereinabove do not include
         any software owned by any management company or any information in the
         possession or control of any such management company which is
         integrated with other information not related to any of the Acquired
         Assets so long as such information related to the Acquired Assets is
         either separately provided to Purchaser in another form, or provided as
         part of other information under this Agreement.

         Easement for Backup Generation Facility. The term " Easement for Backup
         Generation Facility " shall mean the easement in form of SCHEDULE IV,
         in which Purchaser shall grant to Seller, certain easement rights to
         locate Seller's backup electrical generation equipment.

         Effective Date. The term "Effective Date" shall mean September 13,
         2001.



                                       4
<PAGE>

         Equipment Purchase Agreement. The term "Equipment Purchase Agreement"
         shall have the meaning ascribed to such term in the Construction
         Completion Agreement.

         Governmental Regulations. The term "Governmental Regulations" shall
         mean collectively all laws, ordinances, rules and regulations of the
         Authorities applicable to Seller or any of its businesses or operations
         (or any portion thereof), or to the use, ownership, possession,
         operation, management or construction of the Acquired Assets or any
         portion thereof.

         Guaranty. The term "Guaranty" shall mean the Guaranty to be executed by
         Guarantor, as described in the Master Lease.

         Improvements. The term "Improvements" shall mean collectively all
         buildings, structures, fixtures, facilities, parking structures and
         areas, and other improvements located or to be located on or connected
         with the Real Property or the Skywalk, and which shall include without
         limitation the Improvements Under Construction.

         Improvements Under Construction. The term "Improvements Under
         Construction" shall mean collectively the Center, the Skywalk and the
         Parking Garage.

         Initialed Title Commitment. The term "Initialed Title Commitment" shall
         have the meaning ascribed to such term in Section 9.02 (f).

         Insured Property. The term "Insured Property" shall have the meaning
         ascribed to such term in Section 6.01.

         La Petite Lease. The term "La Petite Lease" shall mean that certain
         Ground Lease with Construction by Tenant between Williams Realty Corp.
         (now Williams Headquarters Building Company), as Landlord and La Petite
         Academy, Inc., as Tenant, dated July 22, 1987, as amended by that
         certain First Amendment to Lease Agreement dated February 28, 1989.

         La Petite Parcel. The term "La Petite Parcel" shall mean the real
         property covered by the La Petite Lease.

         Management Agreement. The term "Management Agreement" shall have the
         meaning ascribed to such term on Exhibit H.

         Master Lease. The term "Master Lease" shall mean the Master Lease to be
         executed by Purchaser, as Landlord, and Seller, as Tenant, covering the
         Real Property and Improvements in form of SCHEDULE V.

         Non-Foreign Entity Certification. The term "Non-Foreign Entity
         Certification" shall have the meaning ascribed to such term in Section
         9.02(d).



                                       5
<PAGE>

         Parking Garage. The term "Parking Garage" shall mean the structure
         currently under construction on the Parking Garage Parcel.

         Parking Garage Parcel. The term "Parking Garage Parcel" shall mean that
         portion of the Real Property more particularly described in EXHIBIT D,
         which includes without limitation, the La Petite Parcel.

         Permitted Exceptions. The term "Permitted Exceptions" shall have the
         meaning ascribed to such term in Section 6.01.

         Personal Property. The term "Personal Property" shall mean collectively
         all of the tangible and intangible personal property constituting a
         portion of the Acquired Assets, including without limitation, the
         Category 1 FF&E and Category 2 FF&E, each as defined in the Master
         Lease.

         Purchase Price. The term "Purchase Price" shall have the meaning
         ascribed to such term in Section 3.01.

         Purchaser's Affiliate. The term "Purchaser's Affiliate" shall mean an
         entity (i) that is Purchaser's parent organization, or a wholly owned
         subsidiary of Purchaser; or (ii) that acquires all or substantially all
         of the assets or capital stock of Purchaser; or (iii) of which
         Purchaser owns in excess of fifty percent (50%) of the outstanding
         capital stock; or (iv) that as a result of the consolidation or merger
         with Purchaser and/or Purchaser's parent organization, shall own all of
         the capital stock of Purchaser or Purchaser's parent corporation.

         Real Property. The term "Real Property" shall mean the Center Parcel
         and the Parking Garage Parcel.

         Skywalk. The term "Skywalk" shall mean an elevated pedestrian bridge
         and support structure, connecting the Parking Garage to the Center over
         a portion of South Cincinnati Avenue and a portion of East First
         Street, Tulsa, Oklahoma, that is approximately twenty-seven (27) feet
         above the driving lanes of such streets, together with the air rights
         for the three (3) dimensional space within which it is to be suspended.

         Surveys. The term "Surveys" shall have the meaning ascribed to such
         term in Section 6.02.

         Title Commitment. The term "Title Commitment" shall mean the Commitment
         for Title Insurance dated July 2, 2001, No. E-134132-A, issued by the
         Title Company on behalf of Lawyers Title Insurance Corporation, more
         particularly described on EXHIBIT F.

         Title Company. The term "Title Company" shall mean Guaranty Abstract
         Company of Tulsa, Oklahoma, or such other title company satisfactory to
         Purchaser.



                                       6
<PAGE>

         Title Policy. The term "Title Policy" shall mean the ALTA Form B
         owner's title insurance policy or policies, with standard and printed
         exceptions deleted (excepting survey coverage) and providing lien
         coverage, to be issued based upon the Title Commitment.

         Utility Services Agreement. The term "Utility Services Agreement" shall
         have the meaning ascribed to such term on Exhibit H.

         SECTION 1.02. References. Except as otherwise specifically indicated,
all references in this Agreement to Articles or Sections refer to Articles or
Sections of this Agreement, and all references to Exhibits or Schedules refer to
Exhibits or Schedules attached hereto all of which are hereby incorporated
herein by this reference for all purposes. The words "herein," "hereof,"
"hereinafter," "hereunder" and words and phrases of similar import refer to this
Agreement as a whole and not to any particular Section or Article.

                                   ARTICLE II

                         AGREEMENT OF PURCHASE AND SALE

         SECTION 2.01. Agreement. For payment of the Purchase Price in
accordance with Section 3.01, and in consideration of all of the other terms,
covenants and conditions set forth in this Agreement, Seller hereby agrees to
sell, transfer, convey, assign, and deliver to Purchaser or Purchaser's
Affiliate and Purchaser hereby agrees to purchase, acquire and accept from
Seller, the Acquired Assets (but as to any Licenses and Permits comprising part
of the Acquired Assets, only to the extent assignable).

                                   ARTICLE III

                                  CONSIDERATION

         SECTION 3.01. Purchase Price. The Purchase Price (the "Purchase Price")
for the Acquired Assets shall be the sum of Two Hundred Forty-Five Million and
No/100 Dollars ($245,000,000.00), shall be paid by Purchaser to Seller at
Closing, in immediately available funds.

         SECTION 3.02. Agreed Allocation. The parties hereto agree that the fair
market value allocation of the Purchase Price among the Acquired Assets (the
"Agreed Allocation"), is as set forth on EXHIBIT G. The provisions of this
Section 3.02 shall survive the Closing without limitation.



                                       7
<PAGE>

                                   ARTICLE IV

                                INDEMNIFICATIONS

         SECTION 4.01 Seller's Indemnification. Subject to the obligations of
Purchaser under (i) the agreements to be executed between the parties hereto
pursuant to Article XVI, and (ii) the Construction Completion Agreement, Seller
hereby agrees to defend, indemnify and hold harmless Purchaser and its parent,
subsidiaries and affiliated companies, and Purchaser's stockholders, directors,
officers, employees and agents, of and from any loss, cost, claim and liability
relating to:

                  (a) any inaccuracy or breach by Seller of any representation
         or warranty set forth in Section 7.01; or

                  (b) any claims made by any third parties for any damages,
         physical injury or loss of life occurring on or about the Real Property
         and Improvements including without limitation, any environmental
         claims, arising during Seller's ownership thereof.

         SECTION 4.02. Purchaser's Indemnification. Subject to the obligations
of Seller under (i) the agreements to be executed between the parties hereto
pursuant to Article XVI, and (ii) the Construction Completion Agreement,
Purchaser hereby agrees to defend, indemnify and hold harmless Seller and its
parent, subsidiaries and affiliated companies, and Seller's members, managers,
directors, officers, employees and agents, of and from any loss, cost, claim and
liability relating to:

                  (a) any inaccuracy or breach by Purchaser of any
         representation or warranty set forth in Section 7.02.

         SECTION 4.03. Insurance Claims. In the event any Purchaser or Seller
shall suffer any claim or loss for which it is entitled to indemnification under
this Article IV, the indemnifying parties shall use their best efforts, which
shall include without limitation, the ascertaining and establishing of insurance
coverage for such claim or loss, to pursue such claim and to collect under all
applicable insurance policies maintained by or on behalf of the indemnifying
party.

         SECTION 4.04. Survival. The provisions of this Article IV shall survive
the Closing without limitation.

                                    ARTICLE V

                          EVALUATION OF ACQUIRED ASSETS

         SECTION 5.01. Purchaser's Evaluation. Purchaser has familiarized itself
with respect to the Acquired Assets and subject to the specific warranties,
representations and



                                       8
<PAGE>

covenants of Seller contained in this Agreement, Purchaser accepts the Acquired
Assets on an "as-is" basis, with the understanding that Seller has not and is
not making any warranties or representations of any kind whatsoever, except as
set forth herein and in the Construction Completion Agreement.

                                   ARTICLE VI

                            TITLE AND SURVEY MATTERS

         SECTION 6.01. Title Insurance. Purchaser has previously obtained the
Title Commitment which contains the commitment to issue the Title Policy to
insure marketable title in Purchaser with respect to the Real Property, the
Center, the Parking Garage and the Skywalk (collectively the "Insured
Property"), together with copies of all documents and other matters listed as
exceptions therein. Purchaser hereby waives objection to all exceptions listed
in the Title Commitment (the "Permitted Exceptions"), except for those specific
exceptions which should be deleted by Title Company upon presentment of a
possession affidavit as to the non-existence as of the Closing Date of any
tenants of any portion of the Real Property or the Improvements, executed by
Seller.

         SECTION 6.02. Surveys. Pursuant to the Construction Completion
Agreement, Purchaser shall obtain for Purchaser's own use, and provide to
Seller, certified "as built" ALTA surveys of the Real Property and the
Improvements Under Construction (duly certified as of a recent date by an
Oklahoma licensed surveyor and in form acceptable to Purchaser and the Title
Company) showing all easements, restrictions and rights-of-way relating thereto
(the "Surveys").

                                   ARTICLE VII

                         REPRESENTATIONS AND WARRANTIES

         SECTION 7.01. Seller's Representations and Warranties. Subject to the
limitations on survival set forth in Article XIII of this Agreement, Seller, to
its Best Knowledge represents and warrants to Purchaser the following as of the
Closing Date:

                  (a) Status. Seller is a limited liability company duly
         organized and validly existing under the laws of the State of Delaware,
         and is duly qualified to do business in the State of Oklahoma.

                  (b) Authority. The execution and delivery of this Agreement
         and the performance by Seller of its obligations hereunder have been
         duly authorized by all necessary action on the part of Seller, and this
         Agreement constitutes the legal, valid and binding obligation of
         Seller, enforceable in accordance with its terms.

                  (c) Consents. No consent, waiver, approval or authorization is
         required from any person or entity (which has not already been obtained
         and delivered to



                                       9
<PAGE>

         Purchaser or which will be given on or before Closing) in connection
         with the execution and delivery of this Agreement by Seller, or the
         performance by Seller of the obligations contemplated hereby.

                  (d) Non-Foreign Entity. Seller is not a "foreign person" or
         "foreign corporation" as those terms are defined in the Internal
         Revenue Code, as amended, and the regulations promulgated thereunder.

                  (e) No Governmental Consent Required. No order, license,
         consent, permit, authorization or approval of, or exemption by, or the
         giving of notice to, or the registration with or the taking of any
         other action with respect to any Authorities, and no filing, recording,
         publication or registration in any public office or any other place is
         required or necessary to authorize the execution, delivery and
         performance by Seller of this Agreement or any related documents to
         which it is a party.

                  (f) No Conflicts, etc. The execution, delivery and performance
         by Seller of this Agreement and any related document to which Seller is
         a party, shall not conflict with or result in any breach of, or
         constitute a default or result in the creation of a lien under, the
         certificate of incorporation (or other charter document), or bylaws of
         Seller, or any law or judgment or, assuming that the required consents
         are obtained, any permit held by Seller, or any loan document, lease or
         contract to which Seller is a party or by which Seller is bound or any
         of its assets is subject.

                  (g) Legal Matters. Seller is not in breach, default or
         violation of any provision of any of its certificate of formation or
         bylaws, or any applicable law or judgment, which has or will have any
         material, adverse effect on the transactions contemplated by this
         Agreement. Furthermore:

                                    (i) Except as set forth on EXHIBIT C, there
                  is no claim or litigation pending or threatened to which
                  Seller is a party, or which Seller is threatened to be made a
                  party or to which any portion of the Acquired Assets is
                  subject, or is threatened to be made subject, that would have
                  a material, adverse effect on the Acquired Assets, and there
                  is no litigation pending to which Seller is a party, or
                  threatened to be made a party which seeks to restrain, enjoin,
                  prevent the consummation of, or otherwise challenge this
                  Agreement or any of the related documents, or any of the
                  transactions contemplated hereby, or which seeks to recover
                  damages in connection therewith; and

                                    (ii) Seller is not bound or adversely
                  affected by any unexecuted and unsatisfied judgment rendered
                  against Seller which would materially, adversely affect any of
                  the Acquired Assets.

                  (h) Improvements Under Construction and Real Property. The
         Improvements Under Construction and the Real Property are free and
         clear of all liens, claims and encumbrances, except as may be
         specifically set forth in the Permitted Exceptions.



                                       10
<PAGE>

                  (i) Condemnation Actions and Assessments. There are not
         presently pending or threatened any condemnation, eminent domain or
         other actions, or assessed any special assessments of any nature with
         respect to the Acquired Assets or any material part thereof, and Seller
         has not received any notice of, nor does Seller have any knowledge with
         respect to, any such condemnation, eminent domain or other actions, or
         special assessments.

         SECTION 7.02. Purchaser's Representations and Warranties. The following
constitutes the representations and warranties of Purchaser subject to the
limitations of survival set forth in Article XIII of this Agreement. Purchaser,
to its Best Knowledge, represents and warrants to Seller the following as of the
Closing Date:

                  (a) Status. Purchaser is a corporation duly organized and
         validly existing under the laws of the State of Delaware, and is duly
         qualified to do business in the State of Oklahoma.

                  (b) Authority. The execution and delivery of this Agreement
         and the performance by Purchaser of its obligations hereunder have been
         duly authorized by all necessary action on the part of Purchaser. This
         Agreement has been duly authorized, executed and delivered by
         Purchaser.

                  (c) Consents. No consent, waiver, approval or authorization is
         required from any person or entity (that has not already been obtained)
         in connection with the execution and delivery of this Agreement by
         Purchaser or the performance by Purchaser of the transactions
         contemplated hereby.

                  (d) No Governmental Consent Required. No order, license,
         consent, permit, authorization or approval of, or exemption by, or the
         giving of notice to, or the registration with or the taking of any
         other action with respect to any Authorities, and no filing, recording,
         publication or registration in any public office or any other place is
         required or necessary to authorize the execution, delivery and
         performance by Purchaser of this Agreement or any related documents to
         which Purchaser is a party.

         SECTION 7.03. Survival. All the representations and warranties of
Seller and Purchaser set forth hereinabove in this Article VII, shall survive
the Closing subject to the limitations set forth in Article VIII hereinbelow.

                                  ARTICLE VIII

                               CLOSING CONDITIONS

         SECTION 8.01. Conditions to Obligations of Seller. The obligations of
Seller to consummate the sale contemplated hereby shall be subject to the
satisfaction of the following



                                       11
<PAGE>

conditions on or before the Closing Date, except to the extent that any of such
conditions may be and have been waived by Seller:

                  (a) Representations, Warranties, Covenants and Closing
         Obligations of Purchasers. All representations and warranties of
         Purchaser in this Agreement shall be true and correct as of the Closing
         Date, and Purchaser shall have performed and complied with, at or prior
         to the Closing Date, all covenants and agreements required by this
         Agreement to be performed or complied with by Purchaser and shall have
         furnished each item required to be furnished by them at Closing;

                  (b) No Orders. No order, writ, injunction or decree shall have
         been entered and be in effect by any court of competent jurisdiction or
         any Authorities, and no statute, rule, regulation or other requirement
         shall have been promulgated or enacted and be in effect, that
         restrains, enjoins or invalidates the transactions contemplated hereby;
         and

                  (c) No Suits. No suit or other proceeding shall be pending or
         threatened by any third party not affiliated with or acting at the
         request of Seller before any court or any Authorities seeking to
         restrain, prohibit or declare illegal, or seeking damages against
         Seller or any of its affiliates in connection with, the transactions
         contemplated by this Agreement.

         SECTION 8.02. Conditions to Obligations of Purchaser. The obligations
of Purchaser to consummate the sale contemplated hereby shall be subject to and
conditioned upon the satisfaction of the following conditions on or before the
Closing Date, except to the extent that any of such conditions may be and have
been waived by Purchaser:

                  (a) Representations, Warranties, Covenants and Closing
         Obligations of Seller. All representations and warranties of Seller in
         this Agreement shall be true and correct as of the Closing Date, and
         Seller shall have performed and complied with, prior to the Closing
         Date, all covenants and agreements required by this Agreement to be
         performed or complied with by Seller, and shall have furnished each
         item required to be furnished by it at Closing;

                  (b) No Orders. No order, writ, injunction or decree shall have
         been entered and be in effect by any court of competent jurisdiction or
         any Authorities, and no statute, rule, regulation or other requirement
         shall have been promulgated or enacted and be in effect, that
         restrains, enjoins or invalidates the transactions contemplated hereby
         or materially, adversely affects the value of the Acquired Assets; and

                  (c) No Suits. No suit or other proceeding shall be pending or
         threatened by any third party not affiliated with or acting at the
         request of Purchaser, before any court or Authorities seeking to
         restrain, prohibit or declare illegal, or seeking damages against
         Purchaser in connection with, the transactions contemplated by this
         Agreement.



                                       12
<PAGE>

                  (d) Aircraft Transaction. All of the documents related to the
         Aircraft Transaction shall have been executed and entered into
         effective as of the Closing Date.

                  (e) Credit Agreement. Bank of America, N.A., and any other
         required Lenders as defined in the Credit Agreement, shall have
         executed the following, all in form and substance satisfactory to
         Purchaser in all respects: (i) a waiver and release of lien relating to
         any claim or interest of any of the Lenders (as defined therein), in
         any of the Acquired Assets pursuant to the Credit Agreement; (ii) an
         Intercreditor Agreement; and (iii) the consent of the Lenders to all of
         the transactions contemplated by this Agreement and the Aircraft
         Transaction (collectively the "BOA Documents").

                  (f) Master Lease. The Master Lease, together with all
         documents to be executed as contemplated therein, shall have been
         executed and entered into effective as of the Closing Date.

                                   ARTICLE IX

                                     CLOSING

         SECTION 9.01. Closing. The Closing of the transactions contemplated
herein shall occur on the Closing Date. At Closing, the events set forth in this
Article IX shall occur, it being understood that the performance or tender of
performance of all matters set forth in this Article IX are mutually concurrent
conditions.

         SECTION 9.02. Seller's Closing Obligations. At Closing, Seller and
Guarantor shall deliver or cause to be delivered to Purchaser the following:

                  (a) The duly executed (and acknowledged where provided) Deed
         and Bill of Sale;

                  (b) Duly executed members' resolutions or other documentation
         of Seller, in form and substance reasonably satisfactory to Purchaser,
         authorizing the execution and performance of this Agreement by Seller;

                  (c) Evidence reasonably satisfactory to Purchaser and the
         Title Company that the persons executing the Closing documents on
         behalf of Seller have full right, power and authority to do so;

                  (d) A duly executed certificate (the "Non-Foreign Entity
         Certification") certifying that Seller is not a "foreign person" as
         defined in Section 1445 of the Internal Revenue Code of 1986, as
         amended, in the form of SCHEDULE II;

                  (e) Possession of the Acquired Assets, subject to the
         Permitted Exceptions;



                                       13
<PAGE>

                  (f) The Title Commitment, marked and initialed by a
         representative of the Title Company, in form satisfactory to Purchaser
         (the "Initialed Title Commitment");

                  (g) The duly executed Master Lease and the Memorandum of Lease
         in recordable form as required therein;

                  (h) The duly executed Guaranty;

                  (i) A sufficient number of duly executed UCC-1 Financing
         Statements and a UCC-3 Termination Statement, both in form and
         substance satisfactory to Purchaser, as contemplated by the Master
         Lease;

                  (j) The following duly executed amendments to the Ancillary
         Contracts, all as defined on EXHIBIT H, as specified: (i) First
         Amendment to Management Agreement; (ii) First Amendment to Central
         Plant Lease; and (iii) First Amendment to Utility Services Agreement
         (collectively the "Ancillary Contracts Amendments");

                  (k) The duly executed Third Amendment to Construction
         Completion Agreement;

                  (l) An opinion of Seller's counsel in form and substance
         satisfactory to Purchaser covering, among other matters, the
         enforceability of the Master Lease; and

                  (m) A certificate of the chief executive officer or chief
         financial officer of Seller to the effect that Seller is in compliance
         with all of the terms and provisions set forth in this Agreement, that
         the representations and warranties of Seller set forth herein are true
         and correct on and as of the Closing Date and that no event of default
         under Section 11.01 has occurred and is continuing or would result from
         the consummation of this transaction.

                  (n) Such other documents and instruments as may be reasonably
         necessary or appropriate in Purchaser's or Title Company's reasonable
         judgment, to effect the consummation of the transactions which are the
         subject of this Agreement.

         SECTION 9.03. Purchaser's Closing Obligations. At Closing, Purchaser
shall deliver or cause to be delivered to Seller the following:

                  (a) The Purchase Price as set forth in Section 3.01;

                  (b) The duly executed Easement for Backup Generation Facility;

                  (c) Evidence reasonably satisfactory to Seller and the Title
         Company that the persons executing the Closing documents on behalf of
         Purchaser have full right, power, and authority to do so;



                                       14
<PAGE>

                  (d) Corporate resolutions or other documentation for Purchaser
         in form and substance reasonably satisfactory to Seller, authorizing
         the execution and performance of this Agreement by Purchaser;

                  (e) The duly executed Master Lease;

                  (f) The duly executed Ancillary Contracts Amendments;

                  (g) The duly executed Third Amendment to Construction
         Completion Agreement; and

                  (h) A certificate of the chief executive officer or chief
         financial officer of Purchaser to the effect that Purchaser is in
         compliance with all of the terms and provisions set forth in this
         Agreement, that the representations and warranties of Purchaser set
         forth herein are true and correct on and as of the Closing Date and
         that no event of default under Section 11.02 has occurred and is
         continuing or would result from the consummation of this transaction.

                  (g) Such other documents and instruments as may be reasonably
         necessary or appropriate in Seller's reasonable judgment, to effect the
         consummation of the transactions which are the subject of this
         Agreement.

         SECTION 9.04. Ad Valorem Taxes. Seller acknowledges and agrees that
Seller shall be solely responsible for all real property and personal property
ad valorem taxes and any annual special assessments relating to the Acquired
Assets for the year 2001.

         SECTION 9.05. Closing Costs. All Closing costs incurred in connection
with the Closing shall be paid by Seller, including without limitation, the fees
and expenses of Purchaser's attorneys and other representatives, and the
Oklahoma Real Estate Mortgage Tax on the Master Lease.

         SECTION 9.06. Documents and Data Access and Delivery. Title to all of
the Documents and Data shall be in Purchaser from and after the Closing Date,
subject to the provisions of Section 11.06 of the Construction Completion
Agreement.

                                    ARTICLE X

                                    BROKERAGE

         SECTION 10.01. Brokers. Both Purchaser and Seller represent to the
other that no real estate brokers', agents' or finders' fees or commissions are
due or shall be due or arise in conjunction with the execution of this Agreement
or consummation of this transaction by reason of the acts of such party, and
Purchaser and Seller shall indemnify and hereby agree to hold the other party
harmless from any of the foregoing fees or commissions claimed by any person



                                       15
<PAGE>

asserting its entitlement thereto at the alleged instigation of the indemnifying
party for or on account of this Agreement or the transactions contemplated
hereby. This Section 10.01 shall survive both any termination of, and the
Closing of this Agreement without limitation.

                                   ARTICLE XI

                              DEFAULTS AND REMEDIES

         SECTION 11.01. Default by Seller. In the event of any default by Seller
under this Agreement, subject to the provisions of Section 11.03, Purchaser may
elect, as its sole and exclusive remedies, to (i) terminate all executory
obligations of the parties under this Agreement, and in such event the parties
hereto shall have no further liability hereunder whatsoever, or (ii) prosecute
an action for specific performance of this Agreement. Notwithstanding the
foregoing, nothing contained herein shall limit Purchaser's remedies at law, in
equity or as herein provided, in the event of a breach by Seller of any of the
Closing Surviving Obligations.

         SECTION 11.02. Default by Purchaser. In the event of any default by
Purchaser under this Agreement, subject to the provisions of Section 11.03,
Seller may elect, as its sole and exclusive remedies, to (i) terminate all
executory obligations of the parties under this Agreement, and in such event the
parties shall have no further liability hereunder whatsoever, or (ii) prosecute
an action for specific performance of this Agreement. Notwithstanding the
foregoing, nothing contained herein shall limit Seller's remedies at law, in
equity or as herein provided, in the event of a breach by Purchaser of any of
the Closing Surviving Obligations.

         SECTION 11.03. Notice and Cure. In the event there is a default by
either Purchaser or Seller under the terms of this Agreement, the nondefaulting
party shall give written notice of such default (with sufficient specificity to
allow the defaulting party to determine the nature and extent of such default
and to the extent possible, the manner in which such default can be remedied),
and a period of thirty (30) days thereafter in which the defaulting party may
cure such default, provided however, with respect to any such cure which by its
nature, can not be accomplished during such period, such period shall be
extended so long as the defaulting party has commenced such cure during such
thirty (30) day period, and thereafter continuously and diligently prosecutes
such cure thereafter. In the event a cure by the defaulting party is
accomplished within such period, the parties shall be restored to their relative
positions prior to the occurrence of such default as if no such default had
taken place. The provisions of this Section 11.03 shall survive the Closing
without limitation.

         SECTION 11.04. Remedies. In the event either Seller or Purchaser
defaults in the performance of any of its respective obligations under the terms
of this Agreement, which default is not cured within the applicable cure period
set forth in Section 11.03, the nondefaulting party shall be entitled to
exercise any and all rights and remedies for such breach it may have under
applicable law, provided however, in no event shall Guarantor be entitled to
declare any default or pursue any rights or remedies against either Seller or
Purchaser based upon any alleged default by either of such parties under this
Agreement.



                                       16
<PAGE>

                                   ARTICLE XII

                                     NOTICES

         SECTION 12.01. Notices. All notices or other communications required or
permitted hereunder shall be in writing, and shall be given either by (a)
personal delivery, (b) professional expedited delivery service with proof of
delivery, (c) telecopy (providing that such telecopy is confirmed by the sender
by expedited delivery service), or (d) certified mail return receipt requested,
and if so given, shall be deemed to have been given either at the time of
personal delivery, or, in the case of expedited delivery service, as of the date
of first attempted delivery at the address or in the manner provided herein, or,
in the case of telecopy, upon receipt or, in the case of certified mail, three
(3) Business Days after posting with the U.S. Postal Service. Unless changed in
accordance with the preceding sentence, the addresses for notices given pursuant
to this Agreement shall be as follows:


         To Purchaser:              Williams Headquarters Building Company
                                    Attn: George D. Shahadi, Vice
                                          President-Corp. Real Estate
                                    One Williams Center, Suite 2200
                                    Tulsa, Oklahoma 74172
                                    Fax No. 918/573-4049


         With copy to:              The Williams Companies, Inc.
                                    Attn: Real Estate Counsel
                                    One Williams Center, Suite 4100
                                    Tulsa, Oklahoma 74172
                                    Fax No. 918/ 573-4503



         To Seller:                 Williams Technology Center, LLC
                                    Attn: Vice President, Real Estate
                                    One Williams Center, MD-OneOK-6
                                    Tulsa, Oklahoma 74172
                                    Fax No. 918/ 573-5614


         To Guarantor:              Williams Communications, LLC
                                    Attn: General Counsel
                                    One Williams Center, Suite 4100
                                    Tulsa, Oklahoma 74172
                                    Fax No. 918/ 573-3005



                                       17
<PAGE>

         With copy to:              Williams Communications, LLC
                                    One Technology Center, MD: TC 14X
                                    Tulsa, Oklahoma 74103
                                    Fax No. 918/ 547-1108

                                  ARTICLE XIII

          LIMITED SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS

         SECTION 13.01. Survival of Representations, Warranties and Covenants.
Notwithstanding anything else to the contrary contained herein, any and all of
the representations and warranties of Seller and Purchaser set forth in this
Agreement, and the Closing Surviving Obligations (to the extent applicable)
shall survive the Closing without limitation except for those contained in
Article VII which shall survive the Closing for a period twelve (12) months
only.

                                   ARTICLE XIV

                                  MISCELLANEOUS

         SECTION 14.01. Waivers. No waiver of any breach of any covenant or
condition contained herein shall be deemed a waiver of any preceding or
succeeding breach thereof, or of any other covenant or condition contained
herein. No extension of time for performance of any obligation or act shall be
deemed an extension of the time for performance of any other obligation or act.
No waiver shall be effective unless in writing and signed by the waiving party.

         SECTION 14.02. Recovery of Certain Fees. In the event a party hereto
files any action or suit against the other party hereto by reason of any breach
of any of the covenants, agreements or provisions contained in this Agreement,
or initiates any arbitration action pursuant to the provisions of Section 11.04,
the prevailing party shall be entitled to have and recover from the other party
all costs and expenses of the action, suit or arbitration, including actual
reasonable attorneys' fees. The obligations set forth in this Section 14.02
shall survive the Closing and the termination of the executory obligations of
the parties, as contained in this Agreement.

         SECTION 14.03. Time of Essence. Seller and Purchaser hereby acknowledge
and agree that time is strictly of the essence with respect to each and every
term, condition, obligation and provision hereof.

         SECTION 14.04. Construction. Headings at the beginning of each article
and section are solely for the convenience of the parties and are not a part of
this Agreement. Whenever required by the context of this Agreement, the singular
shall include the plural and the masculine shall include the feminine and vice
versa. This Agreement shall not be construed as if it had



                                       18
<PAGE>

been prepared by one of the parties, but rather as if both parties had prepared
the same. All exhibits and schedules referred to in this Agreement are attached
and incorporated by this reference, and any capitalized term used in any exhibit
or schedule which is not defined in such exhibit or schedule shall have the
meaning attributable to such term in the body of this Agreement. In the event
the date on which Purchaser or Seller is required to take or complete any action
under the terms of this Agreement is not a Business Day, the action shall be
taken or completed on the next succeeding Business Day.

         SECTION 14.05. Counterparts. To facilitate execution of this Agreement,
this Agreement may be executed in as many counterparts as may be required, and
it shall not be necessary that the signatures of, or on behalf of, either party,
or that the signatures of all persons required to bind any party, appear on each
counterpart; rather, it shall be sufficient that the signatures of, or on behalf
of, either party, or that the signatures of the persons required to bind any
party, appear on one or more of the counterparts. All counterparts shall
collectively constitute a single Agreement.

         SECTION 14.06. Severability. If any term or provision of this Agreement
is held to be invalid, illegal, or incapable of being enforced by any rule of
law or public policy, all of the other terms and provisions of this Agreement
shall nevertheless remain in full force and effect, so long as the economic or
legal substance of the transactions contemplated hereby is not effected in any
manner adverse to either party. Upon such determination that any term or
provision is invalid, illegal, or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to reflect
the original intent of the parties as closely as possible in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to the
extent possible, provided however, the failure of the parties to reach a
mutually acceptable provision shall in no event be deemed to render void or
unenforceable any other terms and provisions of this Agreement which terms and
provisions shall remain in full force and effect.

         SECTION 14.07. Entire Agreement. This Agreement, together with the
Construction Completion Agreement, are the final expression of, and contain the
entire agreement between the parties with respect to the subject matter hereof
and thereof, and supersede all prior understandings with respect thereto. This
Agreement may not be modified, changed or supplemented, nor may any obligations
hereunder be waived, except by written instrument signed by the party to be
charged or by its agent duly authorized in writing, or as otherwise expressly
permitted herein.

         SECTION 14.08. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED,
PERFORMED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OKLAHOMA.

         SECTION 14.09. No Recording. The parties hereto agree that neither this
Agreement nor any memorandum or affidavit concerning it shall be recorded.

         SECTION 14.10. No Merger. The parties hereto agree that notwithstanding
the consummation of the transactions contemplated herein, the interests of
Purchaser and Seller



                                       19
<PAGE>

under the Central Plant Lease shall not merge in any event and shall remain in
full force and effect for all purposes according to its terms.

                                   ARTICLE XV

                        CONSTRUCTION COMPLETION AGREEMENT

         SECTION 15.01. Survival. Nothing contained in this Agreement, nor the
execution hereof and the closing of the transactions contemplated hereby, shall
in any way modify, restrict or diminish any of the terms, covenants or
conditions of the Construction Completion Agreement, which shall remain in full
force and effect according to its terms.

         IN WITNESS WHEREOF, the parties hereto have respectively executed this
Agreement effective as of the Closing Date.

PURCHASER                              WILLIAMS HEADQUARTERS BUILDING
                                       COMPANY, A Delaware Corporation


                                       By: /s/ Mark W. Husband
                                          --------------------------------------
                                       Name: Mark W. Husband
                                            ------------------------------------
                                       Title: Assistant Treasurer
                                             -----------------------------------


SELLER                                 WILLIAMS TECHNOLOGY CENTER, LLC,
                                       A Delaware Limited Liability Company

                                       By: /s/ Howard S. Kalika
                                          --------------------------------------
                                       Name: Howard S. Kalika
                                            ------------------------------------
                                       Title: Treasurer and Vice President
                                             -----------------------------------


GUARANTOR                              WILLIAMS COMMUNICATIONS, LLC,
                                       A Delaware Limited Liability Company

                                       By: /s/ Howard S. Kalika
                                          --------------------------------------
                                       Name: Howard S. Kalika
                                            ------------------------------------
                                       Title: Treasurer and Vice President
                                             -----------------------------------



                                       20
<PAGE>

SCHEDULE I

   AFTER RECORDING RETURN TO



MS. ARLENE M. PHILLIPS
GUARANTY ABSTRACT COMPANY
320 S. BOULDER
TULSA, OKLAHOMA 74103-3400

                                 (This space reserved for recording information)

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

                              GENERAL WARRANTY DEED

KNOW ALL MEN BY THESE PRESENTS:

         That WILLIAMS TECHNOLOGY CENTER, LLC, a Delaware limited liability
company, having a mailing address of One Williams Center, Tulsa, Oklahoma 74172
(herein called the "Grantor"), in consideration of the sum of Ten and No/100
Dollars ($10.00), in hand paid and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, does hereby grant,
bargain, sell and convey unto WILLIAMS HEADQUARTERS BUILDING COMPANY, a Delaware
corporation, having a mailing address of One Williams Center, Tulsa, Oklahoma
74172 (herein called "Grantee"), all the real property and premises located in
Tulsa County, Oklahoma, more particularly described on Exhibit "A" attached
hereto, together with any and all improvements thereon and appurtenances
thereunto belonging including, by way of example and not by way of limitation,
all right, title and interest in and to the adjacent streets, alleys and
rights-of-way, to the centerline thereof, and any easement rights, parking
areas, air rights, development rights and water rights, rights in common areas,
rights in common walls, rights in loading and unloading facilities, storage
facilities, rights in utility ducts and rights of access, ingress and egress,
and warrant and forever defend the title to the same to be free, clear and
discharged of and from all former grants, charges, taxes, judgments, mortgages
and other liens and encumbrances of whatsoever nature, against the Grantor, its
successors and assigns, and all and every other person or persons whomsoever,
lawfully claiming or to claim the same.

         TO HAVE AND TO HOLD the above described real property and premises unto
the Grantee, its successors and assigns forever, subject, however to (i) all
oil, gas and other minerals previously reserved or conveyed of record, and (ii)
the Permitted Exceptions described on Exhibit "B" attached hereto.

         SIGNED AND DELIVERED effective as of the 13th day September, 2001.

                                       WILLIAMS TECHNOLOGY CENTER, LLC,
                                       A Delaware Limited Liability Company
                                       by Williams Communications, LLC, Sole
                                       Member

                                       By:
                                          --------------------------------------

                                       Name: HOWARD S. KALIKA
                                            ------------------------------------

                                       Title: VICE PRESIDENT
                                             -----------------------------------



                                       21
<PAGE>

STATE OF OKLAHOMA          )
                           ) SS.
COUNTY OF TULSA            )

                  This instrument was acknowledged before me on
________________, 2001, by _______________________, as Vice President of
WILLIAMS COMMUNICATIONS, LLC, a Delaware limited liability company, Sole Member
of Williams Technology Center, LLC.


                                       -----------------------------------------
My Commission Expires:                 Notary Public

- -----------------------------
(SEAL)



                                       22
<PAGE>

                                   EXHIBIT "A"

                          DESCRIPTION OF REAL PROPERTY

Center Parcel

The Easterly Half (E/2) of Block Eighty-eight (88), ORIGINAL TOWN OF TULSA,
located in the City of Tulsa, Tulsa County, State of Oklahoma, according to the
Official Plat thereof, more particularly described as follows:

BEGINNING at the Southeasterly corner of Block 88; thence Northerly 300 feet
along the Easterly line of Block 88 to the Northeasterly corner of said Block;
thence Westerly along the Northerly line of said Block a distance of 150 feet to
a point; thence Southerly a distance of 300 feet to a point on the Southerly
line of said Block; thence Easterly along the Southerly line 150 feet to the
Point of Beginning.

AND, the following described property:

A portion of East First Street adjacent to Blocks 73 and 88 of the Original
Townsite of Tulsa, Tulsa County, State of Oklahoma, a portion of South
Cincinnati Avenue adjacent to Blocks 88 and 87, Original Townsite, Tulsa County,
State of Oklahoma and said portion of East Second Street adjacent to Blocks 88
and 106, Original Townsite of Tulsa, Tulsa County, State of Oklahoma, that is
below an elevation of Three (3) feet lower than the driving lanes of said
roadway. Said potion of streets being more fully described as follows to wit:

Commencing at the point of beginning, said point being the northeast corner of
Block 88; thence westerly along the northerly line of said Block 88 a distance
of 160.00 feet; thence northerly and perpendicular to the northerly line of said
Block 88 a distance of 3.50 feet; thence easterly and parallel the northerly
line of said Block 88 a distance of 166.75 feet; thence southerly and parallel
the easterly line of said Block 88 a distance of 311. 50 feet; thence westerly
and parallel the southerly line of Block 88 a distance of 166.75 feet; thence
northerly a distance of 8.00 feet to a point on the southerly line of said Block
88, said point being 10.00 feet westerly from the southwest corner of Lot 6,
Block 88; thence easterly along the southerly line of Block 88 a distance of
160.00 feet to the southeast corner of Lot 6 Block 88; thence northerly along
the easterly line of Block 88 a distance of 300.00 feet to the point of
beginning.

Parking Structure Parcel

         TRACT A:

LOTS ONE (1), TWO (2), THREE (3) AND FOUR (4), BLOCK SEVENTY-FOUR (74), ORIGINAL
TOWNSITE OF TULSA, NOW CITY OF TULSA, TULSA COUNTY, STATE OF OKLAHOMA, ACCORDING
TO THE OFFICIAL PLAT THEREOF;

         TRACT B:

ALL THAT PART OF THE ORIGINAL TULSA STATION AND DEPOT GROUNDS OF THE BURLINGTON
NORTHERN RAILROAD COMPANY'S RIGHT OF WAY LOCATED IN SECTIONS 1 AND 2, TOWNSHIP
19 NORTH, RANGE 12 EAST OF THE INDIAN BASE AND MERIDIAN, MORE PARTICULARLY
DESCRIBED AS FOLLOWS, TO-WIT:



                                       23
<PAGE>

BEGINNING AT A POINT THAT IS THE NORTHWEST CORNER OF BLOCK 74, ORIGINAL TOWN OF
TULSA, NOW CITY OF TULSA, TULSA COUNTY, OKLAHOMA, ACCORDING TO THE OFFICIAL PLAT
THEREOF; THENCE WESTERLY ALONG THE WESTERLY PRODUCTION OF THE NORTH LINE OF
BLOCK 74, A DISTANCE OF 80.00 FEET TO A POINT, ALSO BEING THE NORTHEAST CORNER
OF BLOCK 73, SAID POINT ALSO BEING THE SOUTHEAST CORNER OF THAT CERTAIN SALE TO
THE TULSA URBAN RENEWAL AUTHORITY, DATED DECEMBER 30, 1970, RECORDED DECEMBER
30, 1970, IN BOOK 3951 AT PAGES 1235, 1236, 1237 AND 1238, AND CORRECTION DEED
DATED AUGUST 28, 1973; THENCE NORTHERLY ALONG THE NORTHERLY PRODUCTION OF THE
EAST LINE OF SAID BLOCK 73 A DISTANCE OF 200.00 FEET; THENCE EASTERLY PARALLEL
200.00 FEET NORTHERLY OF THE NORTH LINE OF SAID BLOCK 74 A DISTANCE OF 80.00
FEET TO A POINT ON THE NORTHERLY PRODUCTION OF THE WEST LINE OF BLOCK 74; THENCE
SOUTHERLY ALONG THE NORTHERLY PRODUCTION OF THE WEST LINE OF BLOCK 74 A DISTANCE
OF 20.00 FEET; THENCE EASTERLY PARALLEL 180.00 FEET NORTHERLY OF THE NORTH LINE
OF SAID BLOCK 74 A DISTANCE OF 60.91 FEET TO A POINT OF INTERSECTION WITH AN
EXISTING CONCRETE RETAINING WALL; THENCE NORTHEASTERLY ALONG A DEFLECTION ANGLE
TO THE LEFT OF 5(DEGREE)42'01" A DISTANCE OF 240.27 FEET TO A POINT ON THE
NORTHERLY PRODUCTION OF THE EAST LINE OF BLOCK 74; THENCE SOUTHERLY ALONG SAID
NORTHERLY PRODUCTION OF THE EAST LINE OF BLOCK 74 A DISTANCE OF 203.86 FEET TO
THE NORTHEAST CORNER OF BLOCK 74; THENCE WESTERLY ALONG THE NORTHERLY LINE OF
BLOCK 74 A DISTANCE OF 300.00 FEET TO THE POINT OF BEGINNING OF SAID TRACT OF
LAND.

AND, the following described property:

         A portion of East First Street adjacent to Block 74 and Block 87 of the
         Original Townsite of Tulsa, Tulsa County, State of Oklahoma, that is
         below an elevation of One (1) foot lower than the driving lanes of said
         roadway. Said portion of street being more fully described as follows
         to wit:

         Commencing at a point of beginning, said point being the southwest
         corner of Block 74; thence southerly and perpendicular to the south
         line of Block 74 a distance of 2.75 feet; thence easterly and parallel
         to the southerly line of said Block 74 a distance of 302.75 feet;
         thence northerly and parallel to the easterly line of Block 74 a
         distance of 191.00 feet; thence westerly and perpendicular a distance
         of 2.75 feet to the east line of Block 74; thence southerly along the
         east line of Block 74 a distance of 188.25 feet, thence westerly along
         the southerly line of Block 74 a distance of 300.00 feet, to the point
         of beginning.

Skywalk No. 1

The following described property:

         A portion of South Cincinnati Avenue adjacent to Blocks 73 and 74,
         Original Townsite of Tulsa, Tulsa County, State of Oklahoma, that is
         above an elevation of Twenty Seven (27) feet higher than the driving
         lanes of the said roadway. Said portion of South Cincinnati Avenue
         being more fully described as follows to wit:

         Commencing at the point of beginning, said point being the southwest
         corner of Lot 3 Block 74, Original Townsite; thence northerly along the
         westerly line a distance of 32.00



                                       24
<PAGE>

         feet of said Lot 3, Block 74; thence westerly and perpendicular a
         distance of 80.00 feet to a point on the easterly line of Lot 1, Block
         73, Original Townsite; thence southerly along the easterly line a
         distance of 32.0 feet of said Lot 1, Block 73; thence easterly and
         perpendicular a distance of 80.00 feet to the point of beginning.

Skywalk No. 2

The following described property:

         A portion of East First Street adjacent to Blocks 73 and 88 of the
         Original Townsite of Tulsa, Tulsa County, State of Oklahoma, that is
         above an elevation of Twenty Seven (27) feet higher than the driving
         lanes of the said roadway. Said portion of East First Street being more
         fully described as follows to wit:

         Commencing at the point of beginning, said point being the southeast
         corner of Lot 1, Block 73, Original Townsite; thence westerly along the
         southerly line of Lot 1 Block 73 a distance of 26.00 feet; thence
         southerly and perpendicular a distance of 80.00 feet to a point on the
         northerly line of Lot 3, Block 88, Original Townsite; thence easterly
         along the northerly line of Lot 3 Block 88 a distance of 26.00 feet to
         the northeast corner of Lot 3, Block 88; thence northerly and
         perpendicular a distance of 80.00 feet to the point of beginning.



                                       25
<PAGE>

                                   EXHIBIT "B"

                              Permitted Exceptions



                                       26
<PAGE>

SCHEDULE II


                        NON-FOREIGN ENTITY CERTIFICATION


         Section 1445 of the Internal Revenue Code provides that a transferee of
a U.S. real property interest must withhold tax if the transferor is a foreign
person. To inform the transferee that withholding of tax is not required upon
the disposition of a U.S. real property interest by WILLIAMS TECHNOLOGY CENTER,
LLC (the "Transferor"), the undersigned hereby certifies the following on behalf
of the Transferor:

                  1.       Transferor is not a foreign corporation, foreign
                           partnership, foreign trust or foreign estate (as
                           those terms are defined in the Internal Revenue Code
                           and Income Tax Regulations);

                  2.       Transferor's U.S. employer identification number is:
                           ______________________________;

                  3.       Transferor's office address is:
                                   Williams Technology Center, LLC
                                   -------------------------------
                                   One Williams Center
                                   Tulsa, OK 74172

         Transferor understands that this certification may be disclosed to the
Internal Revenue Service and that any false statement made within this
certification could be punished by fine, imprisonment, or both.

         Under penalties of perjury the undersigned declares that he/she has
examined this certification and that to the best of his/her knowledge and belief
it is true, correct and complete, and the undersigned further declares that
he/she has the authority to sign this document on behalf of the Transferor.

                                       WILLIAMS TECHNOLOGY CENTER, LLC, a
                                       Delaware Limited Liability Company


                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------



                                       27
<PAGE>

STATE OF OKLAHOMA          )
                           ) SS.
COUNTY OF TULSA            )

         Subscribed and sworn to before me this ___ day of ______________, 2001.


                                       -----------------------------------------
                                       Notary Public

My Commission Expires:

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

(SEAL)



                                       28
<PAGE>

SCHEDULE III

                           BILL OF SALE AND ASSIGNMENT

KNOW ALL MEN BY THESE PRESENTS:

         THAT, WILLIAMS TECHNOLOGY CENTER, LLC, a Delaware limited liability
company (the "Grantor") for the sum of Ten and No/100 Dollars ($10.00) and other
good and valuable consideration, in hand paid, the receipt and adequacy of which
are hereby acknowledged, has bargained and sold, and by these presents does
grant, bargain, sell, assign, transfer and deliver unto WILLIAMS HEADQUARTERS
BUILDING COMPANY, a Delaware corporation (the "Grantee") the following described
property (collectively the "Personal Property"):

          1. All of Grantor's right, title and interest in all tangible personal
property, if any, located on the real property more particularly described on
Exhibit "A" attached hereto (the "Real Property"), commonly known as the
Williams Technology Center, Tulsa, Oklahoma, which personal property is used in
the ownership, operation or maintenance of the real property and the buildings
and improvements located thereon, all as specifically described on Exhibit "B"
attached hereto; and

          2. All of Grantor's right, title and interest in all intangible
personal property used in the ownership, operation and maintenance of said real
property and the buildings and improvements located thereon, including, without
limitation, all instruments, documents of title, guarantees and warranties,
permits, licenses, certificates of occupancy, general intangibles, business
records, cash, utility deposits, bank accounts, receivables, rights to insurance
proceeds, existing claims and causes of action.

         TO HAVE AND TO HOLD the same unto the Grantee, its successors and
assigns forever, and Grantor will warrant and defend title to such Personal
Property against the lawful claims and demands of persons claiming by or through
Grantor, but not otherwise.

         Grantor hereby acknowledges that Grantee does not assume the
obligations of Grantor for actions or omissions of Grantor prior to the date
hereof in regard to any Property assigned and transferred hereunder, and Grantor
agrees to indemnify and hold Grantee harmless from any loss, costs, claims and
expenses, including, without limitation, attorney's fees and any litigation
costs or expenses which are incurred by Grantee as a result of any act or
omission of Grantor prior to the date hereof or any claim in regard thereto.

         The Property hereby sold is conveyed "as is" without warranty of any
kind as to its physical condition, including, without limitation, warranties of
merchantability and fitness.

         IN WITNESS WHEREOF, the Grantor has caused this Bill of Sale and
Assignment to be executed effective as of the 11th day of September, 2001.

                                       WILLIAMS TECHNOLOGY CENTER, LLC, a
                                       Delaware limited liability company


                                       By:
                                          --------------------------------------

                                       Printed:
                                               ---------------------------------

                                       Title:
                                             -----------------------------------



                                       29
<PAGE>

                                   EXHIBIT "A"

                          DESCRIPTION OF REAL PROPERTY

Center Parcel

The Easterly Half (E/2) of Block Eighty-eight (88), ORIGINAL TOWN OF TULSA,
located in the City of Tulsa, Tulsa County, State of Oklahoma, according to the
Official Plat thereof, more particularly described as follows:

BEGINNING at the Southeasterly corner of Block 88; thence Northerly 300 feet
along the Easterly line of Block 88 to the Northeasterly corner of said Block;
thence Westerly along the Northerly line of said Block a distance of 150 feet to
a point; thence Southerly a distance of 300 feet to a point on the Southerly
line of said Block; thence Easterly along the Southerly line 150 feet to the
Point of Beginning.

AND, the following described property:

A portion of East First Street adjacent to Blocks 73 and 88 of the Original
Townsite of Tulsa, Tulsa County, State of Oklahoma, a portion of South
Cincinnati Avenue adjacent to Blocks 88 and 87, Original Townsite, Tulsa County,
State of Oklahoma and said portion of East Second Street adjacent to Blocks 88
and 106, Original Townsite of Tulsa, Tulsa County, State of Oklahoma, that is
below an elevation of Three (3) feet lower than the driving lanes of said
roadway. Said potion of streets being more fully described as follows to wit:

Commencing at the point of beginning, said point being the northeast corner of
Block 88; thence westerly along the northerly line of said Block 88 a distance
of 160.00 feet; thence northerly and perpendicular to the northerly line of said
Block 88 a distance of 3.50 feet; thence easterly and parallel the northerly
line of said Block 88 a distance of 166.75 feet; thence southerly and parallel
the easterly line of said Block 88 a distance of 311. 50 feet; thence westerly
and parallel the southerly line of Block 88 a distance of 166.75 feet; thence
northerly a distance of 8.00 feet to a point on the southerly line of said Block
88, said point being 10.00 feet westerly from the southwest corner of Lot 6,
Block 88; thence easterly along the southerly line of Block 88 a distance of
160.00 feet to the southeast corner of Lot 6 Block 88; thence northerly along
the easterly line of Block 88 a distance of 300.00 feet to the point of
beginning.

Parking Structure Parcel

         TRACT A:

LOTS ONE (1), TWO (2), THREE (3) AND FOUR (4), BLOCK SEVENTY-FOUR (74), ORIGINAL
TOWNSITE OF TULSA, NOW CITY OF TULSA, TULSA COUNTY, STATE OF OKLAHOMA, ACCORDING
TO THE OFFICIAL PLAT THEREOF;

         TRACT B:

ALL THAT PART OF THE ORIGINAL TULSA STATION AND DEPOT GROUNDS OF THE BURLINGTON
NORTHERN RAILROAD COMPANY'S RIGHT OF WAY LOCATED IN SECTIONS 1 AND 2, TOWNSHIP
19 NORTH, RANGE 12 EAST OF THE INDIAN BASE AND MERIDIAN, MORE PARTICULARLY
DESCRIBED AS FOLLOWS, TO-WIT:



                                       30
<PAGE>

BEGINNING AT A POINT THAT IS THE NORTHWEST CORNER OF BLOCK 74, ORIGINAL TOWN OF
TULSA, NOW CITY OF TULSA, TULSA COUNTY, OKLAHOMA, ACCORDING TO THE OFFICIAL PLAT
THEREOF; THENCE WESTERLY ALONG THE WESTERLY PRODUCTION OF THE NORTH LINE OF
BLOCK 74, A DISTANCE OF 80.00 FEET TO A POINT, ALSO BEING THE NORTHEAST CORNER
OF BLOCK 73, SAID POINT ALSO BEING THE SOUTHEAST CORNER OF THAT CERTAIN SALE TO
THE TULSA URBAN RENEWAL AUTHORITY, DATED DECEMBER 30, 1970, RECORDED DECEMBER
30, 1970, IN BOOK 3951 AT PAGES 1235, 1236, 1237 AND 1238, AND CORRECTION DEED
DATED AUGUST 28, 1973; THENCE NORTHERLY ALONG THE NORTHERLY PRODUCTION OF THE
EAST LINE OF SAID BLOCK 73 A DISTANCE OF 200.00 FEET; THENCE EASTERLY PARALLEL
200.00 FEET NORTHERLY OF THE NORTH LINE OF SAID BLOCK 74 A DISTANCE OF 80.00
FEET TO A POINT ON THE NORTHERLY PRODUCTION OF THE WEST LINE OF BLOCK 74; THENCE
SOUTHERLY ALONG THE NORTHERLY PRODUCTION OF THE WEST LINE OF BLOCK 74 A DISTANCE
OF 20.00 FEET; THENCE EASTERLY PARALLEL 180.00 FEET NORTHERLY OF THE NORTH LINE
OF SAID BLOCK 74 A DISTANCE OF 60.91 FEET TO A POINT OF INTERSECTION WITH AN
EXISTING CONCRETE RETAINING WALL; THENCE NORTHEASTERLY ALONG A DEFLECTION ANGLE
TO THE LEFT OF 5(DEGREE)42'01" A DISTANCE OF 240.27 FEET TO A POINT ON THE
NORTHERLY PRODUCTION OF THE EAST LINE OF BLOCK 74; THENCE SOUTHERLY ALONG SAID
NORTHERLY PRODUCTION OF THE EAST LINE OF BLOCK 74 A DISTANCE OF 203.86 FEET TO
THE NORTHEAST CORNER OF BLOCK 74; THENCE WESTERLY ALONG THE NORTHERLY LINE OF
BLOCK 74 A DISTANCE OF 300.00 FEET TO THE POINT OF BEGINNING OF SAID TRACT OF
LAND.

AND, the following described property:

         A portion of East First Street adjacent to Block 74 and Block 87 of the
         Original Townsite of Tulsa, Tulsa County, State of Oklahoma, that is
         below an elevation of One (1) foot lower than the driving lanes of said
         roadway. Said portion of street being more fully described as follows
         to wit:

         Commencing at a point of beginning, said point being the southwest
         corner of Block 74; thence southerly and perpendicular to the south
         line of Block 74 a distance of 2.75 feet; thence easterly and parallel
         to the southerly line of said Block 74 a distance of 302.75 feet;
         thence northerly and parallel to the easterly line of Block 74 a
         distance of 191.00 feet; thence westerly and perpendicular a distance
         of 2.75 feet to the east line of Block 74; thence southerly along the
         east line of Block 74 a distance of 188.25 feet, thence westerly along
         the southerly line of Block 74 a distance of 300.00 feet, to the point
         of beginning.

Skywalk No. 1

The following described property:

         A portion of South Cincinnati Avenue adjacent to Blocks 73 and 74,
         Original Townsite of Tulsa, Tulsa County, State of Oklahoma, that is
         above an elevation of Twenty Seven (27) feet higher than the driving
         lanes of the said roadway. Said portion of South Cincinnati Avenue
         being more fully described as follows to wit:

         Commencing at the point of beginning, said point being the southwest
         corner of Lot 3 Block 74, Original Townsite; thence northerly along the
         westerly line a distance of 32.00



                                       31
<PAGE>

         feet of said Lot 3, Block 74; thence westerly and perpendicular a
         distance of 80.00 feet to a point on the easterly line of Lot 1, Block
         73, Original Townsite; thence southerly along the easterly line a
         distance of 32.0 feet of said Lot 1, Block 73; thence easterly and
         perpendicular a distance of 80.00 feet to the point of beginning.

Skywalk No. 2

The following described property:

         A portion of East First Street adjacent to Blocks 73 and 88 of the
         Original Townsite of Tulsa, Tulsa County, State of Oklahoma, that is
         above an elevation of Twenty Seven (27) feet higher than the driving
         lanes of the said roadway. Said portion of East First Street being more
         fully described as follows to wit:

         Commencing at the point of beginning, said point being the southeast
         corner of Lot 1, Block 73, Original Townsite; thence westerly along the
         southerly line of Lot 1 Block 73 a distance of 26.00 feet; thence
         southerly and perpendicular a distance of 80.00 feet to a point on the
         northerly line of Lot 3, Block 88, Original Townsite; thence easterly
         along the northerly line of Lot 3 Block 88 a distance of 26.00 feet to
         the northeast corner of Lot 3, Block 88; thence northerly and
         perpendicular a distance of 80.00 feet to the point of beginning.



                                       32
<PAGE>

                                   EXHIBIT "B"

                    DESCRIPTION OF TANGIBLE PERSONAL PROPERTY



             Category 1 FF&E Tangible Personal Property Description

<Table>
<Caption>
                                                     AFE                AMOUNT
                                             --------------------    -----------
<S>                                          <C>                     <C>
Furniture                                               #10001052    $17,878,001
Design Fees & Expenses                                  #10001285    $ 2,345,477
Voice Systems                                          IT-VS-2001    $ 5,465,827
Flooring (initial order)                     #10000723 & 10001038    $ 1,677,487
Contingent Costs                                                     $ 1,189,689
                                                                     -----------
SUBTOTAL                                                             $28,556,481
</Table>

             Category 2 FF&E Tangible Personal Property Description

<Table>
<Caption>
                                                        AFE             AMOUNT
                                                     ----------      -----------
<S>                                                  <C>             <C>
Desktop                                              IT-DT-2001      $ 7,608,570
Audio Visual                                          #10001221      $19,996,330
Data Network                                         IT-DN-2001      $13,800,779
Servers                                              IT-SA-2001      $ 5,867,282
Contingent Costs                                                     $   277,963
                                                                     -----------
SUBTOTAL                                                             $47,550,924
</Table>

The Lessor and Lessee agree to reconcile the exact Category 1 FF&E and Category
2 FF&E within forty-five (45) days of the Substantial Completion Date as defined
in the Construction Completion Agreement.



                                       33
<PAGE>

SCHEDULE IV


After Recording Return To



                                 (This space reserved for recording information)
- --------------------------------------------------------------------------------

                               EASEMENT AGREEMENT

         THIS EASEMENT AGREEMENT, made this _________ day of September, 2001, by
and between Williams Headquarters Building Company, a Delaware Corporation, and
Williams Field Services Company, a Delaware Corporation (collectively,
"Grantors") and Williams Technology Center, L.L.C., a Delaware Limited Liability
Company ("Grantee").

         WHEREAS, Grantors are the owners of certain real property located in
the City of Tulsa, Tulsa County, State of Oklahoma as further described on
Exhibit "A" attached hereto and made a part hereof ("Easement Tract"); and

         WHEREAS, Grantors desire to grant to Grantee an exclusive, perpetual
easement over, above, upon and across the Easement Tract for the purposes of
installing, constructing, maintaining and operating a back up generator system,
including an associated above-ground fuel tank, together with a non-exclusive,
perpetual easement over, upon and across that certain property described on
Exhibit "A" as: a) the Access Area (the "Access Area") for the purpose of
ingress and egress to the Easement Tract; b) the cable easement area (the "Cable
Easement Area") for the purpose of running underground cables or wires to the
equipment to be located on the Easement Tract; and c) the fuel line easement
area (the "Fuel Line Easement Area") for the purpose of running underground fuel
lines between the generators and the fuel tank (the Easement Tract, Access Area,
Cable Easement Area and Fuel Line Easement Area are sometimes collectively
referred to herein as the "Easement").

         NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, it is agreed as follows:

         1.       Grantors hereby grant to Grantee an exclusive, perpetual
                  easement and right, subject to reversion as herein described,
                  over, above, across and upon the Easement Tract for the sole
                  purpose of installing, constructing, maintaining and
                  operating, a back up generator system, including but not
                  limited to all activities appurtenant or incidental thereto.
                  In the event Grantee ceases to use the Easement Tract for the
                  foregoing purpose for a period of six (6) months, the Easement
                  herein granted to Grantee shall immediately revert to Grantor,
                  its successors and assigns, without the need for further
                  instrument or writing. Further, Grantors hereby grant to
                  Grantee a non-exclusive easement and right of way over and
                  across: a) the Access Area for the purpose of ingress and
                  egress to and from the Easement Tract; b) the Cable Easement
                  Area for the sole purpose of installing, constructing,
                  maintaining and operating underground cables, conduits and/or
                  wires in connection with the equipment installed on the
                  Easement Tract; and c) the Fuel Line



                                       34
<PAGE>

                  Easement Area for the sole purpose of installing,
                  constructing, maintaining and operating an underground fuel
                  line between the fuel tank and the generator located on the
                  Easement Tract.

         2.       The Easement granted herein includes incidental rights of
                  maintenance, repair, and replacement. Further, the easement
                  herein granted across the Access Area, the Cable Easement Area
                  and the Fuel Line Easement Area is not exclusive and Grantors
                  retain all rights for use of such Access Area, Cable Easement
                  Area and the Fuel Line Easement Area in any manner not
                  inconsistent with the rights herein granted to Grantee;
                  provided however, the easement herein granted over and across
                  the Easement Tract is and shall be deemed exclusive in favor
                  of Grantee.

         3.       Grantee shall indemnify and hold Grantors harmless from and
                  against any and all claims, losses or judgments including all
                  expenses, reasonable attorney fees, witness fees and the cost
                  of defending any such action or claims or appeals therefrom
                  which arise out of or from the use, maintenance or operation
                  of the Easement Tract, the Access Tract, the Cable Easement
                  Area and the Fuel Line Easement Area or of any improvements
                  within or connected therewith by Grantee, its agents,
                  servants, employees, invitees, licensees, assignees or
                  trespassers thereon, including any interference or damage to
                  any person or property and any environmental claim or damage.
                  The provisions of this paragraph shall survive the termination
                  of this Easement Agreement.

         4.       This instrument contains the entire agreement between the
                  parties relating to the rights herein granted and the
                  obligations herein assumed. Any oral representations or
                  modifications concerning this instrument shall be of no force
                  and effect excepting a subsequent modification in writing,
                  signed by the party to be charged. This instrument may be
                  signed in any number of counterparts, all of which taken
                  together shall be considered one instrument.

         5.       In the event of any controversy, claim, or dispute relating to
                  this instrument or the breach thereof, the prevailing party
                  shall be entitle to recover from the losing party reasonable
                  expenses, attorney's fees, and costs.

         6.       This instrument shall bind and inure to the benefit of the
                  respective successors and assigns of the parties hereto.

         IN WITNESS WHEREOF, the parties hereto have executed this instrument
the day and year first above written.

                                       WILLIAMS HEADQUARTERS BUILDING COMPANY
                                       A Delaware Corporation

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



                                       35
<PAGE>

                                       WILLIAMS FIELD SERVICES COMPANY,
                                       A Delaware Corporation

                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------


                                                                "GRANTORS"




                                       WILLIAMS TECHNOLOGY CENTER, L.L.C.
                                       A Delaware Corporation


                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------

                                                                "GRANTEE"


                                ACKNOWLEDGEMENTS


STATE OF OKLAHOMA          )
                           ) ss
COUNTY OF TULSA            )

         This instrument was acknowledged before me, on __________________, 2001
by __________________ as _____________________ of Williams Headquarters Building
Company, a Delaware Corporation.


                                       -----------------------------------------
                                       Notary Public
My Commission Expires:

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

(SEAL)



                                       36
<PAGE>

STATE OF OKLAHOMA          )
                           ) ss
COUNTY OF TULSA            )


         This instrument was acknowledged before me, on ________________, 2001
by _____________ as ________________ of Williams Field Services Company, a
Delaware Corporation.


                                       -----------------------------------------
                                       Notary Public
My Commission Expires:

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

(SEAL)


STATE OF OKLAHOMA          )
                           ) ss
COUNTY OF TULSA            )

         This instrument was acknowledged before me, on __________________, 2001
by ________________ as ___________________ of Williams Technology Center, L.L.C.
a Delaware Limited Liability Company.


                                       -----------------------------------------
                                       Notary Public
My Commission Expires:

- -----------------------------
(SEAL)



                                       37
<PAGE>

                                    EXHIBIT A
                                 EASEMENT TRACTS





Easement Tract:

         1.       Generator Tract

         2.       Fuel Tank Tract


Access Area:



Cable Easement Area:



Fuel Line Easement Area:



                                       38
<PAGE>

SCHEDULE V

                                  MASTER LEASE

         THIS MASTER LEASE ("Lease") is executed and delivered effective as of
this 13th day of September, 2001 (the "Effective Date"), and is entered into by
and among WILLIAMS HEADQUARTERS BUILDING COMPANY, a Delaware corporation
("Lessor"), WILLIAMS TECHNOLOGY CENTER, LLC, a Delaware limited liability
company ("Lessee"), and WILLIAMS COMMUNICATIONS, LLC, a Delaware limited
liability company ("Guarantor").

                                    RECITALS

         The circumstances underlying the execution and delivery of this Lease
are as follows:

         A. Capitalized terms used and not otherwise defined herein have the
respective meanings given them in Article II, below.

         B. On even date herewith, Lessor has purchased from Lessee One
Technology Center also known as Williams Technology Center, and other related
assets all located in Tulsa, Oklahoma (all of which comprise the Leased
Properties as defined hereinbelow).

         C. Lessor now wishes to lease the Leased Properties to Lessee, and
Lessee wishes to lease the Leased Properties from Lessor, on the terms and
conditions set forth in this Lease.

         D. As a material inducement to Lessor to enter into this Lease,
Guarantor desires to unconditionally guaranty the performance of all of Lessee's
duties and obligations hereunder.

         IN CONSIDERATION of the foregoing, the covenants and agreements
contained herein, and other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, Lessor, Lessee and Guarantor agree as
follows:

                                    ARTICLE I

                                LEASEHOLD ESTATE

         1.1 LEASE. Upon and subject to the terms and conditions hereinafter set
forth, Lessor leases to Lessee, and Lessee leases from Lessor, the Leased
Properties. Each Facility is leased subject to all covenants, conditions,
restrictions, easements and other matters affecting such Facility, whether or
not of record, including the Permitted Encumbrances and other matters which
would be disclosed by an inspection of the Facility or by an accurate survey
thereof.

         1.2 INDIVISIBILITY. This Lease constitutes one indivisible lease of the
Leased Properties, and not separate leases governed by similar terms. The Leased
Properties constitute one economic unit, and the Base Rent and all other
provisions have been negotiated and agreed to based on a demise of all of the
Leased Properties as a single, composite, inseparable transaction and would have
been substantially different had separate leases or a divisible lease been
intended. Except as expressly provided herein for specific, isolated purposes
(and then only



                                       39
<PAGE>

to the extent expressly otherwise stated), all provisions of this Lease apply
equally and uniformly to all the Leased Properties as one unit. An Event of
Default with respect to any Leased Property is an Event of Default as to all of
the Leased Properties. The parties intend that the provisions of this Lease
shall at all times be construed, interpreted and applied so as to carry out
their mutual objective to create an indivisible lease of all the Leased
Properties and, in particular but without limitation, that for purposes of any
assumption, rejection or assignment of this Lease under 11 U.S.C. Section 365 of
the Bankruptcy Code, this is one indivisible and non-severable lease and
executory contract dealing with one legal and economic unit which must be
assumed, rejected or assigned as a whole with respect to all (and only all) the
Leased Properties covered hereby.

         1.3 TERMS. This Lease shall have the Category 1 FF&E Term for the
Category 1 FF&E, the Category 2 FF&E Term for the Category 2 FF&E, and the
Realty Term for the Land and Leased Improvements (collectively the "Term" or
"Terms").

                                   ARTICLE II

                                   DEFINITIONS

         2.1 DEFINITIONS. For all purposes of this Lease, except as otherwise
expressly provided or unless the context otherwise requires, (i) the terms
defined in this Article have the meanings assigned to them in this Article and
include the plural as well as the singular, (ii) all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
GAAP as at the time applicable, (iii) unless otherwise specifically designated,
all references in this Lease to designated "Articles," Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Lease, and (iv) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Lease as a whole and not to any particular
Article, Section or other subdivision.

                  Additional Charges: All Impositions and other amounts,
liabilities and obligations which Lessee assumes or agrees to pay under this
Lease, including without limitation, any and all costs, expenses and charges
relating to the upkeep and operation of the Leased Properties.

                  Affiliate: Any Person which, directly or indirectly, Controls
or is Controlled by or is under common Control with another Person.

                  Approval Threshold: Five Hundred Thousand Dollars
($500,000.00).

                  Assessment: Any governmental assessment on the Leased
Properties or any part thereof for public or private improvements or benefits,
whether or not commenced or completed prior to the date hereof and whether or
not to be completed within the Term.

                  Assumed Indebtedness: Any indebtedness or other obligations
expressly assumed in writing by Lessor and secured by a mortgage, deed of trust
or other security agreement to which Lessor's title to the Leased Properties is
subject.



                                       40
<PAGE>

                  Award: All compensation, sums or anything of value awarded,
paid or received in connection with a total or partial Taking.

                  Base Rent: Collectively the Category 1 FF&E Base Rent, the
Category 2 FF&E Base Rent and the Realty Base Rent.

                  Business Day: Any day that is not a Saturday, Sunday or other
day on which commercial banks in New York, New York or Dallas, Texas are
authorized or required by law to remain closed; provided that, when used in
connection with a Eurodollar Loan (as defined in the Credit Agreement), the term
"Business Day" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.

                  Capital Lease Obligations: With respect to any Person means
the obligations of such Person to pay rent or other amounts under any lease of
(or other arrangement conveying the right to use) real or personal property, or
a combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.

                  Category 1 FF&E: All of the tangible personal property as set
forth on EXHIBIT K.

                  Category 1 FF&E Base Rent: During the Category 1 FF&E Term,
the Category 1 FF&E Base Rent shall be the sum computed as set forth on EXHIBIT
L.

                  Category 1 FF&E Expiration Date: September 12, 2006.

                  Category 1 FF&E Term: Five (5) Lease Years commencing on the
Commencement Date and ending on the Category 1 FF&E Expiration Date.

                  Category 2 FF&E: All of the tangible personal property as set
forth on EXHIBIT M.

                  Category 2 FF&E Base Rent: During the Category 2 FF&E Term,
the Category 2 FF&E Base Rent shall be the sum computed as set forth on EXHIBIT
N.

                  Category 2 FF&E Expiration Date: September 12, 2004.

                  Category 2 FF&E Term: Three (3) Lease Years commencing on the
Commencement Date and ending on the Category 2 FF&E Expiration Date.

                  Center: The multi-story office building located on the Center
Parcel, commonly known as the One Technology Center and Williams Technology
Center.

                  Center Parcel: The real property more particularly described
on EXHIBIT A attached hereto and made a part hereof on which the Center is
located.



                                       41
<PAGE>

                  Central Plant: As defined in the Construction Completion
Agreement.

                  Change in Control:  means

         (a) the acquisition of ownership, directly or indirectly, beneficially
or of record, by any Person other than Guarantor or WCG, of any ownership
interest in the Lessee;

         (b) the acquisition of ownership, directly or indirectly, beneficially
or of record, by any Person or group (within the meaning of Section 13(d) or
14(d) of the Exchange Act and the rules of the SEC thereunder as in effect on
the date hereof) other than Guarantor, of interests representing more than
thirty-five percent (35%) of either (i) the aggregate ordinary voting power
represented by the issued and outstanding ownership interests of Lessee,
Guarantor or WCG, or (ii) the issued and outstanding ownership interests of
Lessee, Guarantor or WCG;

         (c) occupation of a majority of the seats (other than vacant seats) on
the board of directors of Lessee, Guarantor or WCG, by Persons who were neither
(i) nominated by the respective board of directors of Lessee, Guarantor, or WCG
nor (ii) appointed by directors so nominated; or

         (d) the acquisition of direct or indirect Control of Lessee, Guarantor
or WCG, by any Person or group.

                  Clean-Up: The investigation, removal, restoration, remediation
and/or elimination of, or other response to, Contamination, in each case to the
satisfaction of all governmental agencies having jurisdiction, in compliance
with or as may be required by Environmental Laws.

                  Code: The Internal Revenue Code of 1986, as amended.

                  Collateral: Whether now in existence or hereinafter created
and/or acquired, collectively all Leased Personal Property and Fixtures, and
insurance proceeds and products thereof, together with all books and records,
computer files, programs, printouts and other computer materials and records
related thereto.

                  Commencement Date: The Effective Date.

                  Condemnor: Any public or quasi-public authority, or private
corporation or individual, having the power of condemnation.

                  Construction Completion Agreement. The Agreement of Purchase
and Sale and Construction Completion dated effective as of February 26, 2001, as
amended, between Lessor as Seller, and Lessee as Purchaser, covering a portion
of the Leased Properties.

                  Construction Funds: The Net Proceeds and such additional funds
as may be deposited with Lessor by Lessee pursuant to Section 14.6 for
restoration or repair work pursuant to this Lease.



                                       42
<PAGE>

                  Contamination: The presence, Release or threatened Release of
any Hazardous Materials at the Leased Properties in violation of any
Environmental Law, or in a quantity that would give rise to any affirmative
Clean-Up obligations under an Environmental Law, including, but not limited to,
the existence of any injury or potential injury to public health, safety,
natural resources or the environment associated therewith, or any other
environmental condition at, in, about, under or migrating from or to the Leased
Properties.

                  Control: The possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have correlative meanings.

                  Credit Agreement: The Amended and Restated Credit Agreement
dated as of September 8, 1999, among Guarantor, WCG, Bank of America, N.A., The
Chase Manhattan Bank, and other parties, as may be amended or waived from time
to time with respect to the financial covenants therein, a copy of which
constituted as of the Effective Date is attached hereto as EXHIBIT C.

                  Date of Taking: The date on which the Condemnor has the right
to possession of the Leased Property that is the subject of the Taking or
Partial Taking.

                  Debt: This includes, without duplication, (a) all obligations
of such Person for borrowed money or with respect to deposits or advances of any
kind, (b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person under conditional
sale or other title retention agreements relating to property acquired by such
Person, (d) all obligations of such Person in respect of the deferred purchase
price of property or services (excluding (i) current accounts payable incurred
in the ordinary course of business and (ii) payment obligations of such Person
to the owner of assets used in a Telecommunications Business (as defined in the
Credit Agreement) for the use thereof pursuant to a lease or other similar
arrangement with respect to such assets or a portion thereof entered into in the
ordinary course of business), (e) all Debt of others secured by (or for which
the holder of such Debt has an existing right, contingent or otherwise, to be
secured by) any Lien on property owned or acquired by such Person, whether or
not the Debt secured thereby has been assumed, (f) all guarantees by such Person
of the Debt of others, (g) all Capital Lease Obligations of such Person
(provided that Capital Lease Obligations in respect of fiber optic cable
capacity arising in connection with exchanges of such capacity shall constitute
Debt only to the extent of the amount of such Person's liability in respect
thereof net (but not less than zero) of such Person's right to receive payments
obtained in exchange therefor), (h) all obligations, contingent or otherwise, of
such Person as an account party in respect of letters of credit and letters of
guaranty, and (i) all obligations, contingent or otherwise, of such Person in
respect of bankers' acceptances. The Debt of any Person shall include the Debt
of any other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such entity, except to
the extent the terms of such Debt provide that such Person is not liable
therefor.



                                       43
<PAGE>

                  Encumbrance: With respect to any asset, (a) any mortgage, deed
of trust, lien, pledge, hypothecation, encumbrance, charge or security interest
in, on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.

                  Environmental Audit: A written certificate, in form and
substance satisfactory to Lessor, from an environmental consulting or
engineering firm acceptable to Lessor, which states that there is no
Contamination on the Leased Properties and that the Leased Properties are
otherwise in strict compliance with Environmental Laws.

                  Environmental Documents: Each and every (i) document received
by Lessee or any Affiliate from, or submitted by Lessee or any Affiliate to, the
United States Environmental Protection Agency and/or any other federal, state,
county or municipal agency responsible for enforcing or implementing
Environmental Laws with respect to the condition of the Leased Properties, or
Lessee's operations at the Leased Properties; and (ii) review, audit, report, or
other analysis data pertaining to environmental conditions, including, but not
limited to, the presence or absence of Contamination, at, in, or under or with
respect to the Leased Properties that have been prepared by, for or on behalf of
Lessee.

                  Environmental Laws: All federal, state and local laws
(including, without limitation, common law), statutes, codes, ordinances,
regulations, rules, orders, permits or decrees relating to the introduction,
emission, discharge or release of Hazardous Materials into the indoor or outdoor
environment (including without limitation, air, surface water, groundwater,
(land or soil) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, transportation or disposal of Hazardous
Materials; or the Clean-Up of Contamination, all as are now or may hereinafter
be in effect.

                  Equipment: Collectively, all the items of machinery and
equipment as defined in Article 9 of the UCC comprising part of the Leased
Personal Property.

                  ERISA: The Employee Retirement Income Security Act of 1974, as
amended from time to time.

                  ERISA Event: (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by Lessee or Guarantor of any liability under Title IV
of ERISA with respect to the termination of any Plan; (e) the receipt by Lessee
or Guarantor from the Pension Benefit Guaranty Corporation as defined in ERISA
(and any successor entity) or a plan administrator of any notice relating to an
intention to terminate any Plan or Plans or to appoint a trustee to



                                       44
<PAGE>

administer any Plan; (f) the incurrence by Lessee or Guarantor of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
multiemployer plan (as defined in Section 4001(a)(3) of ERISA); or (g) the
receipt by Lessee or Guarantor of any notice, or the receipt by any
multiemployer plan from Lessee or Guarantor of any notice, concerning the
imposition of Withdrawal Liability or a determination that a multiemployer plan
is, or is expected to be, insolvent or in reorganization, within the meaning of
Title IV of ERISA.

                  Event of Default: The occurrence of any of the following:

                  (a) Lessee fails to pay or cause to be paid the Rent when due
and payable;

                  (b) Any of Lessee, Guarantor or WCG, has a petition in
bankruptcy filed against it, is adjudicated a bankrupt or has an order for
relief thereunder entered against it, or a court of competent jurisdiction
enters an order or decree appointing a receiver of Lessee, Guarantor or WCG or
of the whole or substantially all of its property, or approving a petition filed
against Lessee seeking reorganization or arrangement of Lessee under the federal
bankruptcy laws or any other applicable law or statute of the United States of
America or any state thereof, and such judgment, order or decree is not vacated
or set aside or stayed within sixty (60) days from the date of the entry
thereof, subject to the applicable provisions of the Bankruptcy Code (11 U.S.C.
Section 101, et seq.) and to the provisions of Section 16.7;

                  (c) Lessee, Guarantor or WCG: (i) admits in writing its
inability to pay its debts generally as they become due, (ii) files a petition
in bankruptcy or a petition to take advantage of any insolvency law, (iii) makes
a general assignment for the benefit of its creditors, (iv) consents to the
appointment of a receiver of itself or of the whole or any substantial part of
its property, or (v) files a petition or answer seeking reorganization or
arrangement under the Federal bankruptcy laws or any other applicable law or
statute of the United States of America or any state thereof, subject to the
applicable provisions of the Bankruptcy Code (11 U.S.C. Section 101, et seq.)
and to the provisions of Section 16.7;

                  (d) Lessee, Guarantor or WCG, is liquidated or dissolved, or
begins a Proceeding toward liquidation or dissolution, or has filed against it a
petition or other Proceeding to cause it to be liquidated or dissolved and the
Proceeding is not dismissed within thirty (30) days thereafter, or Lessee or
Guarantor in any manner permits the sale or divestiture of substantially all of
its assets;

                  (e) The estate or interest of Lessee in the Leased Properties
or any part thereof is levied upon or attached in any Proceeding and the same is
not vacated or discharged within thirty (30) days thereafter (unless Lessee is
in the process of contesting such lien or attachment in good faith in accordance
with Article XII);

                  (f) Any representation or warranty made by Lessee or Guarantor
in the Purchase Agreement or in the certificates delivered in connection
therewith shall prove to be incorrect in any material respect when made or
deemed made, Lessor is materially and adversely affected thereby and Lessee or
Guarantor as the case may be, fails within twenty (20) days after Notice from
Lessor thereof to cure such condition by terminating such adverse effect and
making Lessor whole for any damage suffered therefrom, or, if with due diligence
such cure cannot be



                                       45
<PAGE>

effected within twenty (20) days, if Lessee has failed to commence to cure the
same within the twenty (20) days or failed thereafter to proceed promptly and
with due diligence to cure such condition and complete such cure prior to the
time that such condition causes a default in any Facility Mortgage or any other
lease to which Lessee is subject and prior to the time that the same results in
civil or criminal penalties to Lessor, Lessee, Guarantor or any Affiliates of
any of such parties or the Leased Properties;

                  (g) Lessee defaults, or permits a default, under any Facility
Mortgage, related documents or obligations thereunder which default is not cured
within any applicable grace period provided for therein;

                  (h) A default occurs under the Guaranty;

                  (i) A Transfer occurs without the prior written consent of
Lessor;

                  (j) Except as otherwise provided in subsection (o) below, a
default occurs under any Material Debt when and as the same become due and
payable (subject to any applicable grace period);

                  (k) Lessee fails to purchase the Leased Properties if and as
required under this Lease;

                  (l) Lessee, Guarantor or WCG breaches any of the financial
covenants set forth in Article VIII hereof and the breach is not cured within a
period of thirty (30) days after the earlier to occur of (i) the Notice thereof
from Lessor, or (ii) knowledge thereof by Lessee, Guarantor or WCG;

                  (m) Lessee or Guarantor fails to observe or perform any other
term, covenant or condition of this Lease and the failure is not cured by Lessee
within a period of thirty (30) days after Notice thereof from Lessor;

                  (n) Lessee or Guarantor breaches any representation or
warranty made by it in this Lease;

                  (o) An Event of Default (as defined in the Credit Agreement),
occurs and an acceleration of any of the Loans as defined in the Credit
Agreement results;

                  (p) One or more judgments for the payment of money in an
aggregate amount in excess of $25,000,000 shall be rendered against Lessee,
Guarantor or WCG, or any combination thereof and the same shall remain
undischarged for a period of thirty (30) consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor to attach or levy upon any assets of Lessee, Guarantor or WCG
to enforce any such judgment;

                  (q) An ERISA Event shall have occurred that, in the opinion of
the Lessor, when taken together with all other ERISA Events that have occurred,
could reasonably be



                                       46
<PAGE>

expected to result in liability of Lessee, Guarantor or WCG in an aggregate
amount exceeding $25,000,000 for all periods;

                  (r) The Guaranty shall cease for any reason (other than the
merger out of existence of the Guarantor pursuant to a transaction permitted
hereunder or pursuant to the express terms of the Guaranty) to be in full force
and effect, or Guarantor shall so assert in writing;

                  (s) A Change in Control shall occur;

                  (t) Lessee or Guarantor fails to observe or perform any
provisions of Article XIII regarding insurance; or

                  (u) This Lease together with the Purchase Agreement are
determined not to be a Qualifying Issuance as defined in the Credit Agreement.

                  Facility: Each of the Center and the Parking Structure.

                  Facility Mortgage: Any mortgage, deed of trust or other
security agreement which with the express, prior, written consent of Lessor is a
lien upon any or all of the Leased Properties, whether such lien secures an
Assumed Indebtedness or another obligation or obligations.

                  Facility Mortgagee: The secured party to a Facility Mortgage.

                  Financial Statement: As to WCG, for any period, a statement of
earnings and retained earnings and of changes in financial position and profit
and loss for such period, and for the period from the beginning of the fiscal
year to the end of such period, and the related balance sheet as at the end of
such period, together with the notes thereto, all in reasonable detail and
setting forth in comparative form the corresponding figures for the
corresponding period in the preceding fiscal year, and prepared in accordance
with GAAP, certified to be accurate and complete by the chief financial officer
of WCG. WCG's fiscal year-end Financial Statement shall be an audited financial
report prepared by Ernst & Young LLP or other independent certified public
accountants of recognized national standing and otherwise reasonably
satisfactory to Lessor, containing WCG's balance sheet as of the end of that
year, its related profits and losses, a statement of shareholder's equity for
that year, a statement of cash flows for that year, any management letter
prepared by those certified public accountants and such comments and financial
details as are customarily included in reports of like character and the
unqualified opinion of the certified public accountants as to the fairness of
the statements therein.

                  Fixtures: Collectively, all permanently affixed Equipment,
machinery, and fixtures, all as defined in Article 9 of the UCC, and other items
of real and/or personal property (excluding Leased Personal Property and any
portion of the Central Plant), including all components thereof, now and
hereafter located in, on or used in connection with, and permanently affixed to
or incorporated into the Leased Improvements, including, without limitation, all
furnaces, boilers, heaters, electrical equipment, heating, plumbing, lighting,
ventilating, refrigerating, incineration, air and water pollution control, waste
disposal, air-cooling and air-conditioning systems and apparatus (other than
individual units), sprinkler systems and fire and theft protection equipment,
towers and other devices for the transmission of radio,



                                       47
<PAGE>

television and other signals, all of which, to the greatest extent permitted by
law, are hereby deemed by the parties hereto to constitute real estate, together
with all replacements, modifications, alterations and additions thereto.

                  GAAP: Generally accepted accounting principles in the United
States of America, in effect at the time in question.

                  Governmental Authority: The government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.

                  Guaranty: The Guaranty of even date herewith in the form
attached hereto as EXHIBIT H executed by Guarantor.

                  Hazardous Materials: All explosive or radioactive substances
or wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law as hazardous, toxic, a pollutant or a contaminant.

                  Impositions: Collectively, all taxes (including, without
limitation, all capital stock and franchise taxes of Lessor and all ad valorem,
sales and use, single business, gross receipts, transaction privilege, rent or
similar taxes to the extent the same are assessed against Lessor on the basis of
its gross or net income from this Lease or the value of the Leased Properties),
assessments (including Assessments), ground rents, water, sewer or other rents
and charges, excises, tax levies, fees (including, without limitation, license,
permit, inspection, authorization and similar fees), and all other governmental
charges, in each case whether general or special, ordinary or extraordinary, or
foreseen or unforeseen, of every character in respect of the Leased Properties
or the businesses conducted thereon by Lessee and/or the Rent (including all
interest and penalties thereon), which at any time prior to, during or in
respect of the Term may be assessed or imposed on or in respect of or be a lien
upon (i) Lessor or Lessor's interest in the Leased Properties, (ii) the Leased
Properties or any part thereof or any rent therefrom or any estate, right, title
or interest therein, or (iii) any occupancy, operation, use or possession of, or
sales from, or activity conducted on, or in connection with the Leased
Properties or the leasing or use of the Leased Properties or any part thereof or
(iv) the Rent; notwithstanding the foregoing, Imposition shall not include: (i)
except as provided above, any tax imposed on Lessor's gross or net income
generally and not specifically arising in connection with the Leased Properties
(unless such a tax is levied, assessed or imposed in lieu of a portion or all of
a tax which was included within the definition of "Imposition,") or (ii) any
transfer or other tax imposed with respect to any subsequent sale, exchange or
other disposition by Lessor of the Leased Properties or any part thereof or the
proceeds thereof.

                  Insurance Requirements: All terms of any insurance policy
required by this Lease and all requirements of the issuer of any such policy.



                                       48
<PAGE>

                  Interest Rate: The rate as set forth on EXHIBIT I.

                  Inventory: Collectively, all of the inventory as defined in
Article 9 of the UCC comprising part of the Leased Personal Property.

                  Investigation: Soil and chemical tests or any other
environmental investigations, examinations or analyses.

                  Judgment Date: The date on which a judgment is entered against
Lessee which establishes, without the possibility of appeal, the amount of
liquidated damages to which Lessor is entitled hereunder.

                  Land: The Center Parcel and the Parking Structure Parcel.

                  La Petite Lease. The term "La Petite Lease" shall mean that
certain Ground Lease with Construction by Lessee between Williams Realty Corp.
(now Williams Headquarters Building Company), as Landlord and La Petite Academy,
Inc., as Lessee, dated July 22, 1987, as amended by that certain First Amendment
to Lease Agreement dated February 28, 1989.

                  La Petite Parcel. The term "La Petite Parcel" shall mean the
real property covered by the La Petite Lease.

                  Lease: As defined in the Preamble.

                  Lease Year: Each period of twelve (12) calendar months
commencing with the Commencement Date, and any succeeding twelve (12) month
period during the Term.

                  Leased Improvements: Collectively, all buildings, structures,
Fixtures and other improvements of every kind on the Land including, but not
limited to the Center, the Parking Structure and the Skywalk, and all alleyways,
sidewalks, utility pipes, conduits and lines (on-site and off-site), parking
areas and roadways appurtenant to such buildings and structures.

                  Leased Personal Property: The Category 1 FF&E, the Category 2
FF&E, and all Personal Property leased to Lessee on the Commencement Date, and
all Personal Property that pursuant to the terms of the Lease becomes the
property of Lessor during the Term.

                  Leased Property: The Land on which a Facility is located, the
Leased Improvements on such portion of the Land, the Related Rights with respect
to such portion of the Land.

                  Leased Properties: All Leased Property and Leased Personal
Property, SPECIFICALLY EXCLUDING, however, the Central Plant.



                                       49
<PAGE>

                  Leased Properties Trade Name: The name under which the Leased
Properties do business during the Term. The current Leased Properties Trade Name
is both "One Technology Center" and "Williams Technology Center".

                  Legal Requirements: All federal, state, county, municipal and
other governmental statutes, laws, rules, orders, waivers, regulations,
ordinances, judgments, decrees and injunctions affecting the Leased Properties
or any portion thereof, Lessee's Personal Property or the construction, use or
alteration thereof, including but not limited to the Americans with Disabilities
Act, whether enacted and in force before, after or on the Commencement Date, and
including any which may (i) require repairs, modifications, alterations or
additions in or to any portion or all of the Facilities, or (ii) in any way
adversely affect the use and enjoyment thereof, and all permits, licenses and
authorizations and regulations relating thereto, and all covenants, agreements,
restrictions and Encumbrances contained in any instruments, either of record or
known to Lessee (other than Encumbrances created by Lessor without the consent
of Lessee), in force at any time during the Term.

                  Lessee's Certificate: A statement in writing in substantially
the form of EXHIBIT D (with such changes thereto as may reasonably be requested
by the person relying on such certificate).

                  Lessee's Personal Property: Personal Property owned or leased
by Lessee that is not included within the definition of Leased Personal Property
but is used by Lessee in the operation of the Facilities, including Personal
Property provided by Lessee in compliance with Section 6.3.

                  Manager: The Person to which management of the operation of a
Facility is delegated.

                  Material Adverse Change: Any event, development or
circumstance that has had or could reasonably expect to have a Material Adverse
Effect.

                  Material Adverse Effect: A material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
Lessee, Guarantor, or WCG, taken as a whole, (b) the ability of Lessee,
Guarantor, or WCG to perform any of its duties or obligations under this Lease
or the Credit Agreement, or (c) the rights of or benefits available to the
Lessor under this Lease.

                  Material Debt: Any Debt (other than the financial obligations
under this Lease), of the Lessee, Guarantor, or WCG, in an aggregate principal
amount exceeding $25,000,000.00.

                  Net Proceeds: All proceeds, net of any costs incurred by
Lessor in obtaining such proceeds, payable under any policy of insurance
required by Article XIII of this Lease (including any proceeds with respect to
Lessee's Personal Property that Lessee is required or elects to restore or
replace pursuant to Section 14.3) or paid by a Condemnor for the Taking of any
of all or any portion of a Leased Property.



                                       50
<PAGE>

                  Notice: A notice given in accordance with Article XXXI.

                  Notice of Termination: A Notice from Lessor that it is
terminating this Lease by reason of an Event of Default or otherwise as
specifically set forth in this Lease.

                  Officer: The chairman of the board of directors, the
president, any vice president and the secretary of any corporation, a general
partner of any partnership, and a manager or managing member of any limited
liability company.

                  Officer's Certificate: If for a corporation, a certificate
signed by one or more officers of the corporation authorized to do so by the
bylaws of such corporation or a resolution of the Board of Directors thereof; if
for a partnership, limited liability company or any other kind of entity, a
certificate signed by a Person having the authority to so act on behalf of such
entity.

                  Overdue Rate: On any date, the interest rate per annum, that
is equal to two percent (2%) (two hundred (200) basis points) above the Prime
Rate, but in no event greater than the maximum rate then permitted under
applicable law.

                  Parking Structure. The multi-story parking facility located on
the Parking Structure Parcel.

                  Parking Structure Parcel. The real property more particularly
described on EXHIBIT B on which the Parking Structure is located, which includes
without limitation, the La Petite Parcel.

                  Partial Taking: A taking of less than the entire fee of a
Leased Property that either (i) does not render the Leased Property Unsuitable
for its Primary Use, or (ii) renders a Leased Property Unsuitable for its
Primary Intended Use, but neither Lessor nor Lessee elects pursuant to Section
15.1 hereof to terminate this Lease.

                  Payment Date: Any due date for the payment of the installments
of Base Rent or for the payment of Additional Charges or any other amount
required to be paid by Lessee hereunder.

                  Permitted Encumbrances: Encumbrances listed on attached
EXHIBIT E.

                  Person: Any natural person, trust, partnership, corporation,
joint venture, limited liability company or other legal entity.

                  Personal Property: All tangible and intangible personal
property including but not limited to machinery, equipment, furniture,
furnishings, movable walls or partitions, computers (and all associated
software), trade fixtures and other personal property (but excluding consumable
inventory and supplies owned by Lessee) used in connection with the Leased
Properties, together with all replacements, substitutions, and alterations
thereof and additions thereto including all tangible personal property acquired
hereafter used in connection with the



                                       51
<PAGE>

Leased Properties, except items, if any, (i) included within the definition of
Fixtures or Leased Improvements, and (ii) any and all components of the Central
Plant.

                  Plan: Any employee pension benefit plan (other than a
multiemployer plan as defined in Section 4001(a)(3) of ERISA) subject to the
provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of
ERISA, and in respect of which Lessee or Guarantor is (or, if such plan were
terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.

                  Primary Intended Use: Multi-use office and technology
facility.

                  Prime Rate: On any date, an interest rate equal to the prime
rate published by the Wall Street Journal, but in no event greater than the
maximum rate then permitted under applicable law. If the Wall Street Journal
ceases to be in existence, or for any reason no longer publishes such prime
rate, the Prime Rate shall be the rate announced as its prime rate by Citibank,
N.A., and if such bank no longer exists or does not announce a prime rate at
such time, the Prime Rate shall be the rate of interest announced as its prime
rate by Bank of America, N.A.

                  Proceeding: Any litigation, action, proposal or investigation
by or against any agency or entity, including without limitation Lessee and
Guarantor.

                  Purchase Agreement: The Purchase and Sale Agreement of even
date herewith, among Lessor, as Purchaser, Lessee, as Seller, and Guarantor,
covering the Leased Properties.

                  Rate: As defined on EXHIBIT I.

                  Realty: Collectively, the Land and Leased Improvements.

                  Realty Base Rent: During the Realty Term, the Realty Base Rent
shall be the sum computed as set forth on EXHIBIT J.

                  Realty Base Rent Interest: As defined on EXHIBIT J.

                  Realty Base Rent Principal: As defined on EXHIBIT J.

                  Realty Expiration Date: September 1, 2011.

                  Realty Term: Ten (10) Lease Years commencing on the
Commencement Date and ending on the Realty Expiration Date.

                  Regulatory Actions: Any claim, demand, notice, action or
Proceeding brought, threatened or initiated by any governmental authority in
connection with any Environmental Law, including, without limitation, any civil,
criminal and administrative Proceeding whether or not the remedy sought is
costs, damages, equitable remedies, penalties or expenses.

                  Related Rights: All easements, rights-of-way and appurtenances
relating to the Land and the Leased Improvements.



                                       52
<PAGE>

                  Release: The intentional or unintentional spilling, leaking,
dumping, pouring, emptying, seeping, disposing, discharging, emitting,
depositing, injecting, leaching, escaping, abandoning, or any other release or
threatened release, however defined, of any Hazardous Materials.

                  Rent: Collectively, Base Rent and Additional Charges.

                  Replacement Cost: The actual replacement cost of a Leased
Property. Replacement Cost shall be an amount sufficient that neither Lessor nor
Lessee is deemed to be a co-insurer of the Leased Property in question. Lessor
shall have the right from time to time, but no more frequently than once in any
period of three (3) consecutive Lease Years, to have Replacement Cost reasonably
redetermined by the all-risk property insurance company or another reputable
appraisal service, which determination shall be final and binding on the parties
hereto, and upon such determination Lessee shall forthwith increase, but not
decrease, the amount of the insurance carried pursuant to Section 13.2.1 to the
amount so determined, subject to the approval of any Facility Mortgagee. Lessee
shall pay the fee, if any, of the insurer making such determination.

                  Repurchase Price: The total Base Rent remaining unpaid at the
time of repurchase of the Realty (and the Leased Personal Property, if
applicable), by the Lessee together with all accrued, unpaid Additional Charges.

                  SEC: Securities and Exchange Commission.

                  Skywalk: The elevated pedestrian bridge and support structure,
connecting the Parking Structure to the Center over a portion of South
Cincinnati Avenue and a portion of East First Street, Tulsa, Oklahoma, that is
approximately twenty-seven (27) feet above the driving lanes of such streets,
together with the air rights for the three (3) dimensional space within which it
is suspended.

                  State: The State of Oklahoma.

                  Taken: Conveyed pursuant to a Taking.

                  Taking: A taking or voluntary conveyance during the Term of
all or part of a Leased Property, or any interest therein or right accruing
thereto or use thereof, as the result of, or in settlement of any condemnation
or other eminent domain Proceeding affecting the Leased Property whether or not
the same shall have actually been commenced.

                  Terms: As defined in Section 1.3.

                  Termination Date: The date on which this Lease terminates
pursuant to a Notice of Termination.



                                       53
<PAGE>

                  Third Party Claims: Any claim, action, demand or Proceeding
(other than Regulatory Actions) howsoever based (including without limitation
those based on negligence, trespass, strict liability, nuisance, toxic tort or
detriment to health welfare or property) due to Contamination, whether or not
the remedy sought is costs, damages, penalties or expenses, brought by any
person or entity other than a governmental agency.

                  Transfer: The (a) assignment, mortgaging or other encumbering
of all or any part of Lessee's interest in this Lease or in the Leased
Properties, (b) Change in Control of Lessee, Guarantor or WCG, or (c) sale,
issuance or transfer, cumulatively or in one transaction, of any interest, or
the termination of any interest, in Lessee, Guarantor or WCG, if Lessee,
Guarantor or WCG is a joint venture, partnership, limited liability company or
other association, which results in a Change of Control of such joint venture,
partnership, limited liability company or other association.

                  Transferee: An assignee, subtenant or other occupant of a
Leased Property pursuant to a Transfer.

                  TWC: The Williams Companies, Inc., a Delaware corporation.

                  UCC: The Uniform Commercial Code as in effect in the State.

                  Unsuitable for Its Primary Intended Use: A state or condition
of a Facility such that by reason of a Partial Taking, the Facility cannot be
operated on a commercially practicable basis for its Primary Intended Use,
taking into account, among other relevant factors, the number of usable square
footage permitted by applicable law and regulation in the Facility after the
Partial Taking, the square footage Taken and the estimated revenue impact of
such Partial Taking.

                  WCG: Williams Communications Group, Inc., a Delaware
corporation.

                  Withdrawal Liability: The liability to a multiemployer plan as
a result of a complete or partial withdrawal from such multiemployer plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.

                                   ARTICLE III

                                      RENT

         3.1 BASE RENT; MONTHLY INSTALLMENTS. In addition to all other payments
to be made by Lessee under this Lease, Lessee shall pay Lessor the Base Rent in
lawful money of the United States of America which is legal tender for the
payment of public and private debts, in arrears, in monthly installments. The
first installment of Base Rent shall be payable on October 1, 2001, provided
however, with respect to levels two (2) and three (3) of the Center, no Realty
Base Rent shall be payable (provided however, such Realty Base Rent shall
accrue) until both such levels are completed and ready for occupancy, which
prorated amount of Realty Base Rent (2/15ths of each monthly installment of
Realty Base Rent) shall be deducted from the total



                                       54
<PAGE>

Base Rent otherwise payable under this Lease. The Realty Base Rent Interest
accruing up to and including the date upon which such levels are completed and
ready for occupancy, shall be converted to Realty Base Rent Principal on a
monthly basis. Thereafter, installments of Base Rent shall be payable on the
first (1st) day of each calendar month. Base Rent shall be paid to Lessor, or to
such other Person as Lessor from time to time may designate by Notice to Lessee,
by check or wire transfer of immediately available federal funds to the bank
account designated in writing by Lessor. If Lessor directs Lessee to pay any
Base Rent or Additional Charges to any Person other than Lessor, Lessee shall
send to Lessor simultaneously with such payment a copy of the transmittal letter
or invoice and check whereby such payment is made, or such other evidence of
such payment as Lessor may require.

         3.2 ADDITIONAL CHARGES. In addition to the Base Rent, Lessee will also
pay as and when due, all Additional Charges.

         3.3 LATE CHARGE; INTEREST. If any Rent payable to Lessor is not paid
when due, Lessee shall pay Lessor on demand, as an Additional Charge, (a) a late
charge equal to the greater of (i) two percent (2%) of the amount not paid
within five (5) days of the date when due and (ii) any and all charges,
expenses, fees or penalties imposed on Lessor by a Facility Mortgagee for late
payment, plus (b) if such Rent (including the late charge) is not paid within
ten (10) days of the date due, interest thereon at the Overdue Rate from such
tenth (10th) day until such Rent (including the late charge and interest) is
paid in full.

         3.4 NET LEASE.

                  3.4.1 Absolute Obligation. The Rent shall be paid absolutely
         net to Lessor, so that this Lease shall yield to Lessor the full amount
         of the Rent payable to Lessor hereunder throughout the Term, subject
         only to any provisions of the Lease which expressly provide for
         adjustment or abatement of Rent or other charges.

                  3.4.2 No Counterclaim or Cross Complaint. If Lessor commences
         any Proceeding for non-payment of Rent, Lessee will not interpose any
         counterclaim or cross complaint or similar pleading of any nature or
         description in such Proceeding unless Lessee would lose or waive such
         claim by the failure to assert it, but Lessee does not waive any rights
         to assert such claim in a separate action brought by Lessee. The
         covenants to pay Rent are independent covenants, and Lessee shall have
         no right to hold back, offset or fail to pay any Rent because of any
         alleged default by Lessor or for any other reason whatsoever.

                                   ARTICLE IV

                                   IMPOSITIONS

         4.1 PAYMENT OF IMPOSITIONS. Subject to Article XII relating to
permitted contests, Lessee will pay all Impositions at least twenty (20) days
before any fine, penalty, interest or cost is added for non-payment, and will
promptly, upon request, furnish to Lessor copies of official receipts or other
satisfactory proof evidencing such payments. If at the option



                                       55
<PAGE>

of the taxpayer any Imposition may lawfully be paid in installments, Lessee may
pay the same in the required installments provided it also pays any and all
interest due thereon as and when due.

         4.2 ADJUSTMENT OF IMPOSITIONS. Impositions imposed in respect of the
tax-fiscal period during which the Term ends shall be adjusted and prorated
between Lessor and Lessee, whether or not imposed before or after the expiration
of the Term or the earlier termination thereof, and Lessee's obligation to pay
its prorated share thereof shall survive such expiration or earlier termination.

         4.3 UTILITY CHARGES. Lessee will pay or cause to be paid when due all
charges for electricity, power, gas, oil, water and other utilities imposed upon
the Leased Properties or upon Lessor or Lessee with respect to the Leased
Properties.

         4.4 INSURANCE PREMIUMS. Lessee shall pay or cause to be paid when due
all premiums for the insurance coverage required to be maintained pursuant to
Article XIII during the Term.

         4.5 TAX RETURNS AND REFUNDS Lessee shall prepare and file as and when
required all tax returns and reports required by governmental authorities with
respect to all Impositions. Lessor and Lessee shall each, upon request, provide
the other with such data, including without limitation cost and depreciation
records, as is maintained by the party to whom the request is made as is
necessary to prepare any required returns and reports. If any provision of any
Facility Mortgage requires deposits for payment of Impositions, Lessee shall
either pay the required deposits to Lessor monthly and Lessor shall make the
required deposits, or, if directed in writing to do so by Lessor, Lessee shall
make such deposits directly. Lessee shall be entitled to receive and retain any
refund from a taxing authority in respect of an Imposition paid by Lessee if at
the time of the refund no Event of Default has occurred and is continuing, but
if an Event of Default has occurred and is continuing at the time of the refund,
Lessee shall not be entitled to receive or retain such refund and if and when
received by Lessor such refund shall be applied as provided in Article XVI.

                                    ARTICLE V

                            NO TERMINATION AND WAIVER

         5.1 NO TERMINATION, ABATEMENT, ETC. Lessee shall not take any action
without the consent of Lessor to modify, surrender or terminate this Lease, and
shall not seek or be entitled to any abatement, deduction, deferment or
reduction of Rent, or setoff against Rent. The respective obligations of Lessor
and Lessee shall not be affected by reason of (i) any damage to, or destruction
of, the Leased Properties or any portion thereof from whatever cause or any
Taking of the Leased Properties or any portion thereof, except as expressly set
forth herein; (ii) the lawful or unlawful prohibition of, or restriction upon,
Lessee's use of the Leased Properties, or any portion thereof, or the
interference with such use by any Person or by reason of eviction by paramount
title; (iii) any claim which Lessee has or might have against Lessor or by
reason of any default or breach of any warranty by Lessor under this Lease or
any other agreement between Lessor and Lessee, or to which Lessor and Lessee are
parties, (iv) any bankruptcy,



                                       56
<PAGE>

insolvency, reorganization, composition, readjustment, liquidation, dissolution,
winding up or other Proceeding affecting Lessor or any assignee or transferee of
Lessor, or (v) any other cause whether similar or dissimilar to any of the
foregoing other than a discharge of Lessee from any such obligations as a matter
of law. Lessee hereby specifically waives all rights, arising from any
occurrence whatsoever, which may now or hereafter be conferred upon it by law to
(a) modify, surrender or terminate this Lease or quit or surrender the Leased
Properties or any portion thereof, or (b) entitle Lessee to any abatement,
reduction, suspension or deferment of the Rent or other sums payable by Lessee
hereunder except as otherwise specifically provided in this Lease.

                                   ARTICLE VI

                             LEASE CHARACTERIZATION

         6.1 STATUS OF OWNERSHIP OF THE LEASED PROPERTIES. Lessor and Lessee
agree that to the full extent permitted by applicable tax law and GAAP, for
Lessee, this Lease shall be treated (i) as an operating lease for tax purposes,
and (ii) as a capital lease for financial purposes. Notwithstanding anything
contained in this Section 6.1 or anywhere else in this Lease to the contrary,
Lessor, Lessee and Guarantor agree that it is their intention that this Lease be
treated as a true lease for purposes of the UCC and other applicable laws of the
State.

         6.2 LEASED PERSONAL PROPERTY. Lessee shall, during the Term, maintain
all of the Leased Personal Property in good order, condition and repair as shall
be necessary in order to operate the Facilities for the Primary Intended Use in
compliance with all applicable licensure and certification requirements, all
applicable Legal Requirements and Insurance Requirements, and customary industry
practice for the Primary Intended Use. If any of the Leased Personal Property
requires replacement in order to comply with the foregoing, Lessee shall replace
it with similar property of the same or better quality at Lessee's sole cost and
expense, and when such replacement property is placed in service with respect to
the Leased Properties it shall become Leased Personal Property. Lessee shall not
permit or suffer Leased Personal Property to be subject to any lien, charge,
Encumbrance, financing statement, contract of sale, equipment Lessor's interest
or the like, except for any purchase money security interest or equipment
Lessor's interest expressly approved in advance, in writing, by Lessor. Unless
Lessee purchases the Leased Properties as provided in this Lease, upon the
expiration or earlier termination of this Lease, all of Leased Personal Property
shall be surrendered to Lessor with the Leased Properties at or before the time
of the surrender of the Leased Properties in at least as good a condition as at
the Commencement Date (or, as to replacements, in at least as good a condition
as when placed in service at the Facilities) except for ordinary wear and tear.

         6.3 LESSEE'S PERSONAL PROPERTY. Lessee shall provide and maintain
during the Term such Personal Property, in addition to the Leased Personal
Property, as shall be necessary and appropriate in order to operate the
Facilities for the Primary Intended Use in compliance with all licensure and
certification requirements, in compliance with all applicable Legal Requirements
and Insurance Requirements and otherwise in accordance with customary practice
in the industry for the Primary Intended Use. Without the prior written consent
of Lessor, Lessee shall not permit or suffer Lessee's Personal Property to be
subject to any lien, charge, Encumbrance, financing statement or contract of
sale or the like. Unless Lessee



                                       57
<PAGE>

purchases the Leased Properties as provided in this Lease, upon the expiration
of the Term or the earlier termination of this Lease, without the payment of any
additional consideration by Lessor, Lessee shall be deemed to have sold,
assigned, transferred and conveyed to Lessor all of Lessee's right, title and
interest in and to any of Lessee's Personal Property that, in Lessor's
reasonable judgment, is integral to the Primary Intended Use of the Facilities
(or if some other use thereof has been approved by Lessor as required herein,
such other use as is then being made by Lessee) and, as provided in Section
34.1, Lessor shall have the option to purchase any of Lessee's Personal Property
that is not then integral to such use. Without Lessor's prior written consent,
Lessee shall not remove Lessee's Personal Property that is in use at the
expiration or earlier termination of the Term from the Leased Properties until
such option to purchase has expired or been waived in writing by Lessor. Any of
Lessee's Personal Property that is not integral to the use of the Facilities
being made by Lessee and is not purchased by Lessor pursuant to Section 34.1 may
be removed by Lessee upon the expiration or earlier termination of this Lease,
and, if not removed within twenty (20) days following the expiration or earlier
termination of this Lease, shall be considered abandoned by Lessee and may be
appropriated, sold, destroyed or otherwise disposed of by Lessor without giving
notice thereof to Lessee and without any payment to Lessee or any obligation to
account therefor. Lessee shall reimburse Lessor for any and all expense incurred
by Lessor in disposing of any of Lessee's Personal Property that Lessee may
remove but within such twenty (20) day period fails to remove, and shall either
at its own expense restore the Leased Properties to the condition required by
Section 9.1.5, including repair of all damage to the Leased Properties caused by
the removal of any of Lessee's Personal Property, or reimburse Lessor for any
and all expense incurred by Lessor for such restoration and repair.

                                   ARTICLE VII

                    CONDITION, USE AND ENVIRONMENTAL MATTERS

         7.1 CONDITION OF THE LEASED PROPERTIES. Lessee acknowledges that it has
inspected and otherwise has knowledge of the condition of the Leased Properties
prior to the execution and delivery of this Lease and has found the same to be
in good order and repair and satisfactory for its purposes hereunder. Lessee is
leasing the Leased Properties "as is" in their condition on the Commencement
Date. Lessee waives any claim or action against Lessor in respect of the
condition of the Leased Properties. LESSOR MAKES NO WARRANTY OR REPRESENTATION
EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED PROPERTIES OR ANY PART THEREOF,
EITHER AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR
PURPOSE OR OTHERWISE AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN,
LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY LESSEE.
Lessee further acknowledges that throughout the Term Lessee is solely
responsible for the condition of the Leased Properties. Subject in all cases to
the provisions of Section 3.4.2, nothing contained in this Agreement including
without limitation, this Section 7, shall be deemed to inhibit, restrict or
waive any independent rights Lessee may have under the Construction Completion
Agreement.



                                       58
<PAGE>

         7.2 USE OF THE LEASED PROPERTIES. Throughout the Term, Lessee shall
continuously use the Leased Properties for the Primary Intended Use and uses
incidental thereto. Lessee shall not use the Leased Properties or any portion
thereof for any other use without the prior written consent of Lessor. No use
shall be made or permitted to be made of, or allowed in, the Leased Properties,
and no acts shall be done, which will cause the cancellation of, or be
prohibited by, any insurance policy covering the Leased Properties or any part
thereof, nor shall the Leased Properties or Lessee's Personal Property be used
for any unlawful purpose. Lessee shall not commit or suffer to be committed any
waste on the Leased Properties, or cause or permit any nuisance thereon, or
suffer or permit the Leased Properties or any portion thereof, or Lessee's
Personal Property, to be used in such a manner as (i) might reasonably tend to
impair Lessor's (or Lessee's, as the case may be) title thereto or to any
portion thereof, or (ii) may reasonably make possible a claim or claims of
adverse usage or adverse possession by the public, as such, or of implied
dedication of the Leased Properties or any portion thereof.

         7.3 CERTAIN ENVIRONMENTAL MATTERS.

                  7.3.1 Prohibition Against Use of Hazardous Materials. Lessee
         shall not permit, conduct or allow on the Leased Properties, the
         generation, introduction, presence, maintenance, use, receipt,
         acceptance, treatment, manufacture, production, installation,
         management, storage, disposal or release of any Hazardous Materials
         except for those types and quantities of Hazardous Materials necessary
         for and ordinarily associated with the conduct of Lessee's business
         which are used in full compliance with all Environmental Laws.

                  7.3.2 Notice of Environmental Claims, Actions or
         Contaminations. Lessee shall notify Lessor, in writing, immediately
         upon learning of any existing, pending or threatened: (a)
         investigation, inquiry, claim or action by any governmental authority
         in connection with any Environmental Laws, (b) Third Party Claims, (c)
         Regulatory Actions, and/or (d) Contamination of any portion of the
         Leased Properties.

                  7.3.3 Costs of Remedial Actions with Respect to Environmental
         Matters. If any investigation and/or Clean-Up of any Hazardous
         Materials or other environmental condition on, under, about or with
         respect to a Leased Property is required by any Environmental Law,
         Lessee shall complete, at its own expense, such investigation and/or
         Clean-Up or cause any other Person that may be legally responsible
         therefore to complete such investigation and/or Clean-Up.

                  7.3.4 Delivery of Environmental Documents. Lessee shall
         deliver to Lessor complete copies of any and all Environmental
         Documents that may now be in or at any time hereafter come into the
         possession of Lessee.

                  7.3.5 Environmental Audit. At Lessee's expense, Lessee shall
         deliver to Lessor, an Environmental Audit from time to time, upon and
         within thirty (30) days of Lessor's request therefor, but no more than
         once every two (2) calendar years, except in the event of (i) any
         construction or excavation of, or material alteration to any portion of
         the Leased Properties, or (ii) Lessor reasonably suspects that
         Contamination of any portion of



                                       59
<PAGE>

         the Leased Properties has occurred or been discovered, in either case
         Lessor may thereafter request an Environmental Audit. All tests and
         samplings shall be conducted using generally accepted and
         scientifically valid technology and methodologies. Lessee shall give
         the engineer or environmental consultant conducting the Environmental
         Audit reasonable and complete access to the Leased Properties and to
         all records in the possession of Lessee that may indicate the presence
         (whether current or past) of a Release or threatened Release of any
         Hazardous Materials on, in, under, about and adjacent to any Leased
         Property. Lessee shall also provide the engineer or environmental
         consultant full access to and the opportunity to interview such persons
         as may be employed in connection with the Leased Properties as the
         engineer or consultant deems appropriate. However, Lessor shall not be
         entitled to request an Environmental Audit from Lessee unless (a) after
         the Commencement Date there have been changes, modifications or
         additions to Environmental Laws as applied to or affecting any of the
         Leased Properties; (b) a significant change in the condition of any of
         the Leased Properties has occurred; (c) there are fewer than six (6)
         months remaining in the Term; or (d) Lessor has another good reason for
         requesting such certificate or certificates. If the Environmental Audit
         discloses the presence of Contamination or any noncompliance with
         Environmental Laws, Lessee shall immediately perform all of Lessee's
         obligations hereunder with respect to such Hazardous Materials or
         noncompliance.

                  7.3.6 Entry onto Leased Properties for Environmental Matters.
         If Lessee fails to provide an Environmental Audit as and when required
         by Section 7.3.5, in addition to Lessor's other remedies Lessee shall
         permit Lessor from time to time, by its employees, agents, contractors
         or representatives, to enter upon the Leased Properties for the purpose
         of conducting such Investigations as Lessor may desire, the expense of
         which shall promptly be paid or reimbursed by Lessee as an Additional
         Charge. Lessor, and its employees, agents, contractors, consultants
         and/or representatives, shall conduct any such Investigation in a
         manner which does not unreasonably interfere with Lessee's use of and
         operations on the Leased Properties (however, reasonable temporary
         interference with such use and operations is permissible if the
         investigation cannot otherwise be reasonably and inexpensively
         conducted). Other than in an emergency, Lessor shall provide Lessee
         with prior notice before entering any of the Leased Properties to
         conduct such Investigation, and shall provide copies of any reports or
         results to Lessee, and Lessee shall cooperate fully in such
         Investigation.

                  7.3.7 Environmental Matters Upon Termination of the Lease or
         Expiration of Term. Upon the expiration or earlier termination of the
         Term of this Lease, Lessee shall cause the Leased Properties to be
         delivered free of any and all Regulatory Actions and Third Party Claims
         and otherwise in compliance with all Environmental Laws with respect
         thereto, and in a manner and condition that is reasonably required to
         ensure that the then present use, operation, leasing, development,
         construction, alteration, refinancing or sale of the Leased Property
         shall not be restricted by any environmental condition existing as of
         the date of such expiration or earlier termination of the Term.

                  7.3.8 Compliance with Environmental Laws. Lessee shall comply
         with, and cause its agents, servants and employees, to comply with, and
         shall use reasonable efforts



                                       60
<PAGE>

         to cause each occupant and user of any of the Leased Properties, and
         the agents, servants and employees of such occupants and users, to
         comply with each and every Environmental Law applicable to Lessee, the
         Leased Properties and each such occupant or user with respect to the
         Leased Properties. Specifically, but without limitation:

                           7.3.8.1 Maintenance of Licenses and Permits. Lessee
                  shall obtain and maintain (and Lessee shall use reasonable
                  efforts to cause each tenant, occupant and user to obtain and
                  maintain) all permits, certificates, licenses and other
                  consents and approvals required by any applicable
                  Environmental Law from time to time with respect to Lessee,
                  each and every part of the Leased Properties and/or the
                  conduct of any business at a Facility or related thereto;

                           7.3.8.2 Contamination. Lessee shall not cause, suffer
                  or permit any Contamination;

                           7.3.8.3 Clean-Up. If a Contamination occurs, the
                  Lessee promptly shall Clean-Up and remove any Hazardous
                  Materials or cause the Clean-Up and the removal of any
                  Hazardous Materials and in any such case such Clean-Up and
                  removal of the Hazardous Materials shall be effected to
                  Lessor's reasonable satisfaction and in any event in strict
                  compliance with and in accordance with the provisions of the
                  applicable Environmental Laws;

                           7.3.8.4 Discharge of Lien. Within twenty (20) days of
                  the date any lien is imposed against the Leased Properties or
                  any part thereof under any Environmental Law, Lessee shall
                  cause such lien to be discharged (by payment, by bond or
                  otherwise to Lessor's absolute satisfaction);

                           7.3.8.5 Notification of Lessor. Within five (5)
                  Business Days after receipt by Lessee of notice or discovery
                  by Lessee of any fact or circumstance which might result in a
                  breach or violation of any covenant or agreement, Lessee shall
                  notify Lessor in writing of such fact or circumstance; and

                           7.3.8.6 Requests, Orders and Notices. Within five (5)
                  Business Days after receipt of any request, order or other
                  notice relating to the Leased Properties under any
                  Environmental Law, Lessee shall forward a copy thereof to
                  Lessor.

                  7.3.9 Environmental Related Remedies. In the event of a breach
         by Lessee beyond any applicable notice and/or grace period of its
         covenants with respect to environmental matters, Lessor may, in its
         sole discretion, do any one or more of the following (the exercise of
         one right or remedy hereunder not precluding the simultaneous or
         subsequent exercise of any other right or remedy hereunder):

                           7.3.9.1 Cause a Clean-Up. Cause the Clean-Up of any
                  Hazardous Materials or other environmental condition on or
                  under the Leased Properties, or both, at Lessee's cost and
                  expense; or



                                       61
<PAGE>

                           7.3.9.2 Payment of Regulatory Damages. Pay on behalf
                  of Lessee any damages, costs, fines or penalties imposed on
                  Lessee or Lessor as a result of any Regulatory Actions; or

                           7.3.9.3 Payments to Discharge Liens. On behalf of
                  Lessee, make any payment or perform any other act or cause any
                  act to be performed which will prevent a lien in favor of any
                  federal, state or local governmental authority from attaching
                  to the Leased Properties or which will cause the discharge of
                  any lien then attached to the Leased Properties; or

                           7.3.9.4 Payment of Third Party Damages. Pay, on
                  behalf of Lessee, any damages, cost, fines or penalties
                  imposed on Lessee as a result of any Third Party Claims; or

                           7.3.9.5 Demand of Payment. Demand that Lessee make
                  immediate payment of all of the costs of such Clean-Up and/or
                  exercise of the remedies set forth in this Section 7.3
                  incurred by Lessor and not theretofore paid by Lessee as of
                  the date of such demand.

                  7.3.10 Environmental Indemnification. Lessee and Guarantor
         shall and do hereby indemnify, and shall defend and hold harmless
         Lessor, its principals, Officers, directors, agents, employees,
         parents, and Affiliates from each and every incurred and potential
         claim, cause of action, damage, demand, obligation, fine, laboratory
         fee, liability, loss, penalty, imposition settlement, levy, lien
         removal, litigation, judgment, Proceeding, disbursement, expense and/or
         cost (including without limitation the cost of each and every
         Clean-Up), however defined and of whatever kind or nature, known or
         unknown, foreseeable or unforeseeable, contingent, incidental,
         consequential or otherwise (including, but not limited to, attorneys'
         fees, consultants' fees, experts' fees and related expenses, capital,
         operating and maintenance costs, incurred in connection with (i) any
         Investigation or monitoring of site conditions, (ii) any amounts paid
         or advanced by Lessor on behalf of Lessee as set forth in this Article
         7, and (iii) any Clean-Up required or performed by any federal, state
         or local governmental entity or performed by any other entity or person
         because of the presence of any Hazardous Materials, Release, threatened
         Release or any Contamination on, in, under or about any of the Leased
         Properties) which may be asserted against, imposed on, suffered or
         incurred by, each and every indemnitee arising out of or in any way
         related to, or allegedly arising out of or due to any environmental
         matter including, but not limited to, any one or more of the following:

                           7.3.10.1 Release Damage or Liability. The presence of
                  Contamination in, on, at, under, or near a Leased Property or
                  migrating to a Leased Property from another location;

                           7.3.10.2 Injuries. All injuries to health or safety
                  (including wrongful death), or to the environment, by reason
                  of environmental matters relating to the condition of or
                  activities past or present on, at, in, under a Leased
                  Property;



                                       62
<PAGE>

                           7.3.10.3 Violations of Law. All violations, and
                  alleged violations, of any Environmental Law relating to a
                  Leased Property or any activity on, in, at, under or near a
                  Leased Property;

                           7.3.10.4 Misrepresentation. All material
                  misrepresentations relating to environmental matters in any
                  documents or materials furnished by Lessee to Lessor and/or
                  its representatives in connection with the Lease;

                           7.3.10.5 Event of Default. Each and every Event of
                  Default relating to environmental matters;

                           7.3.10.6 Lawsuits. Any and all lawsuits brought or
                  threatened, settlements reached and governmental orders
                  relating to any Hazardous Materials at, on, in, under or near
                  a Leased Property, and all demands of governmental
                  authorities, and all policies and requirements of Lessor's,
                  based upon or in any way related to any Hazardous Materials
                  at, on, in, under a Leased Property; and

                           7.3.10.7 Presence of Liens. All liens imposed upon
                  any of the Leased Properties in favor of any governmental
                  entity or any person as a result of the presence, disposal,
                  release or threat of release of Hazardous Materials at, on,
                  in, from, or under a Leased Property.

                  7.3.11 Rights Cumulative and Survival. The rights granted
         Lessor under this Section 7.3 are in addition to and not in limitation
         of any other rights or remedies available to Lessor hereunder or
         allowed at law or in equity or rights of indemnification provided to
         Lessor in any agreement pursuant to which Lessor purchased any of the
         Leased Properties. The payment and indemnification obligations set
         forth in this Section 7.3 shall survive the expiration or earlier
         termination of the Term of this Lease.

                                  ARTICLE VIII

             LEGAL AND INSURANCE REQUIREMENTS; ADDITIONAL COVENANTS

         8.1 COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS. In its use,
maintenance, operation and any alteration of the Leased Properties, Lessee, at
its expense, will promptly (i) comply with all Legal Requirements and Insurance
Requirements, whether or not compliance therewith requires structural changes in
any of the Leased Improvements (which structural changes shall be subject to
Lessor's prior written approval, which approval shall not be unreasonably
withheld or delayed) or interferes with or prevents the use and enjoyment of the
Leased Properties, and (ii) procure, maintain and comply with all licenses, and
other authorizations required for the use of the Leased Properties and Lessee's
Personal Property then being made, and for the proper erection, installation,
operation and maintenance of the Leased Properties or any part thereof. The
judgment of any court of competent jurisdiction, or the admission of Lessee in
any action or Proceeding against Lessee, whether or not Lessor is a party
thereto, that Lessee has violated any such Legal Requirements or Insurance
Requirements shall be conclusive of that fact as between Lessor and Lessee.



                                       63
<PAGE>

         8.2 CERTAIN COVENANTS.

                  8.2.1 Existence; Conduct of Business. Lessee, Guarantor, and
         WCG each will (i) continue to engage in business of the same general
         type as now conducted and (ii) do or cause to be done all things
         necessary to preserve, renew and keep in full force and effect its
         legal existence and the rights, licenses, permits, privileges,
         franchises, patents, copyrights, trademarks and trade names material to
         the conduct of its business.

                  8.2.2 Payment of Obligations. Lessee, Guarantor and WCG each
         (i) will pay its Debt and other material obligations, including tax
         liabilities, before the same shall become delinquent or in default,
         except where (a) the validity or amount thereof is being contested in
         good faith by appropriate legal process, (b) has set aside on its books
         adequate reserves with respect thereto in accordance with GAAP, (c)
         such contest effectively suspends collection of the contested
         obligation and the enforcement of any Encumbrance securing such
         obligation and (d) the failure to make payment pending such contest
         could not reasonably be expected to result in a Material Adverse Effect
         and (ii) shall not breach, in any material respect, or permit to exist
         any material default under, the terms of any material lease,
         commitment, contract, instrument or obligation to which it is a party,
         or by which its properties or assets are bound, except where the
         failure to do the foregoing would not in the aggregate have a Material
         Adverse Effect.

                  8.2.3 Maintenance of Properties. Lessee, Guarantor, and WCG
         each will keep and maintain all property material to the conduct of its
         business in good working order and condition, ordinary wear and tear
         excepted.

                  8.2.4 Insurance. Lessee, Guarantor, and WCG each will
         maintain, with financially sound and reputable insurance companies,
         insurance in such amounts and against such risks as are customarily
         maintained by companies engaged in the same or similar businesses
         operating in the same or similar locations.

                  8.2.5 Casualty and Condemnation. The Lessee will furnish to
         Lessor prompt written notice of any casualty or other insured damage to
         any portion of any of Guarantor's property or assets or the
         commencement of any action or Proceeding for the taking of any of
         Guarantor's property or assets or any part thereof or interest therein
         under power of eminent domain or by condemnation or similar Proceeding
         (in each case with a value in excess of $10,000,000).

                  8.2.6 Books and Records; Inspection and Audit Rights. Lessee,
         Guarantor, and WCG each will keep proper books of record and account in
         which materially full, true and correct entries are made of all
         dealings and transactions in relation to its business and activities.
         Lessee, Guarantor, and WCG each will permit any representatives
         designated by the Lessor at the expense of Lessor, or, if an Event of
         Default shall have occurred and be continuing, at the expense of the
         Lessee, upon reasonable prior notice, to visit and inspect its
         properties, to examine and make extracts from its books and records,
         and to discuss its affairs, finances and condition with its officers
         and independent accountants, all at such reasonable times and as often
         as reasonably requested.



                                       64
<PAGE>

                  8.2.7 Compliance with Laws. Lessee, Guarantor, and WCG each
         will comply with all laws, rules, regulations and orders of any
         Governmental Authority applicable to it or its property (including,
         without limitation, Environmental Laws and ERISA and the rules and
         regulations thereunder), except where the necessity of compliance
         therewith is contested in good faith by appropriate action and such
         failure to comply, individually or in the aggregate, could not
         reasonably be expected to result in a Material Adverse Effect.

                  8.2.8 Further Assurances. At any time and from time to time,
         Lessee and Guarantor each will execute any and all further documents,
         financing statements, agreements and instruments, and take all such
         further actions (including the filing and recording of financing
         statements, fixture filings, mortgages, deeds of trust and other
         documents), which may be required under any applicable law, or which
         the Lessor may reasonably request, to effectuate the transactions
         contemplated by this Lease or to grant, preserve, protect or perfect
         the Encumbrances created or intended to be created in connection with
         this Lease or any of the other documents contemplated herein, required
         to be in effect or the validity or priority of any such Encumbrance,
         all at the expense of Lessee and Guarantor. Lessee and Guarantor also
         agree to provide to Lessor, from time to time upon request, evidence
         reasonably satisfactory to Lessor as to the perfection and priority of
         the Encumbrance created or intended to be created in connection with
         this Lease or any of the other documents contemplated herein.



                                       65
<PAGE>

         8.3 CERTAIN NEGATIVE COVENANTS.

                  8.3.1 No Other Debt. Lessee shall not, directly or indirectly,
         incur or otherwise become liable for any Debt or obligation to pay
         money to any Person other than to (i) Lessor pursuant to this Lease and
         (ii) lessors of leased equipment used in the operation of the
         Facilities.

                  8.3.2 Limitation of Distributions. In or with respect to any
         Lease Year, Lessee shall not pay or distribute to its shareholders or
         any Affiliate in the form of dividends, fees for any services or
         reimbursements for shareholder expenditures or overhead on behalf of
         Lessee or to its Affiliates.

                  8.3.3 Pledge or Encumber Assets. Lessee shall not pledge or
         otherwise encumber any of its assets, other than leased equipment used
         in the operation of the Facilities and liens on assets permitted under
         Section 11.1.

                  8.3.4 Guarantees Prohibited. Lessee shall not guarantee any
         indebtedness of any Person (other than the guarantee of the
         indebtedness under the Credit Agreement).

                  8.3.5 Encumbrances. Neither Lessee nor Guarantor will create,
         incur, assume or permit to exist any Encumbrance on any property or
         asset now owned or hereafter acquired by it, or assign or sell any
         income or revenues or rights in respect of any thereof, except for any
         Permitted Encumbrances or Encumbrances created in connection with or
         specifically contemplated by this Lease or permitted by the Credit
         Agreement.

                  8.3.6 Fundamental Changes. Neither Lessee, Guarantor nor WCG
         will merge into or consolidate with any other Person, or permit any
         other Person to merge into or consolidate with it, or liquidate or
         dissolve, except that, if at the time thereof and immediately after
         giving effect thereto no Event of Default shall have occurred and be
         continuing (i) any Person may merge into the Lessee in a transaction in
         which the Lessee is the surviving entity, provided that any such merger
         involving a Person that is not wholly owned by either Guarantor or WCG
         immediately prior to such merger shall not be permitted, and (ii) any
         person may merge into the Guarantor or WCG in a transaction in which
         the Guarantor or WCG, respectively, is the surviving corporation.

                  8.3.7 Other Material Agreements. Lessee shall not (i) enter
         into any other material agreement relating to any portion of the Leased
         Properties, or (ii) if entered into with Lessor's consent, thereafter,
         amend, modify, renew, replace or otherwise change the terms of any such
         material agreement without the prior written consent of Lessor. For
         purposes of this Section 8.3.7, a "material agreement" shall mean any
         agreement or commitment which requires total payments by Lessee in
         excess of $1,500,000.00, or accumulated annual payments in excess of
         $500,000.00.

         8.4 ADDITIONAL FINANCIAL COVENANTS.

                  8.4.1 Certain Definitions. For purposes of this Section 8.4.1,
         capitalized terms not otherwise specifically defined in this Lease,
         shall have the meanings



                                       66
<PAGE>

         described for such capitalized terms as contained in the Credit
         Agreement (and capitalized terms contained within such definitions as
         set forth in the Credit Agreement shall similarly have the meanings
         described for such capitalized terms therein). Lessee shall provide
         copies of any amendments or restatements or waivers to the Credit
         Agreement to Lessor within five (5) days of execution thereof. Such
         amendments or restatements or waivers shall automatically become a part
         hereof.

                  8.4.2 Total Net Debt to Contributed Capital Ratio. The Total
         Net Debt to Contributed Capital ratio shall at no time prior to January
         1, 2002 exceed .65 to 1.00.

                  8.4.3 Minimum EBITDA. The amount equal to (i) EBITDA for the
         period of four (4) fiscal quarters ending during any period set forth
         below plus (ii) ADP Interest Expense for such period minus (iii) gains
         for such period attributable to Dark Fiber and Capacity Dispositions
         plus (iv) Dark Fiber and Capacity Proceeds for such period shall not be
         less than the amount set forth below opposite such period:

<Table>
<Caption>
PERIOD                                                AMOUNT
- ------                                                ------
<S>                                                   <C>
January 1, 2001-March 31, 2001                        $200,000,000
APRIL 1, 2001-JUNE 30, 2001                           $300,000,000
July 1, 2001-September 30, 2001                       $350,000,000
October 1, 2001-December 31, 2001                     $350,000,000
</Table>

                  8.4.4 Total Leverage Ratio. (a) The Total Leverage Ratio
         during any period set forth below shall not exceed the ratio set forth
         below opposite such period:

<Table>
<Caption>
                                                      TOTAL
PERIOD                                                LEVERAGE RATIO
- ------                                                --------------
<S>                                                   <C>
March 31, 2002-December 30, 2002                      12.50:1.00
December 31, 2002-December 30, 2003                   9.50:1.00
December 31, 2003 and thereafter                      4.00:1.00
</Table>

                  8.4.5 Senior Leverage Ratio. The Senior Leverage Ratio during
         any period set forth below shall not exceed the ratio set forth below
         opposite such period:

<Table>
<Caption>
                                                      SENIOR
PERIOD                                                LEVERAGE RATIO
- ------                                                --------------
<S>                                                   <C>
March 31, 2002-December 30, 2002                      5.25:1.00
December 31, 2002-December 30, 2003                   3.25:1.00
December 31, 2003 and thereafter                      2.50:1.00
</Table>

                  8.4.6 Interest Coverage Ratio . The Interest Coverage Ratio
         for any period of four (4) consecutive fiscal quarters ending during
         any period set forth below shall not be less than the ratio set forth
         below opposite such period:



                                       67
<PAGE>

<Table>
<Caption>
                                                     INTEREST
PERIOD                                               COVERAGE RATIO
- ------                                               --------------
<S>                                                  <C>
June 30, 2002-June 29, 2003                          1.00:1.00
June 30, 2003-December 30, 2003                      1.50:1.00
December 31, 2003 and thereafter                     2.00:1.00
</Table>

                                   ARTICLE IX

                                   MAINTENANCE

         9.1 MAINTENANCE AND REPAIR.

                  9.1.1 Status and Quality. Lessee, at its expense, will keep or
         cause to be kept, the Leased Properties, and all landscaping, private
         roadways, sidewalks and curbs appurtenant thereto which are under
         Lessee's control and Lessee's Personal Property in good order and
         repair, whether or not the need for such repairs arises out of Lessee's
         use, any prior use, the elements or the age of the Leased Properties or
         any portion thereof, or any cause whatsoever except the act or
         negligence of Lessor, and with reasonable promptness shall make all
         necessary and appropriate repairs thereto of every kind and nature,
         whether interior or exterior, structural or non-structural, ordinary or
         extraordinary, foreseen or unforeseen or arising by reason of a
         condition existing prior to the Commencement Date (concealed or
         otherwise). Lessee shall at all times maintain, operate and otherwise
         manage the Leased Properties on a basis and in a manner consistent with
         the higher of that (i) customarily applied to Class A commercial office
         buildings in the vicinity of the City of Tulsa, Oklahoma, or (ii)
         utilized by Lessor in the management of Lessor's facilities adjacent to
         the Center. All repairs shall, to the extent reasonably achievable, be
         at least equivalent in quality to the original work or the property to
         be repaired shall be replaced. Lessee will not take or omit to take any
         action the taking or omission of which might materially impair the
         value or the usefulness of the Leased Properties or any parts thereof
         for the Primary Intended Use.

                  9.1.2 No Liability of Lessor. Lessor shall not under any
         circumstances be required to maintain, build or rebuild any
         improvements on the Leased Properties (or any private roadways,
         sidewalks or curbs appurtenant thereto), or to make any repairs,
         replacements, alterations, restorations or renewals of any nature or
         description to the Leased Properties, whether ordinary or
         extraordinary, structural or non-structural, foreseen or unforeseen, or
         upon any adjoining property, whether to provide lateral or other
         support or abate a nuisance, or otherwise, or to make any expenditure
         whatsoever with respect thereto, in connection with this Lease. Lessee
         hereby waives, to the extent permitted by law, the right to make
         repairs at the expense of Lessor pursuant to any law in effect at the
         time of the execution of this Lease or hereafter enacted.

                 9.1.3 Contracting with Third Parties. Nothing contained in this
         Lease shall be construed as (i) constituting the consent or request of
         Lessor, expressed or implied, to any contractor, subcontractor,
         laborer, materialmen or vendor to or for the



                                       68
<PAGE>

         performance of any labor or services or the furnishing of any materials
         or other property for the construction, alteration, addition, repair or
         demolition of or to any Leased Property or any part thereof, or (ii)
         giving Lessee any right, power or permission to contract for or permit
         the performance of any labor or services or the furnishing of any
         materials or other property in such fashion as would permit the making
         of any claim against Lessor in respect thereof or to make any agreement
         that may create, or in any way be the basis for any right, title,
         interest, lien, claim or other Encumbrance upon the estate of Lessor in
         the Leased Properties, or any portion thereof. Lessor shall have the
         right to give, record and post, as appropriate, notices of
         non-responsibility under any mechanics' and construction lien laws now
         or hereafter existing.

                  9.1.4 Replacements. Lessee (i) shall promptly replace any of
         the Leased Improvements or Leased Personal Property which become worn
         out, obsolete or unusable or unavailable for the purpose for which
         intended, and (ii) in Lessee's reasonable judgment, may acquire a
         substitute for any item or items of Leased Personal Property which is
         of higher or better quality, performance or function than the item for
         which it is substituted. All replacements shall have a value and
         utility at least equal to that of the items replaced and shall become
         part of the Leased Properties immediately upon their acquisition by
         Lessee. Upon Lessor's request, Lessee shall promptly execute and
         deliver to Lessor a bill of sale or other instrument establishing
         Lessor's lien-free ownership of such replacements. Lessee shall
         promptly repair all damage to the Leased Properties incurred in the
         course of such replacement.

                  9.1.5 Vacation and Surrender. Lessee will, upon the expiration
         or prior termination of the Term, vacate and surrender the Leased
         Properties to Lessor in the condition in which they were originally
         received from Lessor, in good operating condition, ordinary wear and
         tear excepted, except as repaired, rebuilt, restored, altered or added
         to as permitted or required by the provisions of this Lease.

         9.2 ENCROACHMENTS; RESTRICTIONS. ETC. If, at any time, any of the
Leased Improvements are alleged to encroach upon any property, street or right
of way adjacent to a Leased Property, or to violate any restrictive covenant, or
to impair the rights of others under any easement or right of way, Lessee shall
promptly settle such allegations or take such other lawful action as may be
necessary in order to be able to continue the use of a Leased Property for the
Primary Intended Use substantially in the manner and to the extent such Leased
Property was being used at the time of the assertion of such violation,
impairment or encroachment, provided, however, that no such action shall violate
any other provision of this Lease and any alteration of a Leased Property must
be made in conformity with the applicable requirements of Article X. Lessee
shall not have any claim against Lessor or offset against any of Lessee's
obligations under this lease with respect to any such violation, impairment or
encroachment.

                                    ARTICLE X

                            ALTERATIONS AND ADDITIONS

         10.1 Construction of Alterations and Additions to the Leased
Properties. Lessee shall not (a) make or permit to be made any structural
alterations, improvements or additions



                                       69
<PAGE>

of or to the Leased Properties or any part thereof, or (b) materially alter the
plumbing, HVAC or electrical systems thereon or (c) make any other alterations,
improvements or additions the cost of which exceeds (i) Two Hundred Thousand
Dollars ($200,000.00), per alteration, improvement or addition, or (ii) One
Million Dollars ($1,000,000.00), in any Lease Year, unless and until Lessee has
(d) caused complete plans and specifications therefor to have been prepared by a
licensed architect and submitted to Lessor at least ninety (90) Business Days
before the planned start of construction thereof, (e) obtained Lessor's written
approval thereof and if required, the approval of any Facility Mortgagee, and
(f) if required to do so by Lessor, provided Lessor with reasonable assurance of
the payment of the cost of any such alterations, improvements or additions, in
the form of a bond, letter of credit or cash deposit. If Lessor requires a
deposit, Lessor shall retain and disburse the amount deposited in the same
manner as is provided for insurance proceeds in Section 14.6. If the deposit is
reasonably determined by Lessor at any time to be insufficient for the
completion of the alteration, improvement or addition, Lessee shall immediately
increase the deposit to the amount reasonably required by Lessor. Lessee shall
be responsible for the completion of such improvements in accordance with the
plans and specifications approved by Lessor, and shall promptly correct any
failure with respect thereto.

                  10.1.1 Lessor's Approval Not Required. Alterations and
         improvements not falling within the categories described in Section
         10.1 may be made by Lessee without the prior approval of Lessor, (i)
         but only in the event any such alternatives or improvements do not
         result in a material reduction in Lessor's opinion, in the value of the
         Leased Properties, and (ii) Lessee shall give Lessor at least thirty
         (30) days prior written Notice of any such alterations and improvements
         in each and every case.

                  10.1.2 Quality of Work. All alterations, improvements and
         additions shall be constructed in a first class, workmanlike manner, in
         compliance with all Insurance Requirements and Legal Requirements, be
         in keeping with the character of the Leased Properties and the area in
         which the Leased Properties are located and be designed and constructed
         so that the value of the Leased Properties will not be diminished or
         and that the Primary Intended Use of the Leased Properties will not be
         changed. All improvements, alterations and additions shall immediately
         become a part of the Leased Properties.

                  10.1.3 No Claim Against Lessor. Lessee shall have no claim
         against Lessor at any time in respect of the cost or value of any such
         improvement, alteration or addition. There shall be no adjustment in
         the Rent by reason of any such improvement, alteration or addition.
         With Lessor's consent, expenditures made by Lessee pursuant to this
         Article X may be included as capital expenditures for purposes of
         inclusion in the capital expenditures budget for the Facilities and for
         measuring compliance with the obligations of Lessee set forth in
         Section 8.2.

                  10.1.4 Asbestos - Containing Material. In connection with any
         alteration which involves the removal, demolition or disturbance of any
         asbestos-containing material, Lessee shall cause to be prepared at its
         expense a full asbestos assessment applicable to such alteration, and
         shall carry out such asbestos monitoring and maintenance program as
         shall reasonably be required thereafter in light of the results of such
         a assessment.



                                       70
<PAGE>

                                   ARTICLE XI

                                      LIENS

         11.1 LIENS. Without the consent of Lessor or as expressly permitted
elsewhere herein, Lessee will not directly or indirectly create or allow to
remain and will promptly discharge at its expense any lien, Encumbrance,
attachment, title retention agreement or claim upon the Leased Properties, and
any attachment, levy, claim or Encumbrance in respect of the Rent, except for
(i) Permitted Encumbrances, (ii) liens of mechanics, laborers, materialmen,
suppliers or vendors for sums not yet due, and (iii) liens created by the
wrongful acts or negligence of Lessor.

                                   ARTICLE XII

                         PERMITTED CONTESTS AND DEPOSITS

         12.1 PERMITTED CONTESTS. Lessee, on its own or on Lessor's behalf (or
in Lessor's name), but at Lessee's sole cost and expense, shall have the right
to contest, by an appropriate legal Proceeding conducted in good faith and with
due diligence, the amount or validity of any Imposition, Legal Requirement or
Insurance Requirement or Claim, provided (a) prior Notice of such contest is
given to Lessor, (b) the Leased Properties would not be in any danger of being
sold, uninsured or underinsured, forfeited or attached as a result of such
contest, and there is no risk to Lessor of a loss of or interruption in the
payment of, Rent, (c) in the case of an unpaid Imposition or Claim, collection
thereof is suspended during the pendency of such contest, (d) in the case of a
contest of a Legal Requirement, compliance may legally be delayed pending such
contest. Upon request of Lessor, Lessee shall deposit funds or assure Lessor in
some other manner reasonably satisfactory to Lessor that a contested Imposition
or Claim, together with interest and penalties, if any, thereon, and any and all
costs for which Lessee is responsible will be paid if and when required upon the
conclusion of such contest. Lessee shall defend, indemnify and save harmless
Lessor from all costs or expenses arising out of or in connection with any such
contest, including but not limited to attorneys' fees. If at any time Lessor
reasonably determines that payment of any Imposition or Claim, or compliance
with any Legal or Insurance Requirement being contested by Lessee is necessary
in order to prevent loss of any of the Leased Properties or Rent or civil or
criminal penalties or other damage, upon such prior Notice to Lessee as is
reasonable in the circumstances Lessor may pay such amount, require Lessee to
comply with such Legal or Insurance Requirement or take such other action as it
may deem necessary to prevent such loss or damage. If reasonably necessary, upon
Lessee's written request Lessor, at Lessee's expense, shall cooperate with
Lessee in a permitted contest, provided Lessee upon demand reimburses Lessor for
Lessor's costs incurred in cooperating with Lessee in such contest.

                                  ARTICLE XIII

                                    INSURANCE

         13.1 GENERAL INSURANCE REQUIREMENTS. Lessee will carry or cause to be
carried and maintained in force throughout the entire Term (except as
specifically noted to the contrary) insurance as described in Sections 13.1.1
through 13.1.5, with insurance companies



                                       71
<PAGE>

and deductibles/retentions reasonably acceptable to Lessor. The limits set forth
below are minimum limits and will not be construed to limit Lessee's liability.
All costs and deductible amounts will be for the sole account of the Lessee.

                  13.1.1 Worker's Compensation Insurance. Workers' compensation
         insurance complying with the laws of the State or States having
         jurisdiction over each employee, whether or not Lessee is required by
         such laws to maintain such insurance, and Employer's Liability with
         limits of $1,000,000 each accident, $1,000,000 disease each employee,
         and $1,000,000 disease policy limit, provided however, in lieu of such
         insurance, Lessee may become a qualified self insured for such
         coverage, in which event such coverage shall not be required unless
         Lessee loses its status as a qualified self insured.

                  13.1.2 Commercial General Liability Insurance. Commercial or
        Comprehensive general liability insurance on an occurrence form with a
        combined single limit of $1,000,000 each occurrence, and annual
        aggregates of $1,000,000, for bodily injury and property damage,
        including coverage for premises-operations, blanket contractual
        liability, broad form property damage, personal injury liability,
        independent contractors, products/completed operations, sudden and
        accidental pollution and explosion, collapse and underground.

                  13.1.3 Automobile Liability. Automobile Liability insurance
         with a combined single limit of $1,000,000 each occurrence for bodily
         injury and property damage to include coverage for all owned,
         non-owned, and hired vehicles.

                  13.1.4 Excess Liability Insurance. Excess or Umbrella
         Liability insurance with a combined single limit of $25,000,000 each
         occurrence, and annual aggregates of $25,000,000, for bodily injury and
         property damage covering excess of Employer's Liability and the
         insurance described in 13.1.2 and 13.1.3 above.

                  13.1.5 Property Insurance. From and after the date upon which
         Lessor is no longer responsible to carry such coverage under the
         Construction Completion Agreement, All-Risk Property insurance
         providing for the full replacement cost of all property located in or
         on the Leased Properties, including Leased Personal Property and
         Lessee's Personal Property. This policy shall include coverage for
         earthquake, flood, and windstorm. The policy shall also include
         business interruption insurance, if due to a covered loss, covering the
         Base Rent due Lessor for a period of no less than twelve (12) months.
         Lessor will be the sole loss payee as required by Article XIV. So long
         as no Event of Default is then in existence, Lessor shall make
         available to Lessee, any proceeds of business interruption insurance
         remaining after the payment of all accrued Rent, within thirty (30)
         days of Lessor's actual receipt of such proceeds, in good funds.

                  13.1.6 Status of Insurance Company. Irrespective of the
         insurance requirements above, the insolvency, bankruptcy, or failure of
         any such insurance company providing insurance for Lessee, or the
         failure of any such insurance company to pay claims that occur will not
         be held to waive any of the provisions hereof.



                                       72
<PAGE>

                  13.1.7 Waiver of Subrogation. In each of the above described
         policies, Lessee agrees to waive and will require its insurers to waive
         any rights of subrogation or recovery they may have against Lessor, its
         parent, subsidiary or affiliated companies. Lessor will have no
         liability to Lessee for any damage or destruction of any portion of the
         Leased Properties or any of Lessee's Personal Property.

                  13.1.8 Additional Insureds. Under the insurance policies
         described hereinabove (except in Section 13.1.1), Lessor, its parent,
         subsidiary and Affiliates and will be named as additional insureds with
         respect to the policies listed in Section 13.1.2 through 13.1.4, and as
         sole loss payees with respect to the policy listed in Section 13.1.5 as
         their interests appear. This insurance will be primary over any other
         insurance maintained by Lessor, its parent, subsidiary or Affiliates.
         All policies shall provide a severability of interests clause.

                  13.1.9 Non-Renewal. Non-renewal or cancellation of policies
         described above, will be effective only after written notice is
         received by Lessor from the insurance company sixty (60) days in
         advance of any such non-renewal or cancellation. Prior to commencing
         the Lease hereunder, Lessee will deliver to Lessor certificates of
         insurance evidencing the existence of the insurance and endorsements
         required above.

                  13.1.10 Original or Certified Copies. In the event of a loss
         or claim arising out of or in connection with this contract, Lessee
         agrees, upon request of Lessor, to submit the original or a certified
         copy of its insurance policies for inspection by Lessor.

         13.2 PREMIUM DEPOSITS. If any provision of a Facility Mortgage requires
deposits of premiums for insurance to be made with the Facility Mortgagee,
Lessee shall pay to Lessor monthly the amounts required and Lessor shall
transfer such amounts to the Facility Mortgagee, unless, pursuant to written
direction by Lessor, Lessee makes such deposits directly with the Facility
Mortgagee.

         13.3 INCREASE IN LIMITS. If from time to time Lessor determines, in the
exercise of its reasonable business judgment, that the limits of the personal
injury or property damage - public liability insurance then being carried are
insufficient, upon Notice from Lessor Lessee shall cause such limits to be
increased to the level specified in such Notice until further increase pursuant
to the provisions of this Section.

         13.4 BLANKET POLICY. Any insurance required by this Lease may be
provided by so called blanket policies of insurance carried by Lessee, provided,
however, that the coverage afforded Lessor thereby may not thereby be less than
or materially different from that which would be provided by a separate policies
meeting the requirements of this Lease, and provided further that such policies
meet the requirements of all Facility Mortgages.

         13.5 COPIES OF POLICIES; CERTIFICATES. Copies of the policies of
insurance required by this Lease and certificates thereof shall be delivered to
Lessor not less than thirty (30) days prior to their effective date (and, with
respect to any renewal policy, not less than twenty (20) days prior to the
expiration of the existing policy), and in the event of the failure of Lessee
either to carry the required insurance or pay the premiums therefor, or to
deliver copies of policies or certificates to Lessor as required, Lessor shall
be entitled, but shall have



                                       73
<PAGE>

no obligation, to obtain such insurance and pay the premiums therefor when due,
which premiums shall be repayable to Lessor upon written demand therefor as
Additional Charges.

                                   ARTICLE XIV

                       DISBURSEMENT OF INSURANCE PROCEEDS

         14.1 INSURANCE PROCEEDS. Net Proceeds shall be paid to Lessor and held,
disbursed or retained by Lessor as provided herein.

                 14.1.1 Proceeds of All-Risk Property Insurance. If the Net
         Proceeds are less than the Approval Threshold, and no Event of Default
         has occurred and is continuing, Lessor shall pay the Net Proceeds to
         Lessee promptly upon Lessee's completion of the restoration of the
         damaged or destroyed Leased Property. If the Net Proceeds equal or
         exceed the Approval Threshold, and no Event of Default has occurred and
         is continuing, the Net Proceeds shall be made available for restoration
         or repair as provided in Section 14.6. Within fifteen (15) days of the
         receipt of the Net Proceeds of All-Risk Insurance, Lessor shall
         determine in its reasonable judgment, as to the portion thereof, if
         any, attributable to the Lessee's Personal Property that Lessee is not
         required and does not elect to restore or replace, and the portion so
         determined attributable to the Lessee's Personal Property that Lessee
         is not required and does not elect to restore or replace shall be paid
         to Lessee.

         14.2 RESTORATION IN THE EVENT OF DAMAGE OR DESTRUCTION. If all or any
portion of the Leased Properties is damaged by fire or other casualty, Lessee
shall (a) give Lessor Notice of such damage or destruction within five (5)
Business Days of the occurrence thereof, (b) within thirty (30) Business Days of
the occurrence commence the restoration of the Leased Properties and (c)
thereafter diligently proceed to complete such restoration to substantially the
same (or better) condition as the Leased Properties were in immediately prior to
the damage or destruction as quickly as is reasonably possible, but in any event
within one hundred eighty (180) days of the occurrence. Regardless of the
anticipated cost thereof, if the restoration of a Leased Property requires any
modification of structural elements, prior to commencing such modification
Lessee shall obtain Lessor's written approval of the plans and specifications
therefor.

         14.3 RESTORATION OF LESSEE'S PROPERTY. If Lessee is required to restore
the Leased Properties, Lessee shall also concurrently restore any of Lessee's
Personal Property that is integral to the Primary Intended Use of the Leased
Properties at the time of the damage or destruction.

         14.4 NO ABATEMENT OF RENT. Absent termination of this Lease as provided
herein, there shall be no abatement of Rent by reason of any damage to or the
partial or total destruction of any portion of the Leased Properties.

         14.5 WAIVER. Except as provided elsewhere in this Lease, Lessee hereby
waives any statutory or common law rights of termination which may arise by
reason of any damage to or destruction of the Leased Properties.



                                       74
<PAGE>

         14.6 DISBURSEMENT OF INSURANCE PROCEEDS EQUAL TO OR GREATER THAN THE
APPROVAL THRESHOLD. If Lessee restores or repairs the Leased Properties pursuant
to this Article XIV, and if the Net Proceeds equal or exceed the Approval
Threshold, the restoration or repair and disbursement of funds to Lessee shall
be in accordance with the following procedures:

                  14.6.1 Plans and Specifications. The restoration or repair
         work shall be done pursuant to plans and specifications approved by
         Lessor and a certified construction cost statement, to be obtained by
         Lessee from a contractor reasonably acceptable to Lessor, showing the
         total cost of the restoration or repair; to the extent the cost exceeds
         the Net Proceeds, Lessee shall deposit with Lessor the amount of the
         excess cost, and Lessor shall disburse the funds so deposited in
         payment of the costs of restoration or repair before any disbursement
         of Net Proceeds.

                  14.6.2 Construction Funds. Construction Funds shall be made
         available to Lessee upon request, no more frequently than monthly, as
         the restoration and repair work progresses, subject to a ten (10%)
         percent holdback, pursuant to certificates of an architect selected by
         Lessee that, in the judgment of Lessor, reasonably exercised, is highly
         qualified in the design and construction of the type of Facility being
         repaired and is otherwise reasonably acceptable to Lessor, which
         certificates must be in form and substance reasonably acceptable to
         Lessor.

                  14.6.3 Lien Waivers. After the first disbursement to Lessee,
         sworn statements and lien waivers in an amount at least equal to the
         amount of Construction Funds previously paid to Lessee shall be
         delivered to Lessor from all contractors, subcontractors and material
         suppliers covering all labor and materials furnished through the date
         of the previous disbursement.

                  14.6.4 Progress of Work. Lessee shall deliver to Lessor such
         other evidence as Lessor may reasonably request from time to time
         during the course of the restoration and repair, as to the progress of
         the work, compliance with the approved plans and specifications, the
         cost of restoration and repair and the total amount needed to complete
         the restoration and repair, and showing that there are no liens against
         the Leased Properties arising in connection with the restoration and
         repair and that the cost of the restoration and repair at least equals
         the total amount of Construction Funds then disbursed to Lessee
         hereunder.

                  14.6.5 Inadequacy of Construction Funds. If the Construction
         Funds are at any time determined by Lessor to be inadequate for payment
         in full of all labor and materials for the restoration and repair,
         Lessee shall immediately pay the amount of the deficiency to Lessor to
         be held and disbursed as Construction Funds prior to the disbursement
         of any other Construction Funds then held by Lessor.

                  14.6.6 Disbursement. The Construction Funds may be disbursed
         by Lessor to Lessee or to the persons entitled to receive payment
         thereof from Lessee, and such disbursement in either case may be made
         directly or through a third party escrow agent, such as, but not
         limited to, a title insurance company, or its agent, all as Lessor may
         determine in its sole discretion. Provided Lessee is not in default
         hereunder, any



                                       75
<PAGE>

         excess Construction Funds shall be paid to Lessee upon completion of
         the restoration or repair.

                  14.6.7 Lessee Default. If Lessee at any time fails to promptly
         and fully perform the conditions and covenants set out hereinabove in
         this Section 14.6, and the failure is not corrected within ten (10)
         days of written Notice thereof, or if during the restoration or repair
         an Event of Default occurs hereunder, Lessor may, at its option,
         immediately cease making any further payments to Lessee for the
         restoration and repair.

                  14.6.8 Lessor Reimbursement. Lessor may reimburse itself out
         of the Construction Funds for its reasonable expenses incurred in
         administering the Construction Funds and inspecting the restoration and
         repair work, including without limitation attorneys' and other
         professional fees and escrow fees and expenses.

         14.7 NET PROCEEDS PAID TO FACILITY MORTGAGEE. Notwithstanding anything
herein to the contrary, if any Facility Mortgagee is entitled to any Net
Proceeds, or any portion thereof, under the terms of any Facility Mortgage, the
Net Proceeds shall be applied, held and/or disbursed in accordance with the
terms of the Facility Mortgage. Lessor shall make commercially reasonable
efforts to cause the Net Proceeds to be applied to the restoration of the Leased
Properties.

         14.8 TERMINATION OF LEASE. Notwithstanding anything herein to the
contrary, in the event the amount of the Net Proceeds from any one (1)
occurrence, (i) exceeds $80,000,000.00, or (ii) exceeds $20,000,000.00 during
the final two (2) years of the Realty Term, Lessor may exercise its option to
require Lessee to purchase the Leased Properties as set forth in Section 42.2.

                                   ARTICLE XV

                                  CONDEMNATION

         15.1 TOTAL TAKING OR OTHER TAKING WITH EITHER LEASED PROPERTY RENDERED
UNSUITABLE FOR ITS PRIMARY INTENDED USE. If title to the fee of the whole of a
Leased Property is Taken, this Lease shall cease and terminate as to the Leased
Property Taken as of the Date of Taking by the Condemnor and Rent shall be
apportioned as of the termination date, provided, however, that if the Award to
Lessor is less than the Repurchase Price for such Leased Property at the time of
such Award, it shall be a condition precedent to the termination of this Lease
as to such Leased Property that Lessee pay the amount of the deficiency to
Lessor. If title to the fee of less than the whole of a Leased Property is
Taken, but such Leased Property is thereby rendered Unsuitable for Its Primary
Intended Use, Lessee and Lessor shall each have the option by written Notice to
the other, at any time prior to the taking of possession by, or the date of
vesting of title in, the Condemnor, whichever first occurs, to terminate this
Lease with respect to such Leased Property as of the date so determined, in
which event this Lease shall thereupon so cease and terminate as of the earlier
of the date specified in such Notice or the date on which possession is taken by
the Condemnor. If this Lease is so terminated as to a Leased Property, Rent
shall be apportioned as of the termination date, and Lessee shall be deemed to
have elected to purchase such Leased Property for the Repurchase Price therefor.
Lessee shall complete the



                                       76
<PAGE>

purchase within forty-five (45) days of the Taking, and Lessee shall receive
credit against such Repurchase Price for any portion of the Award received by
Lessor.

         15.2 ALLOCATION OF AWARD. The total Award made with respect to all or
any portion of a Leased Property or for loss of Rent, or for loss of business,
shall be solely the property of and payable to Lessor. Nothing contained in this
Lease will be deemed to create any additional interest in Lessee, or entitle
Lessee to any payment based on the value of the unexpired term or so-called
"bonus value" to Lessee of this Lease. Any Award made for the taking of Lessee's
Personal Property that is not integral to the Primary Intended Use of the
Facilities, or for removal and relocation expenses of Lessee in any such
Proceeding shall be payable to Lessee. Any Award made for the taking of Lessee's
Personal Property that is integral to the Primary Intended Use of the Facilities
shall be payable to Lessor. In any Proceeding with respect to an Award, Lessor
and Lessee shall each seek its own Award in conformity herewith, at its own
expense. Notwithstanding the foregoing, Lessee may pursue a claim for loss of
its business, provided that under the laws of the State, such claim will not
diminish the Award to Lessor.

         15.3 PARTIAL TAKING. In the event of a Partial Taking, and Lessee, at
its own cost and expense, shall within sixty (60) days of the taking of
possession by, or the date of vesting of title in, the Condemnor, whichever
first occurs/date on which such Notice is given commence the restoration of the
Leased Premises to a complete architectural unit of the same general character
and condition (as nearly as may be possible under the circumstances) as existed
immediately prior to the Partial Taking, and complete such restoration with all
reasonable dispatch, but in any event within one hundred eighty (180) days of
the date on which such Notice is given. Lessor shall contribute to the cost of
restoration only such portion of the Award as is made therefor. As long as no
Event of Default has occurred and is continuing, if such portion of the Award is
in an amount less than the Approval Threshold, Lessor shall pay the same to
Lessee upon completion of such restoration. As long as no Event of Default has
occurred and is continuing, if such portion of the Award is in an amount equal
to or greater than the Approval Threshold, Lessor shall make such portion of the
Award available to Lessee in the manner provided in Section 14.6 with respect to
Net Proceeds in excess of the Approval Threshold.

         15.4 TEMPORARY TAKING. If there is a Taking of possession or the use of
all or part of a Leased Property, but the fee of such Leased Property is not
Taken in whole or in part, until such Taking of possession or use continues for
more than six (6) months, all the provisions of this Lease shall remain in full
force and effect and the entire amount of any Award made for such Taking shall
be paid to Lessee provided there is then no Event of Default. Upon the
termination of any such period of temporary use or occupancy, Lessee at its sole
cost and expense shall restore the affected Leased Property, as nearly as may be
reasonably possible, to the condition existing immediately prior to such Taking.
If any temporary Taking continues for longer than six (6) months, and fifty
percent (50%) or more of any Leased Property is thereby rendered Unsuitable for
Its Primary Use, this Lease shall cease and terminate as to the affected Leased
Property as of the last day of the sixth (6th) month, but if less than fifty
percent (50%) of such Facility is thereby rendered Unsuitable for Its Primary
Use, Lessee and Lessor shall each have the option by at least sixty (60) day's
prior written Notice to the other, at any time prior to the end of the temporary
taking, to terminate this Lease as to the affected Leased Property of the date
set forth in such Notice, and Lessor shall be entitled to any Award made for the
period of such temporary Taking prior to the date



                                       77
<PAGE>

of termination of the Lease. In no event shall Rent or any Additional Charges
abate during the period of any temporary Taking.

         15.5 AWARDS PAID TO FACILITY MORTGAGEE. Notwithstanding anything herein
to the contrary, if any Facility Mortgagee is entitled to any Award or any
portion thereof, under the terms of any Facility Mortgage such Award shall be
applied, held and/or disbursed in accordance with the terms of the Facility
Mortgage. If the Facility Mortgagee elects to apply the Award to the
indebtedness secured by the Facility Mortgage: (i) if the Award represents an
Award for Partial Taking as described in Section 15.3 above, Lessee shall
restore the affected Facility (as nearly as possible under the circumstances) to
a complete architectural unit of the same general character and condition as
that of the Facility existing immediately prior to such Taking; or (ii) if the
Award represents an Award for a Total Taking as described in Section 15.1 above,
Lessee shall pay to Lessor an amount equal to the Repurchase Price and Lessor
shall transfer its portion of the award and its interest in the affected Leased
Property to Lessee. In any such restoration or purchase, Lessee shall receive
full credit for any portion of any award retained by Lessor and the Facility
Mortgagee.

                                   ARTICLE XVI

                       LESSOR'S RIGHTS ON EVENT OF DEFAULT

         16.1 LESSOR'S RIGHTS UPON AN EVENT OF DEFAULT. If an Event of Default
shall occur Lessor may terminate this Lease by giving Lessee a Notice of
Termination, and in such event, the Term shall end and all rights of Lessee
under this Lease shall cease on the Termination Date. The Notice of Termination
shall be in lieu of and not in addition to any notice required by the laws of
any State as a condition to bringing an action for possession of the Leased
Premises or to recover damages under this Lease. In addition to Lessor's right
to terminate this Lease, Lessor shall have all other rights set forth in this
Lease and all remedies available at law and in equity. Lessee shall, to the
extent permitted by law, pay as Additional Charges all costs and expenses
incurred by or on behalf of Lessor, including, without limitation, reasonable
attorneys' fees and expenses (whether or not litigation is commenced, and if
litigation is commenced, including fees and expenses incurred in any appeals and
post judgment Proceeding) as a result of any default of Lessee hereunder.

         16.2 CERTAIN REMEDIES. If an Event of Default shall occur, whether or
not this Lease has been terminated pursuant to Section 16.1, if required to do
so by Lessor, Lessee shall immediately surrender to Lessor the Leased Properties
to Lessor in the condition required by Section 9.1.5 and quit the same, and
Lessor may enter upon and repossess the Leased Properties by reasonable force,
any summary Proceeding, ejectment or otherwise, and may remove Lessee and all
other persons and any and all personal properties from the Leased Properties,
subject to any Legal Requirements. In addition to all other remedies set forth
or referred to in this Article XVI.

         16.3 DAMAGES. Neither (i) the termination of this Lease pursuant to
Section 16.1, (ii) the repossession of the Leased Properties, (iii) the failure
of Lessor to relet the Leased Properties, (iv) the reletting of all or any
portion thereof, nor (v) the failure of Lessor to collect or receive any rentals
due upon such any reletting, shall relieve Lessee of its liability and
obligations hereunder, all of which shall survive any such termination,
repossession or reletting. In the event this Lease is terminated by Lessor,
Lessee shall forthwith pay to Lessor



                                       78
<PAGE>

all accrued and future Rent due and payable with respect to the Leased
Properties to and including the Realty Expiration Date all of which shall become
immediately due and payable, including without limitation all interest and late
charges payable under Section 3.3 with respect to any late payment of such Rent,
and all Additional Charges.

         16.4 LESSEE'S OBLIGATION TO PURCHASE. If an Event of Default occurs,
Lessor may require Lessee to purchase the Leased Properties on the first Rent
payment date occurring after the date of receipt of, or such later date as may
be specified in, a Notice from Lessor requiring such purchase. The purchase
price of the Leased Properties shall be an amount equal to the then Repurchase
Price of the Leased Properties, plus all Rent then due and payable (excluding
the installment of Base Rent due on the purchase date) as of the date of
purchase. If Lessor exercises such right, Lessor shall convey the Leased
Properties to Lessee on the date fixed therefor upon receipt of such purchase
price and this Lease shall thereupon terminate. Any purchase by Lessee of the
Leased Properties pursuant to this Section shall be credited against the damages
specified in Section 16.3.

         16.5 WAIVER. If this Lease is terminated pursuant to Section 16.1,
Lessee waives, to the extent permitted by applicable law, (i) any right of
reentry, repossession or redesignation, (ii) any right to a trial by jury in the
event of any summary Proceeding to enforce the remedies set forth in this
Article XVI, and (iii) the benefit of any laws now or hereafter in force
exempting property from liability for rent or for debt. Acceptance of Rent at
any time does not prejudice or remove any right of Lessor as to any right or
remedy. No course of conduct shall be held to bar Lessor from literal
enforcement of the terms of this Lease.

         16.6 APPLICATION OF FUNDS. Any payments received by Lessor under any of
the provisions of this Lease during the existence or continuance of any Event of
Default shall be applied to Lessee's obligations in the order which Lessor may
determine or as may be prescribed by law.

         16.7 BANKRUPTCY.

                  16.7.1 No Transfer. Neither Lessee's interest in this Lease,
         nor any estate hereby created in Lessee's interest nor any interest
         herein or therein, shall pass to any trustee or receiver or assignee
         for the benefit of creditors or otherwise by operation of law, except
         as may specifically be provided pursuant to the Bankruptcy Code (11
         U.S.C. Section 101 et. seq.), as the same may be amended from time to
         time.

                  16.7.2 Rights and Obligations Under the Bankruptcy Code.

                           Payment of Rent. Upon filing of a petition by or
                           against Lessee under the Bankruptcy Code, Lessee, as
                           debtor and as debtor-in-possession, and any trustee
                           who may be appointed with respect to the assets of or
                           estate in bankruptcy of Lessee, agree to pay monthly
                           in advance on the first day of each month, as
                           reasonable compensation for the use and occupancy of
                           the Leased Properties, an amount equal to all Rent
                           due pursuant to this Lease.



                                       79
<PAGE>

                  OTHER CONDITIONS AND OBLIGATIONS. INCLUDED WITHIN AND IN
ADDITION TO ANY OTHER CONDITIONS OR OBLIGATIONS IMPOSED UPON LESSEE OR ITS
SUCCESSOR IN THE EVENT OF THE ASSUMPTION AND/OR ASSIGNMENT OF THE LEASE ARE THE
FOLLOWING: (i) THE CURE OF ANY MONETARY DEFAULTS AND REIMBURSEMENT OF PECUNIARY
LOSS WITHIN NOT MORE THAN THIRTY (30) DAYS OF ASSUMPTION AND/OR ASSIGNMENT; (ii)
THE DEPOSIT OF AN ADDITIONAL AMOUNT EQUAL TO NOT LESS THAN THREE (3) MONTHS'
BASE RENT, WHICH AMOUNT IS AGREED TO BE A NECESSARY AND APPROPRIATE DEPOSIT TO
SECURE THE FUTURE PERFORMANCE UNDER THE LEASE OF LESSEE OR ITS ASSIGNEE; (iii)
THE CONTINUED USE OF THE LEASED PROPERTIES FOR THE PRIMARY INTENDED USE; AND
(iv) THE PRIOR WRITTEN CONSENT OF ANY FACILITY MORTGAGEE.

         16.8 LESSOR'S RIGHT TO CURE LESSEE'S DEFAULT. If Lessee fails to make
any payment or perform any act required to be made or performed under this
Lease, and fails to cure the same within any grace or cure period applicable
thereto, upon such Notice as may be expressly required herein (or, if Lessor
reasonably determines that the giving of such Notice would risk loss to the
Leased Properties or cause damage to Lessor, upon such Notice as is practical
under the circumstances), and without waiving or releasing any obligation of
Lessee, Lessor may make such payment or perform such act for the account and at
the expense of Lessee, and may, to the extent permitted by law, enter upon the
Leased Properties for such purpose and take all such action thereon as, in
Lessor's sole opinion, may be necessary or appropriate. No such entry shall be
deemed an eviction of Lessee. All amounts so paid by Lessor and all costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses) so incurred, together with the late charge and interest provided for
in Section 3.3 thereon, shall be paid by Lessee to Lessor on demand. The
obligations of Lessee and rights of Lessor contained in this Article shall
survive the expiration or earlier termination of this Lease.

                                  ARTICLE XVII

              ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS

         17.1 ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS. Lessee,
Guarantor, and WCG each jointly and severally represent, warrant and covenant
that:

                  17.1.1 Organization; Powers. Both Lessee and Guarantor are
         duly organized, validly existing and in good standing under the laws of
         the jurisdiction of its organization, has all requisite power and
         authority to carry on its business as now conducted and, except where
         the failure to do so, individually or in the aggregate, could not
         reasonably be expected to result in a Material Adverse Effect, is
         qualified to do business in, and is in good standing in, every
         jurisdiction where such qualification is required.

                  17.1.2 Authorization; Enforceability. The execution of and
         performance under this Lease is within each of the Lessee's and
         Guarantor' entity powers and has been duly authorized by all necessary
         member, corporate and, if required, stockholder action as the case may
         be. This Lease has been duly executed and delivered by each of the
         Lessee and Guarantor and constitutes a legal, valid and binding
         obligation of the Lessee and Guarantor (as the case may be),
         enforceable in accordance with its terms, subject to applicable
         bankruptcy, insolvency, reorganization, moratorium or other laws



                                       80
<PAGE>

         affecting creditors' rights generally and subject to general principles
         of equity, regardless of whether considered in a Proceeding in equity
         or at law.

                  17.1.3 Governmental Approvals; No Conflicts. The Lease or any
         of the other documents contemplated herein, (a) does not require any
         consent or approval of, registration or filing with, or any other
         action by, any Governmental Authority, except such as have been
         obtained or made and are in full force and effect and except filings
         necessary to perfect Lessor's rights under this Lease, (b) will not
         violate any applicable law or regulation or the charter, by-laws or
         other organizational documents of Lessee or Guarantor or any order of
         any Governmental Authority, (c) will not violate or result in a default
         under any indenture, agreement or other instrument binding upon Lessee
         or Guarantor or any of their respective assets, or give rise to a right
         thereunder to require any payment to be made by Lessee or Guarantor,
         and (d) will not result in the creation or imposition of any
         Encumbrance on any asset of Lessee or Guarantor, except any Encumbrance
         created by or in accordance with the Lease.

                  17.1.4 Financial Condition; No Material Adverse Change.
         Guarantor has heretofore furnished to Lessor consolidated balance sheet
         and statements of operations, stockholders equity and cash flows as of
         and for the fiscal years ended December 31, 1998, December 31, 1999 and
         December 31, 2000, audited by Ernst & Young LLP, independent public
         accountants. Such financial statements present fairly, in all material
         respects, the financial position and results of operations and cash
         flow of Guarantor as of such dates and for such periods in accordance
         with GAAP.

                                    17.1.4.1 Pro Formas. Guarantor has
                  heretofore furnished to the Lessor its pro forma consolidated
                  balance sheet as of December 31, 2000 and projected pro forma
                  statements of operations and cash flows for the fiscal year
                  ended December 31, 2001. Such projected pro forma consolidated
                  balance sheets and statements of operations and cash flows (i)
                  have been prepared in good faith based on the same assumptions
                  used to prepare the pro forma financial statements (which
                  assumptions are believed by Lessee and Guarantor to be
                  reasonable), (ii) are based on the best information available
                  to Lessee and Guarantor after due inquiry, (iii) present
                  fairly, in all material respects, the pro forma financial
                  position of Lessee and Guarantor as of such date and for such
                  periods.

                                    17.1.4.2 Material Contingent Liabilities.
                  Except as disclosed in the financial statements referred to
                  above, neither the Lessee or Guarantor has, as of the
                  Effective Date, any material contingent liabilities, unusual
                  material long-term commitments or unrealized material losses.

                                    17.1.4.3 Material Adverse Change. Since
                  December 31, 2000, there has been no Material Adverse Change.

                  17.1.5 Properties. Lessee and Guarantor each has good title
         to, or valid leasehold interests in, all its real and personal property
         material to its business (including the Leased Properties), except for
         minor defects in title that do not interfere with its ability to
         conduct its business as currently conducted or to utilize such



                                       81
<PAGE>

         properties for their intended purposes. None of the properties and
         assets of Lessee or Guarantor is subject to any Encumbrance other than
         Permitted Encumbrances, and Encumbrances created by or in connection
         with this Lease.

                                    17.1.5.1 Intellectual Property. Lessee and
                  Guarantor each owns, or is licensed to use, all trademarks,
                  trade names, copyrights, patents and other intellectual
                  property material to its business, and the use thereof by
                  Lessee and Guarantor does not infringe upon the rights of any
                  other Person, except for any such infringements that,
                  individually or in the aggregate, could not reasonably be
                  expected to result in a Material Adverse Effect.

                  17.1.6 Litigation and Environmental Matters. There is no
         action, suit or Proceeding by or before any arbitrator or Governmental
         Authority pending against or, to the knowledge of Lessee or Guarantor,
         threatened against or affecting Lessee or Guarantor (i) as to which
         there is a reasonable possibility of an adverse determination and that,
         if adversely determined, could reasonably be expected, individually or
         in the aggregate, to result in a Material Adverse Effect or (ii) that
         involve this Lease or any of the other documents contemplated herein.

                                    17.1.6.1 Environmental Compliance. Except
                  with respect to other matters that, individually or in the
                  aggregate, could not reasonably be expected to result in a
                  Material Adverse Effect, neither Lessee nor Guarantor (i) has
                  failed to comply with any Environmental Law or to obtain,
                  maintain or comply with any permit, license or other approval
                  required under any Environmental Law, (ii) has become subject
                  to any liability with respect to any Environmental Law, (iii)
                  has received written notice of any claim with respect to any
                  Environmental Law or (iv) knows of any basis for any
                  violations of any Environmental Law or any release, threatened
                  release or exposure to any Hazardous Materials that is likely
                  to form the basis of any liability under any Environmental
                  Law.

                  17.1.7 Compliance with Laws and Agreements. Lessee and
         Guarantor each is in compliance with all laws, regulations and orders
         of any Governmental Authority applicable to it or its property and all
         indentures, agreements and other instruments binding upon it or its
         property, except where the failure to do so, individually or in the
         aggregate, could not reasonably be expected to result in a Material
         Adverse Effect. No Default has occurred and is continuing.

                  17.1.8 Investment and Holding Company Status. Neither Lessee
         or Guarantor is (a) an "investment company" as defined in, or subject
         to regulation under, the Investment Company Act of 1940 or (b) a
         "holding company" as defined in, or subject to regulation under, the
         Public Utility Holding Company Act of 1935.

                  17.1.9 Taxes. Lessee, Guarantor, and WCG each has timely filed
         or caused to be filed all tax returns and reports required to have been
         filed and has paid or caused to be paid all taxes required to have been
         paid by or with respect to it, except (a) taxes that are being
         contested in good faith by an appropriate Proceeding and for which
         Lessee or Guarantor, as applicable, has set aside on its books adequate
         reserves or (b)



                                       82
<PAGE>

         to the extent that the failure to do so could not reasonably be
         expected to result in a Material Adverse Effect.

                  17.1.10 ERISA. No ERISA Event has occurred or is reasonably
         expected to occur that, when taken together with all other such ERISA
         Events for which liability is reasonably expected to occur, could
         reasonably be expected to result in a Material Adverse Effect. The
         present value of all accumulated benefit obligations under each Plan
         (based on the assumptions used for purposes of Statement of Financial
         Accounting Standards No. 87) did not, as of the date of the most recent
         financial statements reflecting such amounts, exceed by more than
         $25,000,000 the fair market value of the assets of such Plan, and the
         present value of all accumulated benefit obligations of all underfunded
         Plans (based on the assumptions used for purposes of Statement of
         Financial Accounting Standards No. 87) did not, as of the date of the
         most recent financial statements reflecting such amounts, exceed by
         more than $25,000,000 the fair market value of the assets of all such
         underfunded Plans.

                  17.1.11 Disclosure. Lessee and Guarantor have disclosed to the
         Lessor all agreements, instruments and corporate or other restrictions
         to which Lessee or Guarantor is subject, and all other matters known to
         any of them, that, individually or in the aggregate, could reasonably
         be expected to result in a Material Adverse Effect. None of the
         reports, financial statements, certificates or other information
         furnished by or on behalf of Lessee or Guarantor in connection with the
         negotiation of this Lease or delivered hereunder (as modified or
         supplemented by other information so furnished) contains any material
         misstatement of fact or omits to state any material fact necessary to
         make the statements therein, in the light of the circumstances under
         which they were made, not misleading; provided that, with respect to
         projected financial information, Lessee and Guarantor represent only
         that such information was prepared in good faith based upon assumptions
         believed to be reasonable at the time.

                  17.1.12 Insurance. As of the Effective Date, all premiums in
         respect of all insurance described in Article XIII have been paid.

                  17.1.13 Labor Matters. As of the Effective Date, there are no
         strikes, lockouts or slowdowns against Lessee or Guarantor pending or,
         to the knowledge of Lessee or Guarantor, threatened. The hours worked
         by and payments made to employees of Lessee and Guarantor have not been
         in violation of the Fair Labor Standards Act or any other applicable
         Federal, state, local or foreign law dealing with such matters. All
         payments due from Lessee or Guarantor, or for which any claim may be
         made against Lessee or Guarantor, on account of wages and employee
         health and welfare insurance and other benefits, have been paid or
         accrued as a liability on the books of Lessee or Guarantor. The
         execution of this Lease has not and will not give rise to any right of
         termination or right of renegotiation on the part of any union under
         any collective bargaining agreement by which Lessee or Guarantor is
         bound.

                  17.1.14 Solvency. Immediately after the Effective Date and
         immediately following the purchase of the Leased Properties by Lessor
         pursuant to the Purchase Agreement made on the Effective Date and after
         giving effect to the application of the Purchase Price, (a) the fair
         value of the assets of Lessee, Guarantor, and WCG will exceed its debts
         and liabilities, subordinated, contingent or otherwise; (b) the present



                                       83
<PAGE>

         fair saleable value of the property of Lessee, Guarantor and WCG will
         be greater than the amount that will be required to pay the probable
         liability of its debts and other liabilities, subordinated, contingent
         or otherwise, as such debts and other liabilities become absolute and
         matured; (c) Lessee, Guarantor, and WCG each will be able to pay its
         debts and liabilities, subordinated, contingent or otherwise, as such
         debts and liabilities become absolute and matured; and (d) Lessee,
         Guarantor, and WCG each will not have unreasonably small capital with
         which to conduct the business in which it is engaged as such business
         is now conducted and is proposed to be conducted following the
         Effective Date.

                  17.1.15 No Burdensome Restrictions. No contract, lease,
         agreement or other instrument to which Lessee or Guarantor is a party
         or by which any of its property is bound or affected, no charge,
         corporate restriction, judgment, decree or order and no provision of
         applicable law or governmental regulation could reasonably be expected
         to have Material Adverse Effect.

                  17.1.16 Representations True and Correct. As of the dates when
         made and as of the Effective Date, each representation and warranty of
         Lessee or Guarantor thereto contained in the Purchase Agreement, this
         Lease or any other documents executed in connection herewith, is true
         and correct.

                                  ARTICLE XVIII

                       OCCUPANCY AFTER EXPIRATION OF TERM

         18.1 HOLDING OVER. If Lessee remains in possession of all or any of the
Leased Properties after the expiration of the Term or earlier termination of
this Lease, such possession shall be as a month-to-month tenant, and throughout
the period of such possession Lessee shall pay as Rent for each month one
hundred fifty percent (150%) times the sum of: (i) one-twelfth (1/12th) of the
Base Rent payable during the Lease Year in which such expiration or termination
occurs, plus (ii) all Additional Charges accruing during the month, plus (iii)
any and all other sums payable by Lessee pursuant to this Lease. During such
period of month-to-month tenancy, Lessee shall be obligated to perform and
observe all of the terms, covenants and conditions of this Lease, but shall have
no rights hereunder other than the right, to the extent given by applicable law
to month-to-month tenancies, to continue its occupancy and use of the Leased
Properties until the month-to-month tenancy is terminated. Nothing contained
herein shall constitute the consent, express or implied, of Lessor to the
holding over of Lessee after the expiration or earlier termination of this
Lease.

         18.2 INDEMNITY. If Lessee fails to surrender the Leased Properties in a
timely manner and in accordance with the provisions of Section 9.1.5 upon the
expiration or termination of this Lease, in addition to any other liabilities to
Lessor accruing therefrom, Lessee shall defend, indemnify and hold Lessor, its
principals, officers, directors, agents and employees harmless from loss or
liability resulting from such failure, including, without limiting the
generality of the foregoing, loss of rental with respect to any new lease in
which the rental payable thereunder exceeds the Rent paid by Lessee pursuant to
this Lease during Lessee's hold-over and any claims by any proposed new tenant
founded on such failure. The provisions of this Section 18.2 shall survive the
expiration or termination of this Lease.


                                       84
<PAGE>

                                   ARTICLE XIX

                          SUBORDINATION AND ATTORNMENT

         19.1 SUBORDINATION. Upon written request of Lessor, any Facility
Mortgagee, or the beneficiary of any deed of trust of Lessor, Lessee will enter
into a written agreement subordinating its rights pursuant to this Lease (i) to
the lien of any mortgage, deed of trust or the interest of any lease in which
Lessor is the lessee and to all modifications, extensions, substitutions thereof
(or, at Lessor's option, agree to the subordination to this Lease of the lien of
said mortgage, deed of trust or the interest of any lease in which Lessor is the
lessee), and (ii) to all advances made or hereafter to be made thereunder. In
connection with any such request, Lessor shall provide Lessee with a
"Non-Disturbance Agreement" reasonably acceptable to such mortgagee, beneficiary
or lessor providing that if such mortgagee, beneficiary or lessor acquires the
Leased Properties by way of foreclosure or deed in lieu of foreclosure, such
mortgagee, beneficiary or lessor will not disturb Lessee's possession under this
Lease and will recognize Lessee's rights hereunder if and for so long as no
Event of Default has occurred and is continuing. Lessee agrees to consent to
amend this Lease as reasonably required by the Facility Mortgagee, and shall be
deemed to have unreasonably withheld or delayed its consent if the required
changes do not materially (i) alter the economic terms of this Lease, (ii)
diminish the rights of Lessee, or (iii) increase the obligations of Lessee,
provided that Lessee shall also have received the non-disturbance agreement
provided for in this Article.

         19.2 ATTORNMENT. If any Proceeding is brought for foreclosure, or if
the power of sale is exercised under any mortgage or deed of trust made by
Lessor encumbering the Leased Properties, or if a lease in which Lessor is the
lessee is terminated, Lessee shall attorn to the purchaser or lessor under such
lease upon any foreclosure or deed in lieu thereof, sale or lease termination
and recognize the purchaser or lessor as Lessor under this Lease, provided the
purchaser or lessor acquires and accepts the Leased Properties subject to this
Lease.

         19.3 LESSEE'S CERTIFICATE. Lessee shall, upon not less than ten (10)
days prior Notice from Lessor, execute, acknowledge and deliver to Lessor,
Lessee's Certificate containing then-current facts. It is intended that any
Lessee's Certificate delivered pursuant hereto may be relied upon by Lessor, any
prospective tenant or purchaser of the Leased Properties, any mortgagee or
prospective mortgagee, and by any other party who may reasonably rely on such
statement. Lessee's failure to deliver the Lessee's Certificate within such time
shall constitute an Event of Default. In addition, Lessee hereby authorizes
Lessor to execute and deliver a certificate to the effect (if true) that Lessee
represents and warrants that (i) this Lease is in full force and effect without
modification, and (ii) Lessor is not in breach or default of any of its
obligations under this Lease.



                                       85
<PAGE>

                                   ARTICLE XX

                                  RISK OF LOSS

         20.1 RISK OF LOSS. During the Term, the risk of loss or of decrease in
the enjoyment and beneficial use of the Leased Properties in consequence of the
damage or destruction thereof by fire, the elements, casualties, thefts, riots,
wars or otherwise, or in consequence of foreclosures, attachments, levies or
executions is assumed by Lessee, and, in the absence of gross negligence,
willful misconduct or material breach of this Lease by Lessor, Lessor shall in
no event be answerable or accountable therefor nor shall any of the events
mentioned in this Article XX entitle Lessee to any abatement of Rent.

                                   ARTICLE XXI

                                 INDEMNIFICATION

         21.1 INDEMNIFICATION. Notwithstanding the existence of any insurance or
self-insurance provided for in Article XIII, and without regard to the policy
limits of any such insurance or self-insurance, Lessee shall protect, indemnify,
save harmless and defend Lessor, its principals, officers, directors, agents,
employees, parents, and affiliates from and against all liabilities,
obligations, claims, damages, penalties, causes of action, costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses), to the
extent permitted by law, imposed upon or incurred by or asserted against Lessor
by reason of: (i) any accident, injury to or death of persons or loss of or
damage to property occurring on or about the Leased Properties or adjoining
sidewalks, including without limitation any claims of malpractice, (ii) any use,
misuse, non-use, condition, maintenance or repair by Lessee of the Leased
Properties, (iii) the failure to pay any Impositions, (iv) any failure on the
part of Lessee to perform or comply with any of the terms of this Lease, and (v)
the nonperformance of any contractual obligation, express or implied, assumed or
undertaken by Lessee or any party in privity with Lessee with respect to the
Leased Properties or any business or other activity carried on with respect to
the Leased Properties during the Term or thereafter during any time in which
Lessee or any such other party is in possession of the Leased Properties or
thereafter to the extent that any conduct by Lessee or any such person (or
failure of such conduct thereby if the same should have been undertaken during
such time of possession and leads to such damage or loss) causes such loss or
claim. Any amounts which become payable by Lessee under this Section shall be
paid within ten (10) days after liability therefor on the part of Lessee is
determined by litigation or otherwise, and if not timely paid, shall bear
interest (to the extent permitted by law) at the Overdue Rate from the date of
such determination to the date of payment. Nothing herein shall be construed as
indemnifying Lessor against its own grossly negligent acts or omissions or
willful misconduct. Lessee's liability under this Article shall survive the
expiration or any earlier termination of this Lease.



                                       86
<PAGE>

                                  ARTICLE XXII

                            RESTRICTIONS ON TRANSFERS

         22.1 GENERAL PROHIBITION AGAINST TRANSFERS. Lessee acknowledges that a
significant inducement to Lessor to enter into this Lease with Lessee on the
terms set forth herein is the combination of financial strength, experience,
skill and reputation possessed by the Lessee named herein, the Person or Persons
in Control of Lessee and Guarantor, together with Lessee's assurance that Lessor
shall have the unrestricted right to approve or disapprove any proposed
Transfer. Therefore, there shall be no Transfer except as specifically permitted
by this Lease or consented to in advance by Lessor in writing. Lessee agrees
that Lessor shall have the right to withhold its consent to any proposed
Transfer on the basis of Lessor's judgment as to the effect the proposed
Transfer may have on the Leased Properties and the future performance of the
obligations of the Lessee under this Lease, whether or not Lessee agrees with
such judgment. Any attempted Transfer which is not specifically permitted by
this Lease or consented to by Lessor in advance in writing shall be null and
void and of no force and effect whatsoever. In the event of a Transfer, Lessor
may collect Rent and other charges from the assignee, subtenant or other
occupant or transferee (any and all of which are herein referred to as a
"Transferee") and apply the amounts collected to the Rent and other charges
herein reserved, but no Transfer or collection of Rent and other charges shall
be deemed to be a waiver of Lessor's rights to enforce Lessee's covenants or an
acceptance of the Transferee as Lessee, or a release of the Lessee named herein
from the performance of its covenants. Notwithstanding any Transfer, Lessee and
Guarantor shall remain fully liable for the performance of all terms, covenants
and provisions of this Lease. Any violation of this Lease by any Transferee
shall be deemed to be a violation of this Lease by Lessee.

         22.2 CONSENT TO CERTAIN TRANSFERS. Lessor acknowledges that Lessee, as
sublessor, intends to enter into subleases with the parties identified on
SCHEDULE 22.2, as sublessees, with respect to the Facilities identified on such
Schedule. Lessor consents to such subleases provided that all such sublease
agreements satisfy all of the requirements set forth in this Lease and otherwise
are satisfactory in form and substance to Lessor. The conditions set forth in
the immediately preceding sentence shall be deemed satisfied as to any sublease
with respect to which Lessor has executed and delivered a Consent and
Non-Disturbance Agreement in substantially the form of EXHIBIT F.
Notwithstanding any such sublease, Lessee and Guarantor shall remain fully
liable for the performance of all terms, covenants and provisions of this Lease.

         22.3 SUBORDINATION AND ATTORNMENT. Lessee shall insert in any sublease
permitted by Lessor provisions to the effect that (i) such sublease is subject
and subordinate to all of the terms and provisions of this Lease and to the
rights of Lessor hereunder, (ii) if this Lease terminates before the expiration
of such sublease, the sublessee thereunder will, at Lessor's option, attorn to
Lessor and waive any right the sublessee may have to terminate the sublease or
to surrender possession thereunder, as a result of the termination of this
Lease, and (iii) if the sublessee receives a written Notice from Lessor or
Lessor's assignee, if any, stating that Lessee is in default under this Lease,
the sublessee shall thereafter be obligated to pay all rentals accruing under
the sublease directly to the party giving such Notice, or as such party may
direct, which payments shall be credited against the amounts owing by Lessee
under this Lease.



                                       87
<PAGE>

                                  ARTICLE XXIII

                        LESSEE AND GUARANTOR INFORMATION

         23.1 OFFICER'S CERTIFICATES AND FINANCIAL STATEMENTS. Lessee and
Guarantor shall furnish or cause to be furnished to Lessor:

                  23.1.1 Fiscal Year Information. (i) within ninety (90) days
         after the end of each fiscal year of WCG, its audited consolidated
         balance sheets and related audited consolidated statements of
         operations, stockholders' or members' equity and cash flows as of the
         end of and for such fiscal year (including segment reporting with
         respect to each of WCG's business segments consistent), setting forth
         in each case in comparative form the figures for the previous fiscal
         year, all reported on by Ernst & Young LLP or other independent public
         accountants of recognized national standing, and otherwise reasonably
         satisfactory to Lessor (without a "going concern" or like qualification
         or exception and without any qualification or exception as to the scope
         of such audit) to the effect that such consolidated financial
         statements present fairly in all material respects the financial
         condition and results of operations of WCG on a consolidated basis in
         accordance with GAAP consistently applied, and (ii) within ninety (90)
         days after the end of each fiscal year of WCG, supplemental unaudited
         balance sheets and related unaudited statements of operations,
         stockholders' or members' equity and cash flows as of the end of and
         for such fiscal year, setting forth in tabular form in each case the
         figures for the previous year, for WCG and the consolidating
         adjustments with respect thereto.

                 23.1.2 Quarterly Information. (i) within forty-five (45) days
         after the end of each of the first three (3) fiscal quarters of each
         fiscal year of WCG, unaudited consolidated and consolidating balance
         sheets and related consolidated and consolidating statements of
         operations, stockholders' or members' equity and cash flows of
         Guarantor and WCG as of the end of and for such fiscal quarter and the
         then elapsed portion of the fiscal year, setting forth in each case in
         comparative form the figures for the corresponding period or periods of
         the previous fiscal year (or in the case of the balance sheet, as of
         the end of the previous fiscal year), all certified by an Officer's
         Certificate as presenting fairly in all material respects the financial
         condition and results of operations of Guarantor and WCG on a
         consolidated basis in accordance with GAAP consistently applied,
         subject to normal year-end audit adjustments and the absence of
         footnotes and (ii) within forty-five (45) days after the end of each of
         the first three (3) fiscal quarters of each fiscal year of Guarantor,
         unaudited balance sheets and related statements of operations,
         stockholders' or members' equity and cash flow of Guarantor as of the
         end of and for such fiscal quarter and the then elapsed portion of the
         fiscal year, setting forth in each case in comparative form the figures
         for the corresponding period or periods of the previous fiscal year
         (or, in the case of the balance sheet, as of the end of the previous
         fiscal year) all certified by an Officer's Certificate as presenting
         fairly in all material respects the financial condition and results of
         operations of Guarantor in accordance with GAAP consistently applied,
         subject to normal year-end audit adjustments and the absence of
         footnotes.



                                       88
<PAGE>

                  23.1.3 Officers Certificate. Concurrently with any delivery of
         financial statements under Sections 23.1.1 and 23.1.2, and at any time
         and from time to time, within ten (10) days of Lessor's request, an
         Officer's Certificate of the Lessee (i) certifying as to whether an
         Event of Default has occurred and, if an Event of Default has occurred,
         specifying the details thereof and any action taken or proposed to be
         taken with respect thereto, (ii) setting forth in reasonable detail
         calculations demonstrating compliance with Sections 8.4.2 through 8.4.6
         (iii) stating whether any change in GAAP or in the application thereof
         has occurred since the date of audited financial statements referred to
         in Section 17.1.4 and, if any such change has occurred, specifying the
         effect of such change on the financial statements accompanying such
         Officer's Certificate, and (iv) certifying as to the compliance by
         Lessee and Guarantor, with the provisions of this Lease, and such other
         matters set forth in this Lease or the Credit Agreement, as Lessor may
         specify.

                  23.1.4 Accounting Firm Certificate. Concurrently with any
         delivery of financial statements under Section 23.1.1, a certificate of
         the accounting firm that reported on such financial statements stating
         whether they obtained knowledge during the course of their examination
         of such financial statements of any Event of Default (which certificate
         may be limited to the extent required by accounting rules or
         guidelines).

                  23.1.5 Budget. As soon as practicable after approval by the
         Board of Directors of WCG, and in any event not later than one hundred
         and twenty (120) days after the commencement of each fiscal year of
         WCG, a consolidated and consolidating budget of WCG for such fiscal
         year and a consolidated budget of the Lessee for such fiscal year and,
         promptly when available, any significant revisions of any such budget.

                  23.1.6 SEC Filings. Promptly after the same become publicly
         available, copies of all periodic and other reports, proxy statements
         and other materials filed by WCG or any of its Affiliates with the SEC,
         or any Governmental Authority succeeding to any or all of the functions
         of the SEC, or with any national securities exchange, or distributed by
         WCG to its shareholders generally, as the case may be, except to the
         extent any such report, proxy statement or other material is available
         electronically on a publicly-accessible website.

                  23.1.7 Other Information. Promptly following any request
         therefor, such other information regarding the operations, business
         affairs and financial condition of Lessee, Guarantor or WCG, or
         compliance with the terms of this Lease or any of the documents
         contemplated herein, as Lessor may reasonably request.

                  23.1.8 Credit Agreement Information. To the extent not
         previously covered by the provisions of this Section 23.1, copies of
         all information provided by Guarantor, WCG or any Affiliates of either
         pursuant to the Credit Agreement, contemporaneously with its delivery
         pursuant thereto.

         23.2 PUBLIC OFFERING INFORMATION. Lessee, Guarantor and WCG,
specifically agree that subject to the approval of Lessee, which approval shall
not be unreasonably withheld or delayed, Lessor may include financial
information and information concerning the operation of the Facilities in
offering memoranda or prospectus, or similar



                                       89
<PAGE>

publications in connection with syndications or public offerings of Lessor's
securities or interests, and any other reporting requirements under applicable
Federal and State Laws, including those of any successor to Lessor. Lessee,
Guarantor, and WCG, agree to provide such other reasonable information necessary
with respect to Lessee, Guarantor, and WCG, and the Leased Properties to
facilitate a public offering or to satisfy SEC or regulatory disclosure
requirements. Upon request of Lessor, Lessee shall notify Lessor of any
necessary corrections to information Lessor proposes to publish within a
reasonable period of time (not to exceed ten (10) days) after being informed
thereof by Lessor.

         23.3 NOTICES OF MATERIAL EVENTS. Upon its respective knowledge
thereof, Lessee and Guarantor each will furnish to Lessor prompt written notice
of the following. Each notice delivered under this Section shall be accompanied
by a statement of an Officer's Certificate, duly executed, setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.

                  23.3.1 Event of Default. The occurrence of any Event of
         Default.

                  23.3.2 Action, Suit or Proceeding. The filing or commencement
         of any action, suit or Proceeding by or before any arbitrator or
         Governmental Authority against or affecting Lessee, Guarantor or WCG or
         any Affiliate thereof that could reasonably be expected to result in a
         Material Adverse Effect.

                  23.3.3 ERISA Event. The occurrence of any ERISA Event that,
         alone or together with any other ERISA Events that have occurred, could
         reasonably be expected to result in a Material Adverse Effect.

                  23.3.4 Other Matters. Any other development that results in,
         or could reasonably be expected to result in, a Material Adverse
         Effect.

                                  ARTICLE XXIV

                                   INSPECTION

         24.1 LESSOR'S RIGHT TO INSPECT. Lessee shall permit Lessor and its
authorized representatives to inspect the Leased Properties and Lessee's books
and records pertaining thereto during normal business hours at any time upon
reasonable Notice. Notwithstanding the foregoing, Lessee is and shall be in
exclusive control and possession of the Leased Properties as provided herein,
and Lessor shall not in any event whatsoever be liable for any injury or damage
to any property or to any person happening on or about the Leased Properties nor
for any injury or damage to any property of Lessee, or of any other person,
except in the event any such injury or damage is the direct result of the gross
negligence or malfeasance of Lessor. The right of Lessor to enter and inspect
the Leased Properties are for the purpose of enabling Lessor to be informed as
to whether or not Lessee is complying with the terms, covenants and conditions
of this Lease and to do such acts as Lessee may have failed to do, provided
however, in no event shall Lessor have any obligation whatsoever to so perform
such acts.



                                       90
<PAGE>

                                   ARTICLE XXV

                                    NO WAIVER

         25.1 NO WAIVER. No failure by Lessor to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach hereof, and no acceptance of full or partial payment of
Rent during the continuance of any such breach, shall constitute a waiver of any
such breach or of any such term. No waiver of any breach shall affect or alter
this Lease, which shall continue in full force and effect with respect to any
other then existing or subsequent breach.

                                  ARTICLE XXVI

                               REMEDIES CUMULATIVE

         26.1 REMEDIES CUMULATIVE. To the extent permitted by law, each legal,
equitable or contractual right, power and remedy of Lessor now or hereafter
provided either in this Lease or by statute or otherwise shall be cumulative and
concurrent and shall be in addition to every other right, power and remedy and
the exercise or beginning of the exercise by Lessor of any one or more of such
rights, powers and remedies shall not preclude the simultaneous or subsequent
exercise by Lessor of any or all of such other rights, powers and remedies.

                                  ARTICLE XXVII

                                    SURRENDER

         27.1 ACCEPTANCE OF SURRENDER. No surrender to Lessor of this Lease or
of the Leased Properties or any part thereof, or of any interest therein, shall
be valid or effective unless agreed to and accepted in writing by Lessor, and no
act by Lessor or any representative or agent of Lessor, other than such a
written acceptance by Lessor, shall constitute an acceptance of any such
surrender.

                                  ARTICLE XXIII

                                  RELATIONSHIP

         28.1 NO MERGER OF TITLE. There shall be no merger of this Lease or of
the leasehold estate created hereby by reason of the fact that the same person,
firm, corporation or other entity may acquire, own or hold, directly or
indirectly, (i) this Lease or the leasehold estate created hereby or any
interest in this Lease or such leasehold estate, and (ii) the fee estate in the
Leased Properties.

         28.2 NO PARTNERSHIP. Nothing contained in this Lease will be deemed or
construed to create a partnership or joint venture between Lessor and Lessee or
to cause either party to be responsible in any way for the debts or obligations
of the other or any other party, it being the intention of the parties that the
only relationship hereunder is that of Lessor and Lessee.



                                       91
<PAGE>

                                  ARTICLE XXIX

                              CONVEYANCE BY LESSOR

         29.1 CONVEYANCE BY LESSOR. Lessor may at its sole option, transfer the
Leased Properties and in connection with any such transfer, may assign this
Lease. If Lessor or any successor owner of the Leased Properties conveys the
Leased Properties other than as security for a debt, Lessor or such successor
owner, as the case may be, shall thereupon be released from all future
liabilities and obligations of Lessor under this Lease arising or accruing from
and after the date of such conveyance or other transfer and all such future
liabilities and obligations shall thereupon be binding upon the new owner.

                                   ARTICLE XXX

                                 QUIET ENJOYMENT

         30.1 QUIET ENJOYMENT. So long as Lessee pays all Rent as it becomes due
and complies with all of the terms of this Lease and performs its obligations
hereunder, Lessee shall peaceably and quietly have, hold and enjoy the Leased
Properties for the Term, free of any claim or other action by Lessor or anyone
claiming by, through or under Lessor, but subject to all liens and Encumbrances
of record as of the date hereof or hereafter provided for in this Lease or
consented to by Lessee. Except as otherwise provided in this Lease, no failure
by Lessor to comply with the foregoing covenant will give Lessee any right to
cancel or terminate this Lease or abate, reduce or make a deduction from or
offset against the Rent or any other sum payable under this Lease, or to fail to
perform any other obligation of Lessee. Lessee shall, however, have the right,
by separate and independent action, to pursue any claim it may have against
Lessor as a result of a breach by Lessor of the covenant of quiet enjoyment
contained in this Section.

                                  ARTICLE XXXI

                                     NOTICES

         31.1 NOTICES. Any notice, request or other communication to be given by
any party hereunder shall be in writing and shall be sent by registered or
certified mail, postage prepaid, by overnight deliver, hand delivery or
facsimile transmission to the following address:

         To Lessor:                 Williams Headquarters Building Company
                                    Attn: George D. Shahadi, Vice
                                          President-Corp. Real Estate
                                    One Williams Center, Suite 2200
                                    Tulsa, Oklahoma 74172
                                    Fax No. 918/573-4049

         With copies to:            The Williams Companies, Inc.
                                    Attn: Real Estate Counsel
                                    One Williams Center, Suite 4100
                                    Tulsa, Oklahoma 74172
                                    Fax No. 918/573-4503



                                       92
<PAGE>

                                    The Williams Companies, Inc.
                                    Attn: Treasurer
                                    One Williams Center, Suite 5000
                                    Tulsa, Oklahoma 74172
                                    Fax No. 918/573-2065

         To Lessee:                 Williams Technology Center, LLC
                                    Attn: Vice President, Real Estate
                                    One Williams Center, MD-OneOK-6
                                    Tulsa, Oklahoma 74172
                                    Fax No. 918/573-5614

         With copy to:              Williams Communications, LLC.
                                    Attn: P. David Newsome, Jr., Esq., General
                                          Counsel
                                    One Williams Center, MD-41-3
                                    Tulsa, Oklahoma 74172
                                    Fax No. 918/573-3005

         To Guarantor:              Williams Communications, LLC
                                    Attn: P. David Newsome, Jr., Esq., General
                                          Counsel
                                    One Williams Center, MD-41-3
                                    Tulsa, Oklahoma 74172
                                    Fax No. 918/573-3005

         With copy to:              Williams Communications, LLC
                                    Attn: Assistant Treasurer
                                    One Technology Center, MD: TC 14X
                                    Tulsa, Oklahoma 74103
                                    Fax No.: 918/547-1108


or to such other address as either party may hereafter designate. Notice shall
be deemed to have been given on the date of delivery if such delivery is made on
a Business Day, or if not, on the first Business Day after delivery. If delivery
is refused, Notice shall be deemed to have been given on the date delivery was
first attempted. Notice sent by facsimile transmission shall be deemed given
upon confirmation that such Notice was received at the number specified above or
in a Notice to the sender. If Lessee has vacated the Leased Properties, Lessor's
Notice may be posted on the door of a Leased Property. No failure of any
addressee designated as "With copy to", to be sent or to receive any Notice
shall invalidate the effectiveness of Notice sent to and received by any party
to this Lease.

                                  ARTICLE XXXII

                             [INTENTIONALLY OMITTED]



                                       93
<PAGE>

                                 ARTICLE XXXIII

                             [INTENTIONALLY OMITTED]

                                  ARTICLE XXXIV

                           LESSOR'S OPTION TO PURCHASE

         34.1 LESSOR'S OPTION TO PURCHASE LESSEE'S PERSONAL PROPERTY. Unless
Lessee purchases the Leased Properties as provided in this Lease, upon the
expiration or termination of this Lease, Lessor shall have the option on the
terms hereinafter set forth to purchase any of Lessee's Personal Property that
is not deemed to have been sold, assigned, transferred and conveyed to Lessor
pursuant to Section 6.3 hereof, for an amount equal to the then book value
thereof (acquisition cost less accumulated depreciation on the books of Lessee
pertaining thereto), subject to, and with appropriate credits for, any
obligations owing from Lessee to Lessor and for the then outstanding balances
owing on all equipment leases, conditional sale contracts and any other
Encumbrances to which such Lessee's Personal Property is subject. Lessor's
option shall be exercised by Notice to Lessee no more than one hundred eighty
(180) days, nor less than ninety (90) days, before the expiration of the Realty
Term, unless this Lease is terminated prior to its expiration date by reason of
an Event of Default, in which event Lessor's option shall be exercised not more
than ninety (90) days after the date of termination. Lessor's option shall
terminate upon Lessee's purchase of the Leased Properties. If Lessee does not
receive Lessor's Notice exercising its option before the expiration of the
relevant time period, Lessee shall give Lessor Notice thereof and Lessor's
option shall continue in full force and effect for a period of thirty (30) days
after such Notice from Lessee. If Lessor exercises its option, Lessee shall, in
exchange for Lessor's payment of the purchase price, deliver the purchased
Lessee's Personal Property to Lessor, together with a bill of sale and such
other documents as Lessor may reasonably request in order to carry out the
purchase, and the purchase shall be closed by such delivery and such payment on
the date set by Lessor in its Notice of exercise. Lessor shall be responsible
for applicable sales, use and other similar taxes which are assessed on the sale
of Lessee's Personal Property to Lessor.

         34.2 LEASED PROPERTIES TRADE NAME. If this Lease is terminated pursuant
to Section 16.1 or Lessor exercises its option to purchase Lessee's Personal
Property pursuant to Section 34.1, Lessee shall be deemed to have assigned to
Lessor the exclusive right to use Leased Properties Trade Name in perpetuity.

         34.3 TRANSFER OF OPERATIONAL CONTROL OF THE FACILITIES. Lessee shall
cooperate fully in transferring operational control of all of the Facilities
which are then subject to this Lease to Lessor or Lessor's nominee if the Term
expires without renewal or this Lease is terminated upon the occurrence of an
Event of Default or for any other reason, and Lessee shall use its best efforts
to cause the business conducted at all such Facilities to continue without
interruption. To that end, pending completion of the transfer of the operational
control of such Facilities to Lessor or its nominee:

                  34.3.1 Employees. Lessee will not terminate the employment of
         any Leased Properties maintenance and operations employees without just
         cause, or change any salaries, provided, however, that without the
         advance written consent of Lessor,



                                       94

<PAGE>
         Lessee may grant pre-announced wage increases of which Lessor has
         knowledge, increases required by written employment agreements and
         normal raises to non-officers at regular review dates; and Lessee will
         not hire any additional employees except in good faith in the ordinary
         course of business;

                  34.3.2 Change in Control. Lessee will provide all necessary
         information requested by Lessor or its nominee for the preparation and
         filing of any and all necessary applications or notifications of any
         federal or state governmental authority having jurisdiction over a
         change in the operational control of the Facilities, and any other
         information reasonably required to effect an orderly transfer of the
         Facilities;

                  34.3.3 Business and Organization. Lessee shall use all
         reasonable efforts to keep the business and organization of the
         Facilities intact and to preserve for Lessor or its nominee the
         goodwill of the suppliers, distributors, residents and others having
         business relations with Lessee with respect to the Facilities;

                  34.3.4 Operations in Ordinary Course. Lessee shall engage only
         in transactions or other activities with respect to the Facilities
         which are in the ordinary course of its business and shall perform all
         maintenance and repairs reasonably necessary to keep the Facilities in
         satisfactory operating condition and repair;

                  34.3.5 Employee Benefits. Lessee shall provide Lessor or its
         nominee with full and complete information regarding the employees of
         the Facilities and shall reimburse Lessor or its nominee for all
         outstanding accrued employee benefits, including accrued vacation, sick
         and holiday pay calculated on a true accrual basis, including all
         earned and a prorated portion of all unearned benefits;

                  34.3.6 Third Party Consents. Lessee shall use all reasonable
         efforts to obtain the acknowledgment and the consent of any creditor,
         lessor or sublessor, mortgagee, beneficiary of a deed of trust or
         security agreement affecting the real and personal properties of Lessee
         or any other party whose acknowledgment and/or consent would be
         required because of a change in the operational control of the
         Facilities and transfer of personal property. The consent must be in
         form, scope and substance satisfactory to Lessor or its nominee,
         including, without limitation, an acknowledgment in respect to all such
         contracts, leases, deeds of trust, mortgage, security agreements, or
         other agreements that Lessee and all predecessors or
         successors-in-interest thereto are not in default in respect thereto,
         that no condition known to the consenting party exists which with the
         giving of notice or lapse of time would result in such a default, and,
         if requested, affirmatively consenting to the change in the operational
         control of the Facilities;

                  34.3.7 Lessor as Attorney-in-Fact. To more fully preserve and
         protect Lessor's rights under this Section, Lessee does hereby make,
         constitute and appoint Lessor its true and lawful attorney-in-fact, for
         it and in its name, place and stead to execute and deliver all such
         instruments and documents, and to do all such other acts and things, as
         Lessor may deem to be necessary or desirable to protect and preserve
         the rights granted under this Section. Lessee hereby grants to Lessor
         the full power and authority to appoint one or more substitutes to
         perform any of the acts that Lessor is authorized to perform under this
         Section, with a right to revoke such appointment of



                                       95
<PAGE>

         substitution at Lessor's pleasure. The power of attorney granted
         pursuant to this Section is coupled with an interest and therefore is
         irrevocable. Any person dealing with Lessor may rely upon the
         representation of Lessor relating to any authority granted by this
         power of attorney, including the intended scope of the authority, and
         may accept the written certificate of Lessor that this power of
         attorney is in full force and effect. Photographic or other facsimile
         reproductions of this executed Lease may be made and delivered by
         Lessor, and may be relied upon by any person to the same extent as
         though the copy were an original. Anyone who acts in reliance upon any
         representation or certificate of Lessor, or upon a reproduction of this
         Lease, shall not be liable for permitting Lessor to perform any act
         pursuant to this power of attorney. Notwithstanding the foregoing,
         Lessor covenants with Lessee that Lessor shall refrain from exercising
         the power of attorney granted hereby except in the case of an Event of
         Default hereunder or in the event of a default, which, in Lessor's
         reasonable judgment, may lead to the suspension or revocation of any
         license of Lessee or of any sublessee.

         34.4 INTANGIBLES AND PERSONAL PROPERTY. Notwithstanding any other
provision of this Lease but subject to Articles 40 or 41 relating to the
security interest in favor of Lessor, Leased Personal Property shall not include
goodwill nor shall it include any other intangible personal property that is
severable from Lessor's " interests in real property" within the meaning of
Section 856(d) of the Code, or any similar or successor provision thereto.

                                  ARTICLE XXXV

                             [INTENTIONALLY OMITTED]

                                  ARTICLE XXXVI

                                  MISCELLANEOUS

         36.1 COMPLIANCE WITH FACILITY MORTGAGE. Lessee covenants and agrees
that it will duly and punctually observe, perform and comply with all of the
terms, covenants and conditions (including, without limitation, covenants
requiring the keeping of books and records and delivery of Financial Statements
and other information) of any Facility Mortgage and that it will not directly or
indirectly, do any act or suffer or permit any condition or thing to occur,
which would or might constitute a default under a Facility Mortgage. Anything in
this Lease to the contrary notwithstanding, if the time for performance of any
act required of Lessee by the terms of a Facility Mortgage is shorter than the
time allowed by this Lease for performance of such act by Lessee, then Lessee
shall perform such act within the time limits specified in such Facility
Mortgage.

         36.2 SURVIVAL, CHOICE OF LAW. Anything contained in this Lease to the
contrary notwithstanding, all claims against, and liabilities of, Lessee or
Lessor arising prior to the date of expiration or termination of this Lease
shall survive such expiration or termination. If any term or provision of this
Lease or any application thereof is held invalid or unenforceable, the remainder
of this Lease and any other application of such term or provisions shall not be
affected thereby. Neither this Lease nor any provision hereof may be changed,
waived, discharged or terminated except by an instrument in writing and in
recordable form signed by Lessor and Lessee. All the terms and provisions of
this Lease shall



                                       96
<PAGE>

be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. The headings in this Lease are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof. This Lease shall be governed by and construed in accordance with
the laws of the State, except as to matters which, under applicable procedural
conflicts of laws rules require the application of laws of another State.

         LESSEE CONSENTS TO IN PERSONAM JURISDICTION BEFORE THE STATE AND
FEDERAL COURTS OF THE STATES OF OKLAHOMA AND AGREES THAT ALL DISPUTES CONCERNING
THIS LEASE BE HEARD IN THE STATE AND FEDERAL COURTS LOCATED IN THE STATE OF
OKLAHOMA. LESSEE AGREES THAT SERVICE OF PROCESS MAY BE EFFECTED UPON IT UNDER
ANY METHOD PERMISSIBLE UNDER THE LAWS OF THE STATE OF OKLAHOMA AND IRREVOCABLY
WAIVES ANY OBJECTION TO VENUE IN THE STATE AND FEDERAL COURTS OF THE STATE OF
OKLAHOMA.

         36.3 LIMITATION ON RECOVERY. Lessee specifically agrees to look solely
to Lessor's interest in the Leased Properties for recovery of any judgment from
Lessor, it being specifically agreed that no constituent shareholder, officer or
director of Lessor shall ever be personally liable for any such judgment or for
the payment of any monetary obligation to Lessee. Furthermore, Lessor (original
or successor) shall never be liable to Lessee for any indirect, consequential,
special or punitive damages suffered by Lessee from whatever cause.

         36.4 WAIVERS. Lessee waives any defense by reason of any disability of
Lessee, and waives any other defense based on the termination of Lessee's
(including Lessee's successor's) liability from any cause. Lessee waives all
presentments, demands for performance, notices of nonperformance, protests,
notices of protest, notices of dishonor, and notices of acceptance, and waives
all notices of the existence, creation, or incurring of new or additional
obligations.

         36.5 CONSENTS. Whenever the consent or approval of Lessor is required
hereunder, Lessor may in its sole discretion and without reason withhold that
consent or approval unless otherwise specifically provided.

         36.6 COUNTERPARTS. This Lease may be executed in separate counterparts,
each of which shall be considered an original when each party has executed and
delivered to the other one or more copies of this Lease.

         36.7 RIGHTS CUMULATIVE. Except as provided herein to the contrary, the
respective rights and remedies of the parties specified in this Lease shall be
cumulative and in addition to any rights and remedies not specified in this
Lease.

         36.8 ENTIRE AGREEMENT. There are no oral or written agreements or
representations between the parties hereto affecting this Lease. This Lease
supersedes and cancels any and all previous negotiations, arrangements,
representations, brochures, agreements and understandings, if any, between
Lessor and Lessee.

         36.9 AMENDMENTS IN WRITING. No provision of this Lease may be amended
except by an agreement in writing signed by Lessor and Lessee.



                                       97
<PAGE>

         36.10 SEVERABILITY. If any provision of this Lease or the application
of such provision to any person, entity or circumstance is found invalid or
unenforceable by a court of competent jurisdiction, such determination shall not
affect the other provisions of this Lease and all other provisions of this Lease
shall be deemed valid and enforceable.

         36.11 ESTOPPEL CERTIFICATE. At any time and from time to time, Lessee
shall, without charge, within ten (10) days after request by Lessor, certify by
a written instrument executed and acknowledged by a duly authorized
representative of Lessee, addressed to Lessor and any mortgagee or purchaser, or
proposed mortgagee or proposed purchaser, or any other party, firm or
corporation specified by Lessor, as to the validity and status of this Lease, as
to the existence of any default on the part of any party hereunder, as to the
existence of any offsets, counterclaims, or defenses thereto which may be
alleged on the part of Lessee, and as to any other matters which may be
reasonably requested by Lessor.

         36.12 TIME OF THE ESSENCE. Except for the delivery of possession of the
Facilities to Lessee, time is of the essence of all provisions of this Lease of
which time is an element.

         36.13 LESSOR'S COSTS AND EXPENSES. Lessee shall be responsible for and
shall pay on demand by Lessor, all of Lessor's reasonable costs and expenses
incurred in connection with the negotiation and preparation of this Lease,
including without limitation, the reasonable fees and expenses of Lessor's
attorneys.

                                 ARTICLE XXXVII

                                     BROKERS

         37.1 COMMISSIONS. Lessee represents and warrants to Lessor that no real
estate commission, finder's fee or the like is due and owing to any person in
connection with this Lease. Lessee agrees to save, indemnify and hold Lessor
harmless from and against any and all claims, liabilities or obligations for
brokerage, finder's fees or the like in connection with this Lease or the
transactions contemplated hereby, asserted by any person on the basis of any
statement or act alleged to have been made or taken by Lessee.

                                  ARTICLE XVIII

                               MEMORANDUM OF LEASE

         38.1 MEMORANDUM OR SHORT FORM OF LEASE. Lessor and Lessee shall,
promptly upon the request of either, enter into a Memorandum or Short Form of
Lease, substantially in the form of EXHIBIT G with such modifications as may be
appropriate under the laws and customs of the States and in the customary form
suitable for recording under the laws of each of the States. Lessee shall pay
all costs and expenses of recording such memorandum or short form of this Lease.



                                       98
<PAGE>

                                  ARTICLE XXXIX

                               RECHARACTERIZATION

         39.1 RECHARACTERIZATION AS A SECURITY DOCUMENT. In the event that
notwithstanding the intent of Lessor, Lessee and Guarantor as set forth herein,
that this Lease be treated as a true lease for purposes of the UCC and other
applicable laws of the State, a court of competent jurisdiction recharacterizes
this Lease as a security document serving as collateral for a financing, the
additional provisions set forth in Article XL and Article XLI shall apply,
provided however, such application shall in no event otherwise diminish,
restrict or eliminate any of the Lessor's rights or remedies set forth in this
Lease or in any of the other documents executed in connection herewith, all of
the foregoing to remain in full force and effect for all purposes.

                                   ARTICLE XL

                             GRANT OF MORTGAGE LIEN

         40.1 GRANT OF LIEN AND SECURITY INTEREST; ASSIGNMENT OF RENTS. To
secure to the Lessor the performance by the Lessee of its covenants, agreements
and obligations under the Lease, Lessee hereby agrees as follows:

                  40.1.1 MORTGAGE. SUBJECT TO THE TERMS AND CONDITIONS OF THE
         LEASE, AND IN ADDITION TO ALL OTHER RIGHTS AND REMEDIES OF LESSOR AS
         CONTAINED HEREIN OR UNDER APPLICABLE LAW, THE LESSEE DOES HEREBY
         MORTGAGE, PLEDGE, GRANT, BARGAIN, SELL, CONVEY, ASSIGN, WARRANT,
         TRANSFER AND SET OVER TO THE LESSOR, WITH POWER OF SALE, TO THE EXTENT
         PERMITTED BY APPLICABLE LAW: (i) ALL OF THE LESSEE'S RIGHT, TITLE AND
         INTEREST, IF ANY, IN THE LEASED PROPERTIES, AND (ii) ALL OF THE
         LESSEE'S RIGHT, TITLE AND INTEREST IN AND TO ALL PROCEEDS OF THE
         CONVERSION, WHETHER VOLUNTARY OR INVOLUNTARY, OF ANY OF THE
         ABOVE-DESCRIBED PROPERTY INTO CASH OR OTHER LIQUID CLAIMS, INCLUDING,
         WITHOUT LIMITATION, ALL AWARDS, PAYMENTS OR PROCEEDS, INCLUDING
         INTEREST THEREON, AND THE RIGHT TO RECEIVE THE SAME, WHICH MAY BE MADE
         AS A RESULT OF CASUALTY, ANY EXERCISE OF THE RIGHT OF EMINENT DOMAIN OR
         DEED IN LIEU THEREOF, THE ALTERATION OF THE GRADE OF ANY STREET AND ANY
         INJURY TO OR DECREASE IN THE VALUE THEREOF, THE FOREGOING COLLECTIVELY
         BEING REFERRED TO HEREINAFTER AS THE "SECURITY PROPERTY".

                  TO HAVE AND TO HOLD the foregoing rights, interests and
         properties, and all rights, estates, powers and privileges appurtenant
         thereto, unto the Lessor, its successors and assigns, forever, for the
         uses and purposes herein expressed, but not otherwise.

                  40.1.2 SECURITY INTEREST. SUBJECT TO THE TERMS AND CONDITIONS
         OF THE LEASE, THE LESSEE HEREBY GRANTS TO THE LESSOR A SECURITY
         INTEREST IN THE LESSEE'S INTEREST, IF ANY, IN THAT PORTION OF THE
         SECURITY PROPERTY (THE "UCC PROPERTY") SUBJECT TO THE UNIFORM
         COMMERCIAL CODE OF THE STATE IN WHICH THE LEASED PROPERTIES ARE LOCATED
         (THE "UCC"). THIS LEASE SHALL ALSO BE DEEMED TO BE A SECURITY AGREEMENT
         AND A FINANCING STATEMENT FILED AS A FIXTURE FILING PURSUANT TO 12A
         O.S. SECTION 1-9-502 AND SHALL SUPPORT ANY FINANCING STATEMENT SHOWING
         THE LESSOR'S INTEREST AS A



                                       99
<PAGE>

         SECURED PARTY WITH RESPECT TO ANY PORTION OF THE UCC PROPERTY DESCRIBED
         IN SUCH FINANCING STATEMENT. THE LESSEE AGREES, AT ITS SOLE COST AND
         EXPENSE, TO EXECUTE, DELIVER AND FILE FROM TIME TO TIME SUCH FURTHER
         INSTRUMENTS AS MAY BE REQUESTED BY THE LESSOR TO CONFIRM AND PERFECT
         THE LIEN OF THE SECURITY INTEREST IN THE COLLATERAL DESCRIBED IN THIS
         LEASE.

                  40.1.3 ASSIGNMENT OF LEASES AND RENTS. THE LESSEE HEREBY
         IRREVOCABLY ASSIGNS, CONVEYS, TRANSFERS AND SETS OVER UNTO THE LESSOR
         (SUBJECT, HOWEVER, TO THE LEASE AND THE RIGHTS OF THE LESSEE THEREUNDER
         AND HEREUNDER) ALL AND EVERY PART OF THE RENTS, ISSUES AND PROFITS THAT
         MAY FROM TIME TO TIME BECOME DUE AND PAYABLE ON ACCOUNT OF ANY AND ALL
         SUBLEASES OR OTHER OCCUPANCY AGREEMENTS NOW EXISTING, OR THAT MAY
         HEREAFTER COME INTO EXISTENCE WITH RESPECT TO THE LEASED PROPERTIES OR
         ANY PART THEREOF, INCLUDING ANY GUARANTIES OF SUCH SUBLEASES OR OTHER
         OCCUPANCY AGREEMENTS. UPON REQUEST OF THE LESSOR, THE LESSEE SHALL
         EXECUTE AND CAUSE TO BE RECORDED, AT ITS EXPENSE, SUPPLEMENTAL OR
         ADDITIONAL ASSIGNMENTS OF ANY SUBLEASES OR OTHER OCCUPANCY AGREEMENTS,
         OF THE LEASED PROPERTIES. UPON THE OCCURRENCE AND CONTINUANCE OF A
         EVENT OF DEFAULT, THE LESSOR IS HEREBY FULLY AUTHORIZED AND EMPOWERED
         IN ITS DISCRETION (IN ADDITION TO ALL OTHER POWERS AND RIGHTS HEREIN
         GRANTED), AND SUBJECT TO THE LEASE AND THE RIGHTS OF THE LESSEE
         THEREUNDER AND HEREUNDER, TO APPLY FOR AND COLLECT AND RECEIVE ALL SUCH
         RENTS, ISSUES AND PROFITS AND TO ENFORCE ANY GUARANTY OR GUARANTIES,
         AND ALL MONEY SO RECEIVED UNDER AND BY VIRTUE OF THIS ASSIGNMENT SHALL
         BE HELD AND APPLIED AS FURTHER SECURITY FOR THE PAYMENT OF THE
         INDEBTEDNESS SECURED HEREBY AND TO ASSURE THE PERFORMANCE BY THE LESSEE
         OF ITS COVENANTS, AGREEMENTS AND OBLIGATIONS UNDER THE LEASE.

         40.2 REMEDIES. Upon the occurrence and continuance of an Event of
Default:

                  40.2.1 Power of Sale Foreclosure. The Lessor shall have the
         power and authority, to the extent provided by law, after proper notice
         and lapse of such time as may be required by the Oklahoma Power of Sale
         Mortgage Foreclosure Act, 46 O.S. Section 40-49, as amended from time
         to time (the "Act"), to sell the Security Property at the time and
         place of sale fixed by the Lessor in said notice of sale, either as a
         whole, or in separate lots or parcels and in such order as the Lessor
         may elect, at auction to the highest bidder for cash in lawful money of
         the United States payable at the time of sale, all in accordance with
         the Act and any other applicable laws of the jurisdiction in which the
         Leased Properties are located, it being acknowledged that A POWER OF
         SALE HAS BEEN GRANTED IN THIS INSTRUMENT. A POWER OF SALE MAY ALLOW THE
         LESSOR TO TAKE THE SECURITY PROPERTY AND SELL IT WITHOUT GOING TO COURT
         IN A FORECLOSURE ACTION UPON THE OCCURRENCE AND CONTINUANCE OF AN EVENT
         OF DEFAULT BY THE LESSEE.

                  40.2.2 Judicial Foreclosure. The Lessor may proceed by a suit
         or suits in equity or at law, whether for a foreclosure hereunder, or
         for the sale of the Security Property, or, subject to the terms and
         conditions of the Lease, against the Lessee for the Rent, or for the
         specific performance of any covenant or agreement herein contained or
         in aid of the execution of any power herein granted, or for the
         appointment of a receiver pending any foreclosure hereunder or the sale
         of the



                                      100
<PAGE>

         Security Property, or for the enforcement of any other appropriate
         legal or equitable remedy.

                  40.2.3 Appointment of Receiver. Without regard to the Lessor's
         election of nonjudicial power of sale foreclosure or judicial
         foreclosure, the Lessor shall be entitled to the appointment of a
         receiver by any court of competent jurisdiction, without notice and
         without regard to the sufficiency or value of any security for the
         indebtedness secured hereby or the solvency of any party bound for its
         payment. The receiver shall have all of the rights and powers permitted
         under the laws of the state within which the Leased Properties are
         located.

                  40.2.4 Waiver of Appraisement Appraisement of the Leased
         Properties is hereby waived or not waived at the option of the Lessor,
         such option to be exercised at or prior to the time judgment is
         rendered in any judicial foreclosure.

                  40.2.5 ADDITIONAL REMEDIES. IT IS THE INTENT OF THE PARTIES
         HERETO THAT, UPON THE OCCURRENCE AND CONTINUANCE OF AN EVENT OF
         DEFAULT, THE LESSOR SHALL HAVE THE REMEDIES PROVIDED FOR IN THIS
         SECTION 40.2; PROVIDED, HOWEVER, THAT (i) IN LIEU OF THE REMEDIES
         PROVIDED FOR IN THIS LEASE, THE LESSOR, AT ITS ELECTION, MAY REQUIRE
         THE LESSEE TO PURCHASE THE LEASED PROPERTIES AND, IN THE EVENT THAT THE
         LESSEE PURCHASES THE LEASED PROPERTIES AS PROVIDED IN SECTION 16.4 OF
         THIS LEASE, THE REMEDIES SET FORTH HEREIN SHALL NOT BE AVAILABLE TO THE
         LESSOR WITH RESPECT TO SUCH EVENT OF DEFAULT, AND (ii) IN THE EVENT
         THAT, NOTWITHSTANDING THE INTENTION OF THE PARTIES, A COURT OF
         COMPETENT JURISDICTION DETERMINES THAT THE REMEDIES IN THIS SECTION
         40.2 ARE UNENFORCEABLE, THE LESSOR SHALL HAVE, AS A RESULT OF SUCH
         DETERMINATION, IN LIEU OF THE REMEDIES IN THIS SECTION 40.2, ANY AND
         ALL OF THE OTHER REMEDIES PROVIDED FOR IN ARTICLE 16 OF THIS LEASE. TO
         THE EXTENT NOT IN CONFLICT WITH APPLICABLE LAW OR THE LESSEE'S
         OBLIGATIONS THEREUNDER, THE PARTIES ACKNOWLEDGE AND AGREE THAT THE
         PROVISIONS OF 11 U.S.C. SECTION 502(b)(6) ARE NOT APPLICABLE TO THE
         TRANSACTIONS CONTEMPLATED BY THIS LEASE.

                  40.2.6 Cure by Purchase of Leased Properties. Notwithstanding
         anything to the contrary contained herein, the Lessee may cure any
         Event of Default affecting or relating to the Leased Properties by
         purchasing the Leased Properties as provided in Section 16.4 of this
         Lease.

                                   ARTICLE XLI

                           GRANT OF SECURITY INTEREST

         41.1 GRANT OF SECURITY INTEREST. The Lessee hereby pledges, assigns and
grants to the Lessor a security interest in and to the Collateral to secure the
prompt and complete payment and performance of all of Lessee's covenants,
agreements and obligations under this Lease.

         41.2 UCC REPRESENTATIONS AND WARRANTIES. Lessee and Guarantor represent
and warrant to the Lessor that:



                                      101
<PAGE>

                  41.2.1 Authorization, Validity and Enforceability. Lessee has
         good and valid power to grant a security interest hereunder, free and
         clear of all Encumbrances except for Encumbrances permitted under
         Section 41.3.6, and has full power and authority to grant to the Lessor
         the security interest in such Collateral pursuant hereto. When
         financing statements have been filed in the appropriate offices against
         the Lessee in the locations listed on EXHIBIT P, the Lessor will have a
         fully perfected, first priority, security interest in that Collateral
         in which a security interest may be perfected by filing, subject only
         to Encumbrances permitted under Section 41.3.6.

                  41.2.2 Conflicting Laws and Contracts. Neither the execution
         and delivery by the Lessee of this Lease, the creation and perfection
         of the security interest in the Collateral granted hereunder, nor
         compliance with the terms and provisions hereof will violate any law,
         rule, regulation, order, writ, judgment, injunction, decree or award
         binding on any Lessee or Lessee's articles or certificate of
         incorporation or by-laws, partnership agreements, or operating
         agreements, as the case may be, the provisions of any indenture,
         instrument or agreement to which Lessee is a party or is subject, or by
         which it, or its property, is bound, or conflict with or constitute a
         default thereunder, or result in the creation or imposition of any
         Encumbrance pursuant to the terms of any such indenture, instrument or
         agreement.

                  41.2.3 Type and Jurisdiction of Organization. The
         organizational type and jurisdiction for Lessee and Guarantor are set
         forth in the Preamble.

                  41.2.4 Principal Location. Each of the Lessee's and
         Guarantor's mailing address and the location of its place of business
         (if it has only one) or its chief executive office, is disclosed in
         EXHIBIT P; Lessee has no other places of business except those set
         forth in EXHIBIT P.

                  41.2.5 Property Locations. All of the Collateral is located
         solely in Tulsa, Oklahoma, on or connected with the Land or the Leased
         Improvements.

                  41.2.6 No Other Names. Lessee has not conducted business under
         any name except the name in which it has executed this Lease, which is
         the exact name as it appears in the Lessee's organizational documents,
         as amended, as filed with the Lessee's jurisdiction of organization.

                  41.2.7 No Financing Statements. No financing statement
         describing all or any portion of the Collateral which has not lapsed or
         been terminated naming the Lessee as debtor has been filed in any
         jurisdiction except (i) financing statements naming the Lessor as the
         secured party, and (ii) as permitted by Section 41.3.6. None of the
         Equipment is covered by any certificate of title.

                  41.2.8 Federal Employer Identification Number. The Federal
         employer identification numbers for both Lessee and Guarantor are set
         forth on EXHIBIT P.

         41.3 UCC COVENANTS. The following covenants shall apply to the
Collateral.

                  41.3.1 Inspection. Lessee and Guarantor will permit the
         Lessor, by its representatives and agents (i) to inspect the
         Collateral, (ii) to examine and make copies



                                      102
<PAGE>

         of the records of the Lessee relating to the Collateral and (iii) to
         discuss the Collateral and the related records of Lessee and Guarantor
         with, and to be advised as to the same by, the Lessee's and Guarantor's
         respective officers and employees, all at such reasonable times and
         intervals as the Lessor may determine, and all at the Lessee's and
         Guarantor's expense.

                  41.3.2 Taxes. Lessee and Guarantor will pay or cause to be
         paid when due all taxes, assessments and governmental charges and
         levies upon the Collateral, except those which are being contested in
         good faith by appropriate Proceedings and with respect to which no
         Encumbrance exists.

                  41.3.3 Records and Reports; Notification of Default. Lessee
         will maintain complete and accurate books and records with respect to
         the Collateral, and furnish to the Lessor such reports relating to the
         Collateral as the Lessor shall from time to time request. Each of the
         Lessee and Guarantor will give prompt notice in writing to the Lessor
         of the occurrence of any Event of Default and of any other development,
         financial or otherwise, which might materially and adversely affect the
         Collateral.

                  41.3.4 Financing Statements and Other Actions; Defense of
         Title. Both Lessee and Guarantor hereby authorize the Lessor to file
         and if requested will execute and deliver to the Lessor all financing
         statements and other documents and take such other actions as may from
         time to time be requested by the Lessor in order to maintain a first
         perfected security interest in and, if applicable, control of, the
         Collateral. Lessee and Guarantor will take any and all actions
         necessary to defend title to the Collateral against all persons and to
         defend the security interest of the Lessor in the Collateral and the
         priority thereof against any Encumbrance not expressly permitted
         hereunder.

                  41.3.5 Disposition of Collateral. Lessee will not sell, lease
         or otherwise dispose of the Collateral except (i) prior to the
         occurrence of an Event of Default, dispositions specifically permitted
         pursuant to this Lease, (ii) until such time following the occurrence
         of an Event of Default as Lessee receives a notice from the Lessor
         instructing the Lessee to cease such transactions, sales or leases of
         Inventory in the ordinary course of business, and (iii) until such time
         as Lessee receives a notice from the Lessor, proceeds of Inventory
         collected in the ordinary course of business.

                  41.3.6 Encumbrances. Neither Lessee nor Guarantor will create,
         incur, or suffer to exist any Encumbrance on the Collateral except (i)
         the security interest created by this Lease, and (ii) Permitted
         Encumbrances.

                  41.3.7 Change of Name or Mailing Address. Lessee will not (i)
         change its name or taxpayer identification number or (ii) change its
         mailing address, unless Lessee shall have given the Lessor not less
         than thirty (30) days' prior written notice of such event or occurrence
         and the Lessor shall have either (x) determined that such event or
         occurrence will not adversely affect the validity, perfection or
         priority of the Lessor's security interest in the Collateral, or (y)
         taken such steps (with the cooperation of Lessee and Guarantor to the
         extent necessary or advisable) as are necessary or advisable to
         properly maintain the validity, perfection and priority of the Lessor's
         security interest in the Collateral.



                                      103
<PAGE>

                  41.3.8 Other Financing Statements. Lessee will not sign or
         authorize the signing on its behalf of the filing of any financing
         statement naming it as debtor covering all or any portion of the
         Collateral, except as permitted by Section 41.3.6.

                  41.3.9 Maintenance of Goods. Lessee will do all things
         necessary to maintain, preserve, protect and keep the Inventory and the
         Equipment in good repair and working condition.

         41.4 ACCELERATION AND REMEDIES. Upon the acceleration of the Rent
pursuant to the terms hereof, the Lessor may exercise any or all of the
following rights and remedies:

                  41.4.1 UCC Remedies. Those rights and remedies available to a
         secured party under the UCC (whether or not the UCC applies to the
         affected Collateral) or under any other applicable law when a debtor is
         in default under a security agreement.

                  41.4.2 Disposal. Without notice except as specifically
         provided elsewhere in this Lease, sell, lease, assign, grant an option
         or options to purchase or otherwise dispose of the Collateral or any
         part thereof in one or more parcels at public or private sale, for
         cash, on credit or for future delivery, and upon such other terms as
         the Lessor may deem commercially reasonable.

                  41.4.3 Compliance with Law. The Lessor may comply with any
         applicable state or federal law requirements in connection with a
         disposition of the Collateral, and compliance will not be considered to
         adversely affect the commercial reasonableness of any sale of the
         Collateral.

         41.5 OBLIGATIONS UPON DEFAULT. Upon the request of the Lessor after the
occurrence of an Event of Default, both Lessee and Guarantor will:

                  41.5.1 Assembly of Collateral. Assemble and make available to
         the Lessor the Collateral and all records relating thereto at any place
         or places specified by the Lessor.

                  41.5.2 Lessor Access. Permit the Lessor, by the Lessor's
         representatives and agents, to enter any premises where all or any part
         of the Collateral, or the books and records relating thereto, or both,
         are located, to take possession of all or any part of the Collateral
         and to remove all or any part of the Collateral.

         41.6 ADDITIONAL UCC PROVISIONS. The following additional provisions
shall apply to the Collateral:

                  41.6.1 Notice of Disposition of Collateral; Condition of
         Collateral. Notice of the time and place of any public sale or the time
         after which any private sale or other disposition of all or any part of
         the Collateral shall be deemed reasonable if sent to the Lessee at
         least ten (10) days prior to (i) the date of any such public sale or
         (ii) the time after which any such private sale or other disposition
         may be made. Lessor shall have no obligation to clean-up or otherwise
         prepare the Collateral for sale.



                                      104
<PAGE>

                  41.6.2 Lessor Performance of Lessee Obligations. Without
         having any obligation to do so, the Lessor may perform or pay any
         obligation which Lessee has agreed to perform or pay in this Lease and
         Lessee and Guarantor shall reimburse the Lessor for any amounts paid by
         the Lessor pursuant to this Section 41.6.2.

                  41.6.3 Authorization for Lessor to Take Certain Action. Lessee
         irrevocably authorizes the Lessor at any time and from time to time in
         the sole discretion of the Lessor and appoints the Lessor as its
         attorney-in-fact (i) to execute on behalf of Lessee and to file
         financing statements necessary or desirable in the Lessor's sole
         discretion to perfect and to maintain the perfection and priority of
         the Lessor's security interest in the Collateral, (ii) to indorse and
         collect any cash proceeds of the Collateral, (iii) to file a carbon,
         photographic or other reproduction of this Lease or any financing
         statement with respect to the Collateral as a financing statement and
         to file any other financing statement or amendment of a financing
         statement (which does not add new collateral or add a debtor) in such
         offices as the Lessor in its sole discretion deems necessary or
         desirable to perfect and to maintain the perfection and priority of the
         Lessor's security interest in the Collateral, (iv) to apply the
         proceeds of any Collateral received by the Lessor to the Rent, and (v)
         to discharge past due taxes, assessments, charges, fees or Encumbrances
         on the Collateral (except for such Encumbrances as are specifically
         permitted hereunder), and Lessee and Guarantor agree to reimburse the
         Lessor on demand for any payment made or any expense incurred by the
         Lessor in connection therewith, provided that this authorization shall
         not relieve Lessee or Guarantor of any obligations under this Lease.

                  41.6.4 Dispositions Not Authorized. Neither Lessee or
         Guarantor is authorized to sell or otherwise dispose of the Collateral
         except as set forth in Section 41.3.5 and notwithstanding any course of
         dealing between Lessee and Guarantor, and Lessor or other conduct of
         the Lessor, no authorization to sell or otherwise dispose of the
         Collateral (except as set forth in Section 41.3.5) shall be binding
         upon the Lessor unless such authorization is in writing signed by the
         Lessor.

                                  ARTICLE XLII

                                PURCHASE OPTIONS

         42.1 OPTION TO PURCHASE. For good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, and in addition to
Lessor's right to require Lessee to purchase the Leased Properties as set forth
in Section 16.4, Lessor hereby grants to Lessee the option to purchase the
Leased Properties or portions thereof, which option may be exercised by Lessee
at any time during the Terms, all pursuant to the terms and conditions set forth
on EXHIBIT O.

         42.2 PUT OPTION OF LESSOR. For good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, Lessee grants to
Lessor the right for Lessor to require Lessee to purchase the Leased Properties
or portions thereof, either (i) any time after the date which is ninety (90)
days prior to the Realty Expiration Date, or (ii) otherwise pursuant to the
provisions of Section 14.8, subject to the same terms, covenants and conditions
applicable to Lessee's Option to Purchase as set forth in Section 42.1 and as
described on EXHIBIT O.



                                      105
<PAGE>

         42.3 TERMINATION OF LEASE. In the event of Exercise of Option as set
forth herein and the acquisition of Leased Properties by Lessee, this Lease
shall terminate effective as of the closing of such purchase.



                             SIGNATURE PAGES FOLLOW



                                      106
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have respectively executed this
Lease effective as of the Effective Date.

LESSOR                                 WILLIAMS HEADQUARTERS BUILDING
                                       COMPANY, A Delaware Corporation


                                       By:    /s/ Mark W. Husband
                                          --------------------------------------
                                       Name:  Mark W. Husband
                                            ------------------------------------
                                       Title: Assistant Treasurer
                                             -----------------------------------


LESSEE                                 WILLIAMS TECHNOLOGY CENTER, LLC,
                                       A Delaware Limited Liability Company


                                       By:    /s/ Howard S. Kalika
                                          --------------------------------------
                                       Name:  Howard S. Kalika
                                            ------------------------------------
                                       Title: Treasurer and Vice President
                                             -----------------------------------


GUARANTOR                              WILLIAMS COMMUNICATIONS, LLC,
                                       A Delaware Limited Liability Company


                                       By:    /s/ Howard S. Kalika
                                          --------------------------------------
                                       Name:  Howard S. Kalika
                                            ------------------------------------
                                       Title: Treasurer and Vice President
                                             -----------------------------------


WCG - FOR THE LIMITED PURPOSE OF SECTION 8.2, 8.3, ARTICLE XVII, AND
SECTION 23.2


                                       WILLIAMS COMMUNICATIONS GROUP, INC.
                                       A Delaware Corporation


                                       By:    /s/ Howard S. Kalika
                                          --------------------------------------
                                       Name:  Howard S. Kalika
                                            ------------------------------------
                                       Title: Treasurer and Vice President
                                             -----------------------------------



                                      107
<PAGE>

EXHIBIT A         -        Center Parcel Real Property Description
EXHIBIT B         -        Parking Structure Parcel Property Description
EXHIBIT C         -        Credit Agreement
EXHIBIT D         -        Lessee's Certificate
EXHIBIT E         -        Permitted Encumbrances
EXHIBIT F         -        Consent and Non-Disturbance Agreement
EXHIBIT G         -        Memorandum or Short Form of Lease
EXHIBIT H         -        Guaranty
EXHIBIT I         -        Interest Rate Calculation
EXHIBIT J         -        Realty Base Rent Computation
EXHIBIT K         -        Category 1 FF&E Tangible Personal Property
                           Description
EXHIBIT L         -        Category 1 FF&E Base Rent Computation
EXHIBIT M         -        Category 2 FF&E Tangible Personal Property
                           Description
EXHIBIT N         -        Category 2 FF&E Base Rent Computation
EXHIBIT O         -        Option to Purchase/Put Option Terms
EXHIBIT P         -        UCC Information

SCHEDULE 22.2     -        Sublease Parties



                                      108
<PAGE>

EXHIBIT A

                     Center Parcel Real Property Description


The Easterly Half (E/2) of Block Eighty-eight (88), ORIGINAL TOWN OF TULSA,
located in the City of Tulsa, Tulsa County, State of Oklahoma, according to the
Official Plat thereof, more particularly described as follows:

BEGINNING at the Southeasterly corner of Block 88; thence Northerly 300 feet
along the Easterly line of Block 88 to the Northeasterly corner of said Block;
thence Westerly along the Northerly line of said Block a distance of 150 feet to
a point; thence Southerly a distance of 300 feet to a point on the Southerly
line of said Block; thence Easterly along the Southerly line 150 feet to the
Point of Beginning.

AND, the following described property:

A portion of East First Street adjacent to Blocks 73 and 88 of the Original
Townsite of Tulsa, Tulsa County, State of Oklahoma, a portion of South
Cincinnati Avenue adjacent to Blocks 88 and 87, Original Townsite, Tulsa County,
State of Oklahoma and said portion of East Second Street adjacent to Blocks 88
and 106, Original Townsite of Tulsa, Tulsa County, State of Oklahoma, that is
below an elevation of Three (3) feet lower than the driving lanes of said
roadway. Said potion of streets being more fully described as follows to wit:

Commencing at the point of beginning, said point being the northeast corner of
Block 88; thence westerly along the northerly line of said Block 88 a distance
of 160.00 feet; thence northerly and perpendicular to the northerly line of said
Block 88 a distance of 3.50 feet; thence easterly and parallel the northerly
line of said Block 88 a distance of 166.75 feet; thence southerly and parallel
the easterly line of said Block 88 a distance of 311. 50 feet; thence westerly
and parallel the southerly line of Block 88 a distance of 166.75 feet; thence
northerly a distance of 8.00 feet to a point on the southerly line of said Block
88, said point being 10.00 feet westerly from the southwest corner of Lot 6,
Block 88; thence easterly along the southerly line of Block 88 a distance of
160.00 feet to the southeast corner of Lot 6 Block 88; thence northerly along
the easterly line of Block 88 a distance of 300.00 feet to the point of
beginning.


Skywalk No. 1

The following described property:

                  A portion of South Cincinnati Avenue adjacent to Blocks 73 and
         74, Original Townsite of Tulsa, Tulsa County, State of Oklahoma, that
         is above an elevation of Twenty Seven (27) feet higher than the driving
         lanes of the said roadway. Said portion of South Cincinnati Avenue
         being more fully described as follows to wit:

         Commencing at the point of beginning, said point being the southwest
         corner of Lot 3 Block 74, Original Townsite; thence northerly along the
         westerly line a distance of 32.00 feet of said Lot 3, Block 74; thence
         westerly and perpendicular a distance of



<PAGE>

         80.00 feet to a point on the easterly line of Lot 1, Block 73, Original
         Townsite; thence southerly along the easterly line a distance of 32.0
         feet of said Lot 1, Block 73; thence easterly and perpendicular a
         distance of 80.00 feet to the point of beginning.


Skywalk No. 2

The following described:

         A portion of East First Street adjacent to Blocks 73 and 88 of the
         Original Townsite of Tulsa, Tulsa County, State of Oklahoma, that is
         above an elevation of Twenty Seven (27) feet higher than the driving
         lanes of the said roadway. Said portion of East First Street being more
         fully described as follows to wit:

         Commencing at the point of beginning, said point being the southeast
         corner of Lot 1, Block 73, Original Townsite; thence westerly along the
         southerly line of Lot 1 Block 73 a distance of 26.00 feet; thence
         southerly and perpendicular a distance of 80.00 feet to a point on the
         northerly line of Lot 3, Block 88, Original Townsite; thence easterly
         along the northerly line of Lot 3 Block 88 a distance of 26.00 feet to
         the northeast corner of Lot 3, Block 88; thence northerly and
         perpendicular a distance of 80.00 feet to the point of beginning.



<PAGE>

                                    EXHIBIT B

                  Parking Structure Parcel Property Description


TRACT A:

Lots One (1), Two (2), Three (3) and Four (4), Block Seventy-four (74), ORIGINAL
TOWNSITE OF TULSA, now City of Tulsa, Tulsa County, State of Oklahoma, according
to the Official Plat thereof;

TRACT B:

All that part of the Original Tulsa Station and Depot Grounds of the Burlington
Northern Railroad Company's Right of Way located in Sections 1 and 2, Township
19 North, Range 12 East of the Indian Base and Meridian, more particularly
described as follows, to-wit:

                 BEGINNING at a point that is the Northwest corner of Block 74,
        Original Town of Tulsa, now City of Tulsa, Tulsa County, Oklahoma,
        according to the Official Plat thereof; thence Westerly along the
        Westerly production of the North line of Block 74, a distance of 80.00
        feet to a point, also being the Northeast corner of Block 73, said point
        also being the Southeast corner of that certain sale to the Tulsa Urban
        Renewal Authority, dated December 30, 1970, recorded December 30, 1970,
        in Book 3951 at Pages 1235, 1236, 1237 and 1238, and correction deed
        dated August 28, 1973; thence Northerly along the Northerly production
        of the East line of said Block 73 a distance of 200.00 feet; thence
        Easterly parallel 200.00 feet Northerly of the North line of said Block
        74 a distance of 80.00 feet to a point on the Northerly production of
        the West line of Block 74; thence Southerly along the Northerly
        production of the West line of Block 74 a distance of 20.00 feet; thence
        Easterly parallel 180.00 feet Northerly of the North line of said Block
        74 a distance of 60.91 feet to a point of intersection with an existing
        concrete retaining wall; thence Northeasterly along a deflection angle
        to the left of 5(degree)42'01" a distance of 240.27 feet to a point on
        the Northerly production of the East line of Block 74; thence Southerly
        along said Northerly production of the East line of Block 74 a distance
        of 203.86 feet to the Northeast corner of Block 74; thence Westerly
        along the Northerly line of Block 74 a distance of 300.00 feet to the
        Point of Beginning of said tract of land.

AND, the following described property:

         A portion of East First Street adjacent to Block 74 and Block 87 of the
         Original Townsite of Tulsa, Tulsa County, State of Oklahoma, that is
         below an elevation of One (1) foot lower than the driving lanes of said
         roadway. Said portion of street being more fully described as follows
         to wit:

         Commencing at a point of beginning, said point being the southwest
         corner of Block 74; thence southerly and perpendicular to the south
         line of Block 74 a distance of 2.75 feet; thence easterly and parallel
         to the southerly line of said Block 74 a distance of 302.75 feet;
         thence northerly and parallel to the easterly line of Block 74 a
         distance of 191.00 feet; thence westerly and perpendicular a distance
         of 2.75 feet to the east line of Block 74; thence southerly along the
         east line of Block 74 a distance of 188.25 feet, thence westerly along
         the southerly line of Block 74 a distance of 300.00 feet, to the point
         of beginning.



<PAGE>

                                    EXHIBIT C

                                Credit Agreement



================================================================================
                                 $1,500,000,000

                      AMENDED AND RESTATED CREDIT AGREEMENT

                                   dated as of

                                SEPTEMBER 8, 1999

                                      among

                          WILLIAMS COMMUNICATIONS, LLC,
                                   as Borrower

                      WILLIAMS COMMUNICATIONS GROUP, INC.,
                                  as Guarantor

                            THE LENDERS PARTY HERETO,

                             BANK OF AMERICA, N.A.,
                            as Administrative Agent,

                                       and

                            THE CHASE MANHATTAN BANK,
                              as Syndication Agent

                                   ----------

                            SALOMON SMITH BARNEY INC.

                                       and

                             LEHMAN BROTHERS, INC.,
                  as Joint Lead Arrangers and Joint Bookrunners
           with respect to the Incremental Facility referred to herein

                           SALOMON SMITH BARNEY INC.,

                             LEHMAN BROTHERS, INC.,

                                       and

                            MERRILL LYNCH & CO., INC.

                           as Co-Documentation Agents
================================================================================



<PAGE>

<Table>
<S>            <C>                                                                                    <C>
                                           ARTICLE 1 DEFINITIONS


SECTION 1.01.  Defined Terms.............................................................................1
SECTION 1.02.  Classification of Loans and Borrowings...................................................27
SECTION 1.03.  Terms Generally..........................................................................27
SECTION 1.04.  Accounting Terms; GAAP...................................................................28

                                           ARTICLE 2 THE CREDITS


SECTION 2.01.  Commitments..............................................................................28
SECTION 2.02.  Loans and Borrowings.....................................................................28
SECTION 2.03.  Requests for Borrowings..................................................................30
SECTION 2.04.  Swingline Loans..........................................................................30
SECTION 2.05.  Letters of Credit........................................................................32
SECTION 2.06.  Funding of Borrowings....................................................................36
SECTION 2.07.  Interest Elections.......................................................................36
SECTION 2.08.  Termination and Reduction of Commitments.................................................38
SECTION 2.09.  Repayment of Loans; Evidence of Debt.....................................................40
SECTION 2.10.  Amortization of Term Loans and Incremental Term Loans....................................41
SECTION 2.11.  Prepayment of Loans......................................................................43
SECTION 2.12.  Fees.....................................................................................45
SECTION 2.13.  Interest.................................................................................46
SECTION 2.14.  Alternate Rate of Interest...............................................................47
SECTION 2.15.  Increased Costs..........................................................................48
SECTION 2.16.  Break Funding Payments...................................................................49
SECTION 2.17.  Taxes....................................................................................49
SECTION 2.18.  Payments Generally; Pro Rata Treatment; Sharing of Set-offs..............................51
SECTION 2.19.  Mitigation Obligations; Replacement of Lenders...........................................52
SECTION 2.20.  Additional Incremental Facilities and Commitments........................................53

                                 ARTICLE 3 REPRESENTATIONS AND WARRANTIES


SECTION 3.01.  Organization; Powers.....................................................................54
SECTION 3.02.  Authorization; Enforceability............................................................54
SECTION 3.03.  Governmental Approvals; No Conflicts.....................................................54
SECTION 3.04.  Financial Condition; No Material Adverse Change..........................................55
SECTION 3.05.  Properties...............................................................................56
SECTION 3.06.  Litigation and Environmental Matters.....................................................56
SECTION 3.07.  Compliance with Laws and Agreements......................................................56
SECTION 3.08.  Investment and Holding Company Status....................................................56
SECTION 3.09.  Taxes....................................................................................57
SECTION 3.10.  ERISA....................................................................................57
</Table>



                                        i
<PAGE>

<Table>
<S>             <C>                                                                                    <C>
SECTION 3.11.   Disclosure...............................................................................57
SECTION 3.12.   Subsidiaries.............................................................................57
SECTION 3.13.   Insurance................................................................................57
SECTION 3.14.   Labor Matters............................................................................57
SECTION 3.15.   Solvency.................................................................................57
SECTION 3.16.   No Burdensome Restrictions...............................................................58
SECTION 3.17.   Representations in Loan Documents True and Correct.......................................58

                                            ARTICLE 4 CONDITIONS


SECTION 4.01.   Effective Date...........................................................................58
SECTION 4.02.   Each Credit Event........................................................................58
SECTION 4.03.   First Incremental Borrowing Date with Respect to the Incremental Facility................58

                                       ARTICLE 5 AFFIRMATIVE COVENANTS


SECTION 5.01.   Financial Statements and Other Information...............................................59
SECTION 5.02.   Notices of Material Events...............................................................61
SECTION 5.03.   Existence; Conduct of Business...........................................................62
SECTION 5.04.   Payment of Obligations...................................................................62
SECTION 5.05.   Maintenance of Properties................................................................62
SECTION 5.06.   Insurance................................................................................62
SECTION 5.07.   Casualty and Condemnation................................................................62
SECTION 5.08.   Books and Records; Inspection and Audit Rights...........................................62
SECTION 5.09.   Compliance with Laws.....................................................................63
SECTION 5.10.   Use of Proceeds and Letters of Credit....................................................63
SECTION 5.11.A  Initial Collateral Date..................................................................63
SECTION 5.11.B  Collateral Event.........................................................................64
SECTION 5.12.   Information Regarding Collateral.........................................................65
SECTION 5.13.   Additional Subsidiaries..................................................................66
SECTION 5.14.   Further Assurances.......................................................................67
SECTION 5.15.   Concentration Accounts...................................................................67
SECTION 5.16.   Dissolution of CNG.......................................................................67
SECTION 5.17.   Sale of Solutions and ATL................................................................67
SECTION 5.18.   Qualifying Issuances.....................................................................68

                                        ARTICLE 6 NEGATIVE COVENANTS


SECTION 6.01.   Indebtedness; Certain Equity Securities..................................................68
SECTION 6.02.   Liens....................................................................................70
SECTION 6.03.   Fundamental Changes......................................................................72
SECTION 6.04.   Investments, Loans, Advances, Guarantees and Acquisitions................................72
SECTION 6.05.   Asset Sales..............................................................................75
SECTION 6.06.   Sale and Leaseback Transactions..........................................................76
</Table>



                                       ii
<PAGE>

<Table>
<S>            <C>                                                                                    <C>
SECTION 6.07.  Restricted Payments; Certain Payments of Indebtedness....................................76
SECTION 6.08.  Limitation on Capital Expenditures.......................................................77
SECTION 6.09.  Transactions with Affiliates.............................................................78
SECTION 6.10.  Restrictive Agreements...................................................................78
SECTION 6.11.  Fiscal Year..............................................................................78
SECTION 6.12.  Change in Business.......................................................................78
SECTION 6.13.  Amendment of Material Documents..........................................................78
SECTION 6.14.  Designation of Unrestricted Subsidiaries.................................................78
SECTION 6.15.  Total Net Debt to Contributed Capital Ratio..............................................79
SECTION 6.16.  Minimum EBITDA...........................................................................79
SECTION 6.17.  Total Leverage Ratio.....................................................................80
SECTION 6.18.  Senior Leverage Ratio....................................................................80
SECTION 6.19.  Interest Coverage Ratio..................................................................80
SECTION 6.20.  Financial Covenant Non-Compliance Cure...................................................80

                                        ARTICLE 7 EVENTS OF DEFAULT


SECTION 7.01.  Events of Default........................................................................81

                                           ARTICLE 8 THE AGENTS


SECTION 8.01.  Appointment, Powers, Immunities..........................................................83
SECTION 8.02.  Reliance by Agents.......................................................................84
SECTION 8.03.  Delegation to Sub-Agents.................................................................84
SECTION 8.04.  Resignation of Agents....................................................................85
SECTION 8.05.  Non-reliance on Agents or other Lenders..................................................85
SECTION 8.06.  Syndication Agent, Incremental Facility Arrangers and Co-Documentation Agents............85

                                       ARTICLE 9 HOLDINGS GUARANTEE


SECTION 9.01.  The Guarantee............................................................................85
SECTION 9.02.  Guarantee Unconditional..................................................................86
SECTION 9.03.  Discharge Only Upon Payment in Full; Reinstatement in Certain Circumstances..............86
SECTION 9.04.  Waiver...................................................................................87
SECTION 9.05.  Subrogation..............................................................................87
SECTION 9.06.  Stay of Acceleration.....................................................................87
SECTION 9.07.  Successors and Assigns...................................................................87
</Table>



                                       iii
<PAGE>

<Table>
<S>            <C>                                                                                    <C>
                                         ARTICLE 10 MISCELLANEOUS


SECTION 10.01.  Notices.................................................................................87
SECTION 10.02.  Waivers; Amendments.....................................................................88
SECTION 10.03.  Expenses; Indemnity; Damage Waiver......................................................89
SECTION 10.04.  Successors and Assigns..................................................................91
SECTION 10.05.  Survival................................................................................94
SECTION 10.06.  Counterparts; Integration; Effectiveness................................................94
SECTION 10.07.  Severability............................................................................94
SECTION 10.08.  Right of Setoff.........................................................................94
SECTION 10.09.  Governing Law; Jurisdiction; Consent to Service of Process..............................94
SECTION 10.10.  WAIVER OF JURY TRIAL....................................................................95
SECTION 10.11.  Headings................................................................................95
SECTION 10.12.  Confidentiality.........................................................................95
SECTION 10.13.  Interest Rate Limitation................................................................96
</Table>



                                       iv
<PAGE>

SCHEDULE 2.01  -     COMMITMENTS
SCHEDULE 3.05  -     REAL PROPERTY
SCHEDULE 3.06  -     DISCLOSED MATTERS
SCHEDULE 3.12  -     SUBSIDIARIES
SCHEDULE 3.13  -     INSURANCE
SCHEDULE 6.01  -     EXISTING INDEBTEDNESS
SCHEDULE 6.02  -     EXISTING LIENS
SCHEDULE 6.04  -     EXISTING INVESTMENTS
SCHEDULE 6.09  -     EXISTING AFFILIATE AGREEMENTS
SCHEDULE 6.10  -     EXISTING RESTRICTIVE AGREEMENTS



EXHIBIT A      -     FORM OF ASSIGNMENT AND ACCEPTANCE
EXHIBIT B      -     FORM OF BORROWING REQUEST
EXHIBIT C-1    -     FORM OF OPINION OF SPECIAL COUNSEL TO HOLDINGS, THE
                     BORROWER AND THE SUBSIDIARY LOAN PARTIES
EXHIBIT C-2    -     FORM OF OPINION OF THE GENERAL COUNSEL OF HOLDINGS
EXHIBIT D      -     FORM OF SUBSIDIARY GUARANTEE
EXHIBIT E      -     FORM OF REVOLVING NOTE
EXHIBIT F      -     FORM OF TERM NOTE
EXHIBIT G      -     FORM OF INTERCOMPANY NOTE
EXHIBIT H      -     FORM OF INTERCREDITOR AGREEMENT
EXHIBIT I      -     [INTENTIONALLY DELETED]
EXHIBIT J      -     FORM OF PROMISSORY NOTE
EXHIBIT K      -     FORM OF SECURITY AGREEMENT
EXHIBIT L      -     FORM OF INCREMENTAL TERM NOTE



                                        v
<PAGE>

         AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") dated as of
September 8, 1999 among Williams Communications, LLC, a Delaware limited
liability company, Williams Communications Group, Inc., a Delaware corporation,
the LENDERS party hereto, BANK OF AMERICA, N.A., as Administrative Agent, THE
CHASE MANHATTAN BANK, as Syndication Agent, and SALOMON SMITH BARNEY INC. and
LEHMAN BROTHERS, INC., as Joint Lead Arrangers with respect to the Incremental
Facility referred to herein.

         WHEREAS, Holdings, the Borrower, the lenders party thereto, Bank of
America, N.A., as Administrative Agent, The Chase Manhattan Bank, as Syndication
Agent and Salomon Smith Barney Inc. and Lehman Brothers, Inc., as Joint Lead
Arrangers with respect to the Incremental Facility referred to herein, have
entered into an Amendment No. 5 dated as of April 12, 2001 ("Amendment No. 5")
pursuant to which such parties have agreed to amend and restate the Existing
Agreement referred to therein as set forth herein;

         NOW, THEREFORE, the parties hereto agree as follows:



                                    ARTICLE 1

                                   DEFINITIONS

         SECTION 1.1. Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:

         "ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.

         "Additional Capital" means the sum of:

                  (a) $850 million;

                  (b) the aggregate Net Proceeds received by the Borrower from
         the issuance or sale of any Qualifying Equity Interests of Holdings,
         subsequent to the Amendment No. 4 Effective Date; and

                  (c) the aggregate Net Proceeds from the issuance or sale of
         Qualifying Holdings Debt subsequent to the Amendment No. 4 Effective
         Date convertible or exchangeable into Qualifying Equity Interests of
         Holdings, in each case upon conversion or exchange thereof into
         Qualifying Equity Interests of Holdings subsequent to the Amendment No.
         4 Effective Date;

provided, however, that the Net Proceeds from the issuance or sale of Equity
Interests or Debt described in clause (b) or (c) shall be excluded from any
computation of Additional Capital to the extent (1) utilized to make a
Restricted Payment or (2) such Equity Interests or Debt shall have been issued
or sold to the Borrower, a Subsidiary of the Borrower or a Plan.

         "Additional Incremental Commitment" has the meaning assigned to such
term in Section 2.20.

         "Additional Incremental Facility" has the meaning assigned to such term
in Section 2.20.



                                       1
<PAGE>

         "Additional Incremental Facility Agreement" has the meaning assigned to
such term in Section 2.20.

         "Additional Incremental Lender" has the meaning assigned to such term
in Section 2.20.

         "Additional Incremental Loan" means an Additional Incremental Revolving
Loan or an Additional Incremental Term Loan.

         "Additional Incremental Revolving Commitment" has the meaning assigned
to such term in Section 2.20.

         "Additional Incremental Revolving Loan" has the meaning assigned to
such term in Section 2.20.

         "Additional Incremental Term Commitment" has the meaning assigned to
such term in Section 2.20.

         "Additional Incremental Term Loan" has the meaning assigned to such
term in Section 2.20.

         "Adjusted EBITDA" means, for any period of four consecutive fiscal
quarters:

                  (i) if such period is a period ending on or after June 30,
         1999 and on or before September 30, 2001,

                           (A) an amount equal to (x)(1) EBITDA for the last
                           fiscal quarter in such period plus (2) ADP Interest
                           Expense for such fiscal quarter minus (3) gain for
                           such fiscal quarter attributable to Dark Fiber and
                           Capacity Dispositions multiplied by (y) four, plus

                           (B) Dark Fiber and Capacity Proceeds for such period;
                           and

                  (ii) if such period is any other period,

                           (A) EBITDA for such period plus (y) ADP Interest
                           Expense for such period minus (z) gain for such
                           period attributable to Dark Fiber and Capacity
                           Dispositions plus

                           (B) Dark Fiber and Capacity Proceeds for such period.

         "Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.

         "Administrative Agent" means Bank of America, in its capacity as
administrative agent for the Lenders hereunder, and any successor in such
capacity.

         "Administrative Questionnaire" means an Administrative Questionnaire in
a form supplied by the Administrative Agent.

         "ADP" means the program set forth in the Operative Documents.

         "ADP Event of Default" has the meaning assigned to such term in the
Intercreditor Agreement.



                                       2
<PAGE>

         "ADP Interest Expense" means, for any period, the amount that would be
accrued for such period in respect of the Borrower's obligations under the ADP
that would constitute "interest expense" for such period if such obligations
were treated as Capital Lease Obligations.

         "ADP Obligations" means all obligations of Holdings or any Subsidiary
under the ADP.

         "ADP Outstandings" means, at any time, the amount of the Borrower's
obligations at such time in respect of the ADP that would be considered
"principal" if such obligations were treated as Capital Lease Obligations.

         "ADP Property" has the meaning assigned to the term "Property" in the
Participation Agreement.

         "Affiliate" means, with respect to a specified Person, (i) another
Person that directly, or indirectly through one or more intermediaries, Controls
(a "controlling Person"), is Controlled by or is under common Control with the
specified Person, (ii) any Person that holds, directly or indirectly, 10% or
more of the Equity Interests of the specified Person and (iii) any Person 10% or
more of the Equity Interests of which are held directly or indirectly by the
specified Person or a controlling Person.

         "Agents" means, collectively, the Administrative Agent, the Syndication
Agent and each Co-Documentation Agent.

         "Alternate Base Rate" means, for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.

         "Amendment No. 4 Effective Date" means March 19, 2001.

         "Amendment No. 5" has the meaning set forth in the preamble.

         "Amendment No. 5 Effective Date" means the date of effectiveness of
Amendment No. 5.

         "Applicable Margin" means, for any day, (a) with respect to any Term
Loan or Revolving Loan, (i) the applicable rate per annum set forth below under
the caption "Eurodollar Spread" or "ABR Spread", as the case may be, based upon
the ratings by S&P and Moody's, respectively, applicable on such date to the
Facilities plus (ii) the applicable rate per annum set forth below under the
caption "Leverage Premium", unless the Total Leverage Ratio, as determined by
reference to the financial statements delivered to the Administrative Agent in
respect of the most recently ended fiscal quarter of the Borrower, is less than
6:00 to 1:00:

         (b) with respect to any Incremental Tranche A Loan, (i) the applicable
rate per annum set forth below under the caption "Eurodollar Spread" or "ABR
Spread", as the case may be, based upon the ratings by S&P and Moody's,
respectively, applicable on such date to the Facilities plus (ii) the applicable
rate per annum set forth below under the caption "Leverage Premium", unless the
Total Leverage Ratio, as determined by reference to the financial statements
delivered to the Administrative Agent in respect of the most recently ended
fiscal quarter of the Borrower, is less than 6:00 to 1:00:

<Table>
<Caption>
                   FACILITIES           EURODOLLAR               ABR               LEVERAGE
                     RATING               SPREAD               SPREAD               PREMIUM
                   ----------           ----------             ------              --------
<S>             <C>                     <C>                    <C>                 <C>
LEVEL I         BBB- and Baa3 or           1.50%                0.50%                0.25%
                     higher

LEVEL II           BB+ and Ba1            1.875%               0.875%                0.25%

LEVEL III          BB and Ba2              2.25%                1.25%                0.25%

LEVEL IV           BB- and Ba3             2.50%                1.50%                0.25%

LEVEL V          Lower than BB-
                or lower than Ba3          2.75%                1.75%                0.25%
</Table>



                                       3
<PAGE>

         and

         (c) with respect to any Additional Incremental Loan, the Applicable
Margin in respect thereof set forth in the applicable Additional Incremental
Facility Agreement.

         For purposes of the foregoing clauses (a) and (b), (i) if neither S&P
nor Moody's shall have in effect a rating for the Facilities (other than by
reason of the circumstances referred to in the last sentence of this
definition), then the Applicable Margin shall be the rate set forth in Level V,
(ii) if either S&P or Moody's, but not both S&P and Moody's, shall have in
effect a rating for the Facilities, then the Applicable Margin shall be based on
such rating, (iii) if the ratings established by S&P and Moody's for the
Facilities shall fall within different Levels, then the Applicable Margin shall
be based on the lower of the two ratings, (iv) if the ratings established by S&P
and Moody's for the Facilities shall fall within the same Level, then the
Applicable Margin shall be based on that Level and (v) if the ratings
established by S&P and Moody's for the Facilities shall be changed (other than
as a result of a change in the rating system of S&P or Moody's), such change
shall be effective as of the date on which it is first announced by the
applicable rating agency. Each change in the Applicable Margin shall apply
(other than with respect to the Leverage Premium or as described in the
immediately succeeding sentence or the immediately succeeding paragraph) during
the period commencing on the effective date of such change and ending on the
date immediately preceding the effective date of the next such change. If the
rating system of S&P or Moody's shall change, or if either such rating agency
shall cease to be in the business of rating corporate debt obligations, the
Borrower and the Lenders shall negotiate in good faith to amend this definition
to reflect such changed rating system or the unavailability of ratings from such
rating agency and, pending the effectiveness of any such amendment, the
Applicable Margin shall be determined by reference to the rating most recently
in effect prior to such change or cessation. Any such amendment shall be subject
to the provisions of Section 10.02(b).

         If the Borrower shall enter into any Additional Incremental Facility
Agreement, the Borrower, the Incremental Facility Arrangers and the
Administrative Agent, on behalf of the then current Lenders, shall evaluate in
good faith at such time whether to amend this definition of Applicable Margin
with respect to the Term Loans, the Revolving Loans and the Incremental Tranche
A Term Loans. Any such amendment shall be subject to the provisions of Section
10.02(b).

         "Applicable Percentage" means, with respect to any Revolving Lender,
the percentage of the total Revolving Commitments represented by such Lender's
Revolving Commitment. If the Revolving Commitments have terminated or expired,
the Applicable Percentages shall be determined based upon the Revolving
Commitments most recently in effect, giving effect to any assignments.

         "Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 10.04), and accepted by the Administrative Agent, in the
form of Exhibit A or any other form approved by the Administrative Agent.

         "ATL" means ATL-Algar Telecom Leste S.A., a Brazilian corporation.

         "Attributable Debt" means, on any date, in respect of any lease of
Holdings or any Restricted Subsidiary entered into as part of a Sale and
Leaseback Transaction subject to Section 6.06(ii), (i) if such



                                       4
<PAGE>

lease is a Capital Lease Obligation, the capitalized amount thereof that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP, and (ii) if such lease is not a Capital Lease Obligation, the
capitalized amount of the remaining lease payments under such lease that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP if such lease were accounted for as a Capital Lease Obligation.

         "Bank of America" means Bank of America, N.A.

         "Board" means the Board of Governors of the Federal Reserve System of
the United States of America.

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

         "Borrowing" means (a) Loans of the same Class and Type, made, converted
or continued on the same date and, in the case of Eurodollar Loans, as to which
a single Interest Period is in effect, or (b) a Swingline Loan.

         "Borrowing Request" means a request by the Borrower for a Borrowing in
accordance with Section 2.03.

         "Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York, New York or Dallas, Texas are
authorized or required by law to remain closed; provided that, when used in
connection with a Eurodollar Loan, the term "Business Day" shall also exclude
any day on which banks are not open for dealings in dollar deposits in the
London interbank market.

         "Capital Expenditures" means, for any period, the additions to
property, plant and equipment and other capital expenditures of Holdings and the
Restricted Subsidiaries that are (or would be) set forth in a consolidated
statement of cash flows of Holdings and the Restricted Subsidiaries for such
period prepared in accordance with GAAP, other than any such capital
expenditures that constitute Investments permitted under Section 6.04 (other
than Section 6.04(i)); provided that any use during such period of the proceeds
of any such Investment made by the recipient thereof for additions to property,
plant and equipment and other capital expenditures, as described in this
definition, shall (unless such use shall, itself, constitute an Investment
permitted under Section 6.04 (other than Section 6.04(i)) constitute "Capital
Expenditures".

         "Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.

         "Cash Equivalent Investments" means:

                  (1) Government Securities maturing, or subject to tender at
         the option of the holder thereof, within two years after the date of
         acquisition thereof;

                  (2) time deposits and certificates of deposit of (a) any
         commercial bank organized in the United States having capital and
         surplus in excess of $500,000,000 or (b) any branch located in the
         United States of any commercial bank organized under the law of any
         other country that is a member of the Organization for Economic
         Cooperation and Development having total assets in excess of
         $500,000,000, or its foreign currency equivalent at the time, in either
         case with a maturity date not more than one year from the date of
         acquisition;



                                       5
<PAGE>

                  (3) repurchase obligations with a term of not more than 30
         days for underlying securities of the types described in clause (1)
         above entered into with (a) any bank meeting the qualifications
         specified in clause (2) above or (b) any primary government securities
         dealer reporting to the Market Reports Division of the Federal Reserve
         Bank of New York;

                  (4) direct obligations issued by any state of the United
         States or any political subdivision of any such state or any public
         instrumentality thereof maturing, or subject to tender at the option of
         the holder of such obligation, within one year after the date of
         acquisition thereof; provided that, at the time of acquisition, the
         long-term debt of such state, political subdivision or public
         instrumentality has a rating of A, or higher, from S&P or A-2 or higher
         from Moody's or, if at any time neither S&P nor Moody's shaft be rating
         such obligations, then an equivalent rating from such other nationally
         recognized rating service as is acceptable to the Administrative Agent;

                  (5) commercial paper issued by the parent corporation of (a)
         any commercial bank organized in the United States having capital and
         surplus in excess of $500,000,000 or (b) any branch located in the
         United States of any commercial bank organized under the laws of any
         other country that is a member of the Organization for Economic
         Cooperation and Development having total assets in excess of
         $500,000,000, or its foreign currency equivalent at the time, and money
         market instruments and commercial paper issued by others having one of
         the three highest ratings obtainable from either S&P or Moody's, or, if
         at any time neither S&P nor Moody's shall be rating such obligations,
         then from such other nationally recognized rating service as is
         acceptable to the Administrative Agent and in each case maturing within
         one year after the date of acquisition;

                  (6) overnight bank deposits and bankers' acceptances at (a)
         any commercial bank organized in the United States having capital and
         surplus in excess of $500,000,000 or (b) any branch located in the
         United States of any commercial bank organized under the laws of any
         other country that is a member of the Organization for Economic
         Cooperation and Development having total assets in excess of
         $500,000,000 or its foreign currency equivalent at the time;

                  (7) deposits available for withdrawal on demand with (a) a
         commercial bank organized in the United States having capital and
         surplus in excess of $500,000,000 or (b) any branch located in the
         United States of any commercial bank organized under the laws of any
         other country that is a member of the Organization for Economic
         Cooperation and Development having total assets in excess of
         $500,000,000 or its foreign currency equivalent at the time; and

                  (8) investments in money market funds substantially all of
         whose assets comprise securities of the types described in clauses (1)
         through (7).

         "Change in Control" means:



                                       6
<PAGE>

         (a) the acquisition of ownership, directly or indirectly, beneficially
or of record, by any Person other than Holdings of any shares of capital stock
of the Borrower;

         (b) the acquisition of ownership, directly or indirectly, beneficially
or of record, by any Person or group (within the meaning of Section 13(d) or
14(d) of the Exchange Act and the rules of the Commission thereunder as in
effect on the date hereof) other than the Parent and its subsidiaries, of shares
representing more than 35% of either (i) the aggregate ordinary voting power
represented by the issued and outstanding Voting Stock of Holdings or (ii) the
issued and outstanding capital stock of Holdings;

         (c) other than as a result of the consummation of the Spin-Off, the
failure of the Parent and its subsidiaries to own, directly or indirectly, (i)
more than 75% (or, if (x) the Facilities are rated at least BBB- by S&P and Baa3
by Moody's and (y) the Parent shall have been released from its obligations
under the Parent Guarantee, 35%) of the aggregate ordinary voting power
represented by the issued and outstanding Voting Stock of Holdings or (ii) more
than 65% (or, if (x) the Facilities are rated at least BBB- by S&P and Baa3 by
Moody's and (y) the Parent shall have been released from its obligations under
the Parent Guarantee, 35%) of the issued and outstanding capital stock of
Holdings;

         (d) occupation of a majority of the seats (other than vacant seats) on
the board of directors of Holdings by Persons who were neither (i) nominated by
the board of directors of Holdings nor (ii) appointed by directors so nominated;
or

         (e) the acquisition of direct or indirect Control of Holdings by any
Person or group (other than, prior to the consummation of the Spin-Off, the
Parent).

         "Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender, any Swingline
Lender or any Issuing Bank (or, for purposes of Section 2.15(b), by any lending
office of such Lender, Swingline Lender or Issuing Bank or by such Lender's,
Swingline Lender's or Issuing Bank's holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.

         "Chase" means The Chase Manhattan Bank.

         "Class" means, when used in reference to any Loan or Borrowing, to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans,
Term Loans, Swingline Loans, Incremental Term Loans or Additional Incremental
Loans and, when used in reference to any Commitment or Facility, refers to
whether such Commitment or Facility is a Revolving Commitment or Facility, a
Term Commitment or Facility, an Incremental Commitment or Facility or an
Additional Incremental Commitment or Facility. The Additional Incremental Loans,
Borrowings thereof and Additional Incremental Commitments under each Additional
Incremental Facility shall constitute a separate Class from the Additional
Incremental Loans, Borrowings thereof and Additional Incremental Commitments
under each other Additional Incremental Facility, and if an Additional
Incremental Facility includes Additional Incremental Revolving Commitments and
Additional Incremental Term Commitments, such Additional Incremental Revolving
Commitments and Additional Incremental Term Commitments and the Additional
Incremental Revolving Loans and Borrowings thereof and the Additional
Incremental Term Loans and Borrowings thereof, respectively, thereunder shall
constitute separate Classes.



                                       7
<PAGE>

         "CNG" means CNG Computer Networking Group, Inc., a Delaware
corporation, and its successors and assigns.

         "Co-Documentation Agent" means each of Salomon Smith Barney Inc.,
Lehman Brothers, Inc. and Merrill Lynch & Co., Inc., in each case in its
capacity as a co-documentation agent hereunder.

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

         "Collateral" means any and all "Collateral", as defined in any
applicable Collateral Document.

         "Collateral Documents" means the Security Agreement and all security
agreements, pledge agreements, mortgages and other security agreements or
instruments or documents executed and delivered pursuant to Section 5.11B, 5.13
or 5.14.

         "Collateral Establishment Date" has the meaning assigned to such term
in Section 5.11B.

         "Collateral Event" means the failure of the Facilities to be rated at
least (i) BB- by S&P and (ii) Ba3 by Moody's.

         "Collateral Notice has the meaning assigned to such term in Section
5.11B.

         "Collateral Release Event" means the occurrence, after the occurrence
of a Collateral Event, of the earlier to occur of (i) the termination of the
Commitments, the payment in full of all obligations under the Loan Documents and
the expiration or termination of all Letters of Credit and (ii) the rating of
the Facilities by S&P of BB+ or greater and by Moody's of Ba1 or greater, in
each case after giving effect to the release of all Collateral.

         "Commission" means the United States Securities and Exchange
Commission.

         "Commitment" means a Revolving Commitment, a Term Commitment, an
Incremental Commitment, an Additional Incremental Commitment or any combination
thereof (as the context requires).

         "Commitment Fee Rate" means, (a) with respect to the Revolving
Commitments and the Term Commitments, a rate per annum equal to (x) 1.00% for
each day on which Usage is less than 33.3%, (y) 0.75% for each day on which
Usage is equal to or greater than 33.3% but less than 66.6% and (z) 0.50% for
each day on which Usage is equal to or greater than 66.6% and (b) with respect
to the Incremental Tranche A Commitments, 0.75% for each day. For purposes of
the foregoing, "Usage" means, on any date, the percentage obtained by dividing
(i) in the case of Revolving Commitments, (a) the aggregate Revolving Exposure
on such date less the aggregate principal amount of all Swingline Loans
outstanding on such date by (b) the aggregate outstanding Revolving Commitments
on such date and (ii) in the case of Term Commitments, (a) the aggregate
principal amount of all Term Loans outstanding on such date by (b) the sum of
the aggregate principal amount of all Term Loans outstanding on such date and
the aggregate unused Term Commitments on such date.

         "Commitment Fees" has the meaning assigned to such term in Section
2.12.

         "Consolidated Net Income" means, for any period, the net income or loss
of Holdings and the Restricted Subsidiaries (exclusive of the portion of net
income allocable to Persons that are not Restricted Subsidiaries, except to the
extent such amounts are received in cash by the Borrower or a Restricted
Subsidiary) for such period.

         "Consolidated Assets" means, at any date, the consolidated assets of
Holdings and the Restricted Subsidiaries.



                                       8
<PAGE>

         "Contributed Capital" means, at any date, (i) Total Net Debt at such
date plus (ii) without duplication, all cash proceeds received by Holdings on or
prior to such date from contributions to the capital, or purchases of common
equity securities, of Holdings, including, without limitation, the proceeds of
the Equity Issuance, and all other capital contributions made by the Parent and
its subsidiaries (other than Holdings and its Subsidiaries) to Holdings, but
only to the extent that proceeds of any of the foregoing are contributed by
Holdings to the Borrower.

         "Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have correlative meanings.

         "Dark Fiber and Capacity Proceeds" means, for any period, cash proceeds
received by Holdings and the Restricted Subsidiaries in respect of Dark Fiber
and Capacity Dispositions during such period.

         "Dark Fiber and Capacity Disposition" means a lease, sale, conveyance
or other disposition of fiber optic cable or capacity for a period constituting
all or substantially all of the expected useful life of either the fiber optic
cable (in the case of Dark Fiber Disposition) or optronic equipment generating
the capacity (in the case of Capacity Disposition) thereof.

         "Deemed Subsidiary Investment" has the meaning assigned to such term in
Section 6.14.

         "Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.

         "Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.

         "Disqualified Stock" of any Person means any Equity Interest of such
Person which, by its terms, or by the terms of any security into which it is
convertible or for which it is exchangeable, or upon the happening of any event,
matures or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the option of the holder thereof, in whole or in
part, on or prior to the first anniversary of the Term Maturity Date.

         "dollars" or "$" refers to lawful money of the United States of
America.

         "EBITDA" means, for any period,

                  (i Consolidated Net Income for such period,

         plus,

                  (ii to the extent deducted in determining Consolidated Net
         Income, the sum, without duplication, of (w) interest expense, (x)
         income tax expense, (y) depreciation and amortization expense and (z)
         non-cash extraordinary or non-recurring charges (if any), in each case
         recognized in such period;

         minus,

                  (iii to the extent included in Consolidated Net Income for
         such period, extraordinary or non-recurring gains (if any), in each
         case recognized in such period.

         "Effective Date" means September 8, 1999.



                                       9
<PAGE>

         "Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material, the health effects of Hazardous Materials or safety matters.

         "Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of Holdings or any Restricted Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.

         "Equity Interests" means shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person.

         "Equity Issuance" means the issuance and sale by Holdings of its common
stock (x) in an initial public offering or (y) to certain strategic investors
other than the Parent or any of its subsidiaries or Affiliates.

         "Equity Issuance Registration Statement" means Amendment No. 7 to the
Registration Statement on Form S-1 with respect to the Equity Issuance filed by
Holdings with the Commission on September 2, 1999.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

         "ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.

         "ERISA Event" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.

         "Eurodollar", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.

         "Event of Default" has the meaning assigned to such term in Article 7.

         "Excess Cash Flow" means, for any fiscal period, the sum (without
duplication) of:



                                       10
<PAGE>

                  (a) the Consolidated Net Income (or loss) of Holdings and the
         Restricted Subsidiaries for such period, adjusted to exclude any gains
         or losses attributable to Prepayment Events; plus

                  (b) depreciation, amortization, non-cash interest expense and
         other non-cash charges or losses deducted in determining Consolidated
         Net Income (or loss) for such period; plus

                  (c) the sum of (i) the amount, if any, by which Net Working
         Capital decreased during such period plus (ii) the amount, if any, by
         which the consolidated deferred revenues of Holdings and the Restricted
         Subsidiaries increased during such period plus (iii) the aggregate
         principal amount of Capital Lease Obligations and other Indebtedness
         incurred during such period to finance Capital Expenditures, to the
         extent that mandatory principal payments in respect of such
         Indebtedness would not be excluded from clause (f) below when made;
         minus

                  (d) the sum of (i) any non-cash gains included in determining
         Consolidated Net Income (or loss) for such period plus (ii) the amount,
         if any, by which Net Working Capital increased during such period plus
         (iii) the amount, if any, by which the consolidated deferred revenues
         of Holdings and the Restricted Subsidiaries decreased during such
         period; minus

                  (e) Capital Expenditures for such period; minus

                  (f) the aggregate principal amount of long-term Indebtedness
         (including pursuant to Capital Lease Obligations) repaid or prepaid by
         Holdings and the Restricted Subsidiaries during such period, excluding
         (i) Indebtedness in respect of Revolving Loans, Incremental Revolving
         Loans, Additional Incremental Revolving Loans and Letters of Credit,
         (ii) Term Loans, Incremental Term Loans and Additional Incremental Term
         Loans prepaid pursuant to Section 2.11(b) or (c), (iii) repayments or
         prepayments of Indebtedness financed by incurring other Indebtedness,
         to the extent that mandatory principal payments in respect of such
         other Indebtedness would not be excluded from this clause (f) when made
         and (iv) Indebtedness referred to in Sections 6.01(d), 6.01(f),
         6.01(g), 6.01(i), 6.01(j), 6.01(k) and 6.01(o).

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "Excluded Taxes" means, with respect to the Administrative Agent, any
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is a
resident or is organized or in which its principal office is located or, in the
case of any Lender, in which its applicable lending office is located, (b) any
branch profits taxes imposed by the United States of America or any similar tax
imposed by any other jurisdiction described in clause (a) above and (c) in the
case of a Foreign Lender (other than an assignee pursuant to a request by the
Borrower under Section 2.19(b)) or any Participant that would be a Foreign
Lender if it were a Lender, any withholding tax that (i) is imposed on or with
respect to amounts



                                       11
<PAGE>

payable to such Foreign Lender or Participant at the time such Foreign Lender
becomes a party to this Agreement (or designates a new lending office) or such
Participant become a Participant, except to the extent that such Foreign Lender
(or its assignor, if any) or Participant was entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts from the Borrower with respect to such withholding tax pursuant to
Section 2.17(a) or (ii) is attributable to such Foreign Lender or Participant's
failure to comply with Section 2.17(e).

         "Existing International Joint Ventures" means ATL, PowerTel Limited and
Telefonica Manquehue, S.A.

         "Facilities" means the Term Facility, the Revolving Facility, the
Incremental Facility and each Additional Incremental Facility.

         "Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.

         "Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of Holdings or the Borrower, as the
case may be.

         "First Incremental Borrowing Date" means the date on which the first
Borrowing under the Incremental Facility is made in accordance with Section
4.03.

         "Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.

         "Foreign Subsidiary" means any Subsidiary that is organized under the
laws of a jurisdiction other than the United States of America or any State
thereof or the District of Columbia, other than a Subsidiary that is (whether as
a matter of law, pursuant to an election by such Subsidiary or otherwise)
treated as a partnership in which any Subsidiary that is not a Foreign
Subsidiary is a partner or as a branch of any Subsidiary that is not a Foreign
Subsidiary for United States income tax purposes.

         "GAAP" means generally accepted accounting principles in the United
States of America.

         "Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.

         "Government Securities" means direct obligations of, or obligations
fully and unconditionally guaranteed or insured by, the United States of America
or any agency or instrumentality thereof for the payment of which obligations or
guarantee the full faith and credit of the United States is pledged and which
are not callable or redeemable at the issuer's option; provided that, for
purposes of the definition of "Cash Equivalents Investments" only, such
obligations shall not constitute Government Securities if they are redeemable or
callable at a price less than the purchase price paid by the Borrower or the
applicable other Restricted Subsidiary, together with all accrued and unpaid
interest, if any, on such Government Securities.

         "Granting Lender" has the meaning set forth in Section 10.04(b)(2).



                                       12
<PAGE>

         "Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.

         "Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law as hazardous, toxic, a pollutant or a contaminant.

         "Hedge Counterparty" means each Lender that is, and each affiliate of
any Lender that is, a counterparty under a Hedging Agreement entered into with
the Borrower or any other Restricted Subsidiary.

         "Hedging Agreement" means any interest rate protection agreement,
commodity price protection agreement or other interest or currency exchange rate
or commodity price hedging arrangement.

         "High Yield Notes" means the notes issued by Holdings (i) the terms of
which either (A) are substantially similar to the terms set forth in the Notes
Offering Registration Statement or (B) are otherwise approved by the
Administrative Agent and the Syndication Agent after consultation with the
Required Banks and (ii) no part of the principal of which is required to be paid
(upon maturity or by mandatory sinking fund, mandatory redemption, mandatory
prepayment or otherwise) prior to the date that is one year after the Term
Maturity Date.

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

         "Incremental Commitments" means the Incremental Tranche A Commitments.

         "Incremental Facility" means the Incremental Tranche A Facility.

         "Incremental Facility Arrangers" means Salomon Smith Barney Inc. and
Lehman Brothers, Inc., in their respective capacities as joint lead arrangers of
the Incremental Facility.

         "Incremental Lenders" means the Incremental Tranche A Lenders.

         "Incremental Term Loans" means the Incremental Tranche A Term Loans.

         "Incremental Tranche A Amortization Date" means December 31, 2002.

         "Incremental Tranche A Commitments" means with respect to each
Incremental Tranche A Lender, the commitment, if any, of such Lender to make
Incremental Tranche A Term Loans hereunder during the Incremental Tranche A Term
Loan Availability Period, expressed as an amount representing the maximum
principal amount of the Incremental Tranche A Term Loans to be made by such
Lender hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 10.04. The initial
amount of each Lender's Incremental Tranche A Term Commitment is set forth on



                                       13
<PAGE>

Schedule 2.01(b), or in the Assignment and Acceptance pursuant to which such
Lender shall have assumed its Incremental Tranche A Term Commitment, as
applicable. The initial aggregate amount of the Incremental Tranche A Lenders'
Incremental Tranche A Term Commitments is $450,000,000.

         "Incremental Tranche A Commitment Termination Date" means the date that
is the earlier of (i) 180 days after the Amendment No. 5 Effective Date and (ii)
the date of termination of the Incremental Tranche A Commitments.

         "Incremental Tranche A Facility" means the Incremental Tranche A
Commitments and the Incremental Tranche A Term Loans hereunder.

         "Incremental Tranche A Lenders" means a Lender with an Incremental
Tranche A Commitment or an outstanding Incremental Tranche A Term Loan.

         "Incremental Tranche A Maturity Date" means September 8, 2006.

         "Incremental Tranche A Term Loan" means a Loan made pursuant to Section
2.01(b)(i).

         "Incremental Tranche A Term Loan Availability Period" means the period
from and including the First Incremental Borrowing Date to but excluding the
earlier of (i) the Incremental Tranche A Commitment Termination Date and (ii)
the date of termination of the Incremental Tranche A Commitments.

         "Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
under conditional sale or other title retention agreements relating to property
acquired by such Person, (d) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding (i) current accounts
payable incurred in the ordinary course of business and (ii) payment obligations
of such Person to the owner of assets used in a Telecommunications Business for
the use thereof pursuant to a lease or other similar arrangement with respect to
such assets or a portion thereof entered into in the ordinary course of
business), (e) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on property owned or acquired by such Person, whether or not the
Indebtedness secured thereby has been assumed, (f) all Guarantees by such Person
of Indebtedness of others, (g) all (x) Capital Lease Obligations of such Person
(provided that Capital Lease Obligations in respect of fiber optic cable
capacity arising in connection with exchanges of such capacity shall constitute
Indebtedness only to the extent of the amount of such Person's liability in
respect thereof net (but not less than zero) of such Person's right to receive
payments obtained in exchange therefor) and (y) ADP Outstandings, if any, of
such Person, (h) all obligations, contingent or otherwise, of such Person as an
account party in respect of letters of credit and letters of guaranty, (i) all
obligations, contingent or otherwise, of such Person in respect of bankers'
acceptances, (j) any Disqualified Stock and (k) all obligations under any
Hedging Agreements or Permitted Specified Security Hedging Transactions. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.
Indebtedness of the Borrower and the other Subsidiaries shall exclude any
Indebtedness of Holdings that would otherwise constitute Indebtedness of the
Borrower or any such Subsidiary only under clause (e) above and solely by virtue
of a Lien created under the Loan Documents in accordance with Section 5.11B(d),
and Indebtedness of Holdings and the Subsidiaries shall exclude any Indebtedness
of the Parent that would otherwise constitute Indebtedness of Holdings or any
Subsidiary only under clause (e) above and solely by virtue of a Lien created
under the Loan Documents in accordance with Section 5.11B(d).

         "Indemnified Taxes" means Taxes other than Excluded Taxes.



                                       14
<PAGE>

         "Information Memorandum" means the Confidential Information Memorandum
dated August 1999 relating to the Parent, Holdings, the Borrower and the
Transactions.

         "Initial Collateral Date" means the first date on which the Parent
ceases to own at least a majority of the outstanding securities having ordinary
voting power of Holdings, whether as a result of the consummation of the
Spin-Off or otherwise.

         "Intercreditor Agreement" means the Intercreditor Agreement,
substantially in the form of Exhibit H hereto, among the Lenders, the Parent,
Holdings and the Borrower.

         "Interest Coverage Ratio" means, at any date, the ratio of (i) the
amount equal to (A) EBITDA plus (B) ADP Interest Expense minus (C) gains
attributable to Dark Fiber and Capacity Dispositions plus (D) Dark Fiber and
Capacity Proceeds to (ii) Interest Expense, in each case for the period of four
consecutive fiscal quarters most recently ended on or prior to such date.

         "Interest Election Request" means a request by the Borrower to convert
or continue a Revolving Borrowing or Term Borrowing in accordance with Section
2.07.

         "Interest Expense" means, for any period, the cash interest expense of
Holdings and the Restricted Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP plus ADP Interest Expense for such
period, net of interest income for such period.

         "Interest Payment Date" means (a) with respect to any ABR Loan (other
than a Swingline Loan), the last day of each March, June, September and
December, (b) with respect to any Eurodollar Loan, the last day of the Interest
Period applicable to the Borrowing of which such Loan is a part and, in the case
of a Eurodollar Borrowing with an Interest Period of more than three months'
duration, each day prior to the last day of such Interest Period that occurs at
intervals of three months' duration after the first day of such Interest Period,
and (c) with respect to any Swingline Loan, the day that such Loan is required
to be repaid.

         "Interest Period" means with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three, or six months
(or if corresponding funding is available to each Lender of the applicable
Class, twelve months) thereafter, as the Borrower may elect; provided, that (i)
if any Interest Period would end on a day other than a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day and
(ii) any Interest Period that commences on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
last calendar month of such Interest Period) shall end on the last Business Day
of the last calendar month of such Interest Period. For purposes hereof, the
date of a Borrowing initially shall be the date on which such Borrowing is made
and thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.

         "Issuing Bank" means each of Bank of America and Chase, each in its
capacity as an issuer of Letters of Credit hereunder, and its successors in such
capacity as provided in Section 2.05(i). Each Issuing Bank may, in its
discretion, arrange for one or more Letters of Credit to be issued by affiliates
of the Issuing Bank, in which case the term "Issuing Bank" shall include any
such affiliate with respect to Letters of Credit issued by such affiliate.

         "Investment" has the meaning assigned to such term in Section 6.04.

         "LC Disbursement" means a payment made by an Issuing Bank pursuant to a
Letter of Credit.

         "LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have



                                       15
<PAGE>

not yet been reimbursed by or on behalf of the Borrower at such time. The LC
Exposure of any Revolving Lender at any time shall be its Applicable Percentage
of the total LC Exposure at such time.

         "Lenders" means the Persons listed on Schedule 2.01, any Additional
Incremental Lender that shall become a Lender pursuant to Section 2.20 and any
other Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance. Unless the context otherwise requires, the term
"Lenders" includes the Swingline Lenders and the Additional Incremental Lenders.

         "Leverage Target Date" means the first date on or after March 31, 2002
on which the Total Leverage Ratio for the fiscal quarter (or fiscal year, as the
case may be) most recently ended and with respect to which Holdings and the
Borrower shall have delivered the financial statements required to be delivered
by them with respect to such fiscal quarter (or fiscal year, as the case may be)
pursuant to Section 5.01(a) or 5.01(b) does not exceed 3.5:1.0.

         "Letter of Credit" means any letter of credit issued pursuant to this
Agreement.

         "LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate (rounded
upwards, if necessary, to the next 1/16 of 1%) at which dollar deposits of
$5,000,000 and for a maturity comparable to such Interest Period are offered by
the principal London office of the Administrative Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.

         "Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.

         "Loan Documents" means this Agreement, the Parent Guarantee, the
Subsidiary Guarantee, the Intercreditor Agreement, any Additional Incremental
Facility Agreement and the Collateral Documents (if any).

         "Loan Parties" means Holdings, the Borrower and the Subsidiary Loan
Parties.

         "Loan Party Guarantees" means the Subsidiary Guarantee.

         "Loans" means the loans made by the Lenders to the Borrower pursuant to
this Agreement.

         "Mark-to-Market Valuation" means, at any date with respect to any
Hedging Agreement or Permitted Specified Security Hedging Transaction, all net
obligations under such Hedging Agreement or Permitted Specified Security Hedging
Transaction in an amount equal to (i) if such Hedging Agreement or Permitted
Specified Security Hedging Transaction has been closed out, the termination
value thereof or (ii) if such Hedging Agreement or Permitted Specified Security
Hedging Transaction has not been closed out, the mark-to-market value thereof
determined on the basis of readily available quotations provided by any



                                       16
<PAGE>

recognized dealer in Hedging Agreements or other transactions similar to such
Hedging Agreement or Permitted Specified Security Hedging Transaction."

         "Material Adverse Change" means any event, development or circumstance
that has had or could reasonably be expected to have a Material Adverse Effect.

         "Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
Holdings and its Subsidiaries taken as a whole, (b) the ability of any Loan
Party to perform any of its obligations under any Loan Document or (c) the
rights of or benefits available to the Lenders under any Loan Document.

         "Material Indebtedness" means Indebtedness (other than the Loans and
Letters of Credit) of any one or more of Holdings and the Restricted
Subsidiaries in an aggregate principal amount exceeding $25,000,000. For
purposes of determining Material Indebtedness, the "principal amount" of the
obligations of Holdings or any Restricted Subsidiary in respect of any Hedging
Agreement or Permitted Specified Security Hedging Transaction at any time shall
be the maximum aggregate amount (giving effect to any netting agreements) that
Holdings or such Restricted Subsidiary would be required to pay if such Hedging
Agreement or Permitted Specified Security Hedging Transaction were terminated at
such time.

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

         "Mortgage" means a mortgage, deed of trust, assignment of leases and
rents, leasehold mortgage or other security document granting a Lien on any
Mortgaged Property to secure the Obligations.

         "Mortgage Establishment Date" has the meaning assigned to such term in
Section 5.11B(b).

         "Mortgaged Property" means each parcel of real property and the
improvements thereto owned by a Loan Party with respect to which a Mortgage is
granted pursuant to Section 5.11B(b).

         "Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.

         "Net Proceeds" means, with respect to any event (a) the cash proceeds
received in respect of such event including (i) any cash received in respect of
any non-cash proceeds, but only as and when received, (ii) in the case of a
casualty, insurance proceeds, and (iii) in the case of a condemnation or similar
event, condemnation awards and similar payments, net of (b) the sum of (i) all
reasonable fees and out-of-pocket expenses paid by Holdings and the Restricted
Subsidiaries to third parties (other than Affiliates) in connection with such
event, (ii) in the case of a sale or other disposition of an asset (including
pursuant to a casualty or condemnation), the amount of all payments required to
be made by Holdings and the Restricted Subsidiaries as a result of such event to
repay Indebtedness (other than Loans) secured by such asset or otherwise subject
to mandatory prepayment as a result of such event, and (iii) the amount of all
taxes paid (or reasonably estimated to be payable) by Holdings and the
Restricted Subsidiaries, and the amount of any reserves established by Holdings
and the Restricted Subsidiaries to fund contingent liabilities reasonably
estimated to be payable, in each case during the year that such event occurred
or the next succeeding year and that are directly attributable to such event (as
determined reasonably and in good faith by the chief financial officer of
Holdings).

         "Net Working Capital" means, at any date, (a) the consolidated current
assets of Holdings and the Restricted Subsidiaries as of such date (excluding
cash and Cash Equivalent Investments) minus (b) the consolidated current
liabilities of Holdings and the Restricted Subsidiaries as of such date
(excluding current liabilities in respect of Indebtedness). Net Working Capital
at any date may be a positive or negative number. Net Working Capital increases
when it becomes more positive or less negative and decreases when it becomes
less positive or more negative.

         "Notes Offering" means the public offering and sale of the High Yield
Notes.



                                       17
<PAGE>

         "Notes Offering Registration Statement" means Amendment No. 6 to the
Registration Statement on Form S-1 with respect to the Notes Offering filed by
Holdings with the Commission on September 2, 1999.

         "Obligations" means (i) obligations under the Loan Documents, including
(x) all principal of and interest (including, without limitation, Post-Petition
Interest) on any Loan under, or any Note issued pursuant to, or any
reimbursement obligation under any Letter of Credit under, the Credit Agreement
and (y) all other amounts payable under the Loan Documents and (ii) obligations
of any Loan Party under any Hedging Agreement with any Lender or any affiliate
of any Lender, including, without limitation, a conditional obligation to make a
future payment under an outstanding Hedging Agreement.

         "Operative Documents" has the meaning set forth in the Participation
Agreement.

         "Other Financing Documents" means all agreements, instruments and other
documents entered into or related to the Equity Issuance and the Notes Offering.

         "Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.

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

         "Parent Indemnity" means the Indemnification Agreement dated as of
September 1, 1999 between the Parent and Holdings.

         "Participation Agreement" means the Amended and Restated Participation
Agreement dated as of September 2, 1998, as amended from time to time, among the
Borrower, State Street Bank and Trust Company of Connecticut, National
Association, as trustee, the Noteholders and Certificate Holders named therein,
State Street Bank and Trust Company, as collateral agent, and Citibank, N.A., as
agent, and the other agents, arrangers and managing agents party thereto.

         "PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.

         "Permitted Encumbrances" means:

         (a)      Liens imposed by law for taxes that are not yet due or are
                  being contested in compliance with Section 5.04;

         (b)      carriers', warehousemen's, mechanics', materialmen's,
                  repairmen's and other like Liens imposed by law, arising in
                  the ordinary course of business and securing obligations that
                  are not overdue by more than 45 days or are being contested in
                  compliance with Section 5.04;

         (c)      pledges and deposits made in the ordinary course of business
                  in compliance with workers' compensation, unemployment
                  insurance and other social security laws or regulations;

         (d)      deposits to secure the performance of bids, trade contracts,
                  leases, statutory obligations, surety and appeal bonds,
                  performance bonds and other obligations of a like nature, in
                  each case in the ordinary course of business;



                                       18
<PAGE>

         (e)      judgment liens in respect of judgments that do not constitute
                  an Event of Default under clause (k) of Section 7.01; and

         (f)      easements, zoning restrictions, rights-of-way and similar
                  encumbrances on real property imposed by law or arising in the
                  ordinary course of business that do not secure any monetary
                  obligations and do not materially detract from the value of
                  the affected property or interfere with the ordinary conduct
                  of business of Holdings or any Restricted Subsidiary;

provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.

         "Permitted Receivables Disposition" means any transfer (by way of sale,
pledge or otherwise) by the Borrower or any Restricted Subsidiary to any other
Person (including a Receivables Subsidiary) of accounts receivable and other
rights to payment (whether constituting accounts, chattel paper, instruments,
general intangibles or otherwise and including the right to payment of interest
or finance charges) and related contract and other rights and property
(including all general intangibles, collections and other proceeds relating
thereto, all security therefor (and the property subject thereto), all
guarantees and other agreements or arrangements of whatsoever character from
time to time supporting such right to payment, and all other rights, title and
interest in goods relating to a sale which gave rise to such right of payment)
in connection with a Permitted Receivables Financing.

         "Permitted Receivables Financing" means any receivables securitization
program or other type of accounts receivable financing transaction by the
Borrower or any of its Restricted Subsidiaries in an aggregate amount not to
exceed $250,000,000 on terms reasonably satisfactory to all the Incremental
Facility Arrangers (if any) and the Administrative Agent.

         "Permitted Specified Security Hedging Transactions" means options,
collars, forwards and other similar transactions (including, without limitation,
prepaid forward transactions, collar/loan transactions and other similar
transactions) with respect to any Specified Security entered into by the
Borrower or any of its Subsidiaries to monetize the value of and/or hedge
against changes in the market price of such Specified Security."

         "Permitted Telecommunications Asset Disposition"means the transfer,
conveyance, sale, lease or other disposition of an interest in or capacity on
(1) optical fiber and/or conduit and any related equipment, technology or
software used in a Segment of the Borrower's and the Restricted Subsidiaries'
communications network, other than in the ordinary course of business; provided
that after giving effect to such disposition, the Borrower and the Restricted
Subsidiaries would retain the right to use at least the minimum retained
capacity set forth below:

         (i)      with respect to any Segment constructed by, for or on behalf
                  of the Borrower or any Subsidiary or Affiliate, (x) 24 optical
                  fibers per route mile on such Segment as deployed at the time
                  of such Permitted Telecommunications Asset Disposition or (y)
                  12 optical fibers and one empty conduit per route mile on such
                  Segment as deployed at the time of such Permitted
                  Telecommunications Asset Disposition; and

         (ii)     with respect to any Segment purchased or leased from third
                  parties, the lesser of (x) 50% of the optical fibers per route
                  mile originally purchased or leased on such Segment, (y) 24
                  optical fibers per route mile on such Segment as deployed at
                  the time of such Permitted Telecommunications Asset
                  Disposition or (z) 12 optical fibers and one empty conduit per
                  route mile on such Segment as deployed at the time of such
                  Permitted Telecommunications Asset Disposition; or



                                       19
<PAGE>

(2) single strand fiber used in a Segment of the Borrower's and the Restricted
Subsidiaries' communications network, other than in the ordinary course of
business; provided that after giving effect to such disposition, the Borrower
and the Restricted Subsidiaries would not eliminate all capacity between the
endpoint cities connected by any fiber of the Borrower or its Restricted
Subsidiaries.

         "Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.

         "Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.

         "Post-Petition Interest" means any interest that accrues after the
commencement of any case, proceeding or action relating to the bankruptcy,
reorganization or insolvency of the Borrower (or would accrue but for the
operation of applicable bankruptcy, reorganization or insolvency laws), whether
or not such interest is allowed or allowable as a claim in any such case,
proceeding or other action.

         "Prepayment Event" means:

         (a)      any sale, transfer or other disposition (including pursuant to
                  a Sale and Leaseback Transaction) of any property or asset of
                  Holdings or any Restricted Subsidiary, other than Dark Fiber
                  and Capacity Dispositions and dispositions permitted under
                  clauses (a) through (d) and (f) through (i) of Section 6.05
                  and except as contemplated by Sections 5.17 and 5.18; or

         (b)      any casualty or other insured damage to, or any taking under
                  power of eminent domain or by condemnation or similar
                  proceeding of, any property or asset of Holdings or any
                  Subsidiary, but only to the extent that the Net Proceeds
                  therefrom have not been applied to repair, restore or replace
                  such property or asset or purchase similar property or assets
                  within 360 days after such event; or

         (c)      the incurrence by Holdings, the Borrower or any Subsidiary of
                  any Indebtedness, other than Indebtedness permitted under
                  Section 6.01.

         "Prepayment Portion" means in respect of any prepayment to be made
pursuant to Section 2.11(b) or 2.11(c), a fraction, the numerator of which is
the aggregate principal amount of Term Loans, Additional Incremental Term Loans
and Incremental Term Loans of any Class subject to prepayment under such Section
on account of Excess Cash Flow or the applicable type of Prepayment Event, as
the case may be (whether or not such Loans are actually to be prepaid on account
of such Prepayment Event or Excess Cash Flow), and the denominator of which is
the sum of such aggregate principal amount and the aggregate Revolving
Commitments and Additional Incremental Revolving Commitments of any Class
subject to reduction pursuant to Section 2.08(f) or (g) on account of Excess
Cash Flow or the applicable type of Prepayment Event, as the case may be
(whether or not such Commitments are actually to be reduced on account of such
Prepayment Event or Excess Cash Flow).

         "Prime Rate" means the rate of interest per annum publicly announced
from time to time by the Administrative Agent as its prime rate in effect at its
principal office in Dallas, Texas; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.



                                       20
<PAGE>

         "Projections" has the meaning set forth in Section 3.04(d).

         "Qualifying Borrower Indebtedness" means, unsecured Indebtedness of the
Borrower to Holdings that (i) does not require the payment of any principal or
cash interest prior to the first anniversary of the Term Maturity Date, (ii) is
not redeemable by, or convertible or exchangeable for securities of the Borrower
or any of its Subsidiaries that are redeemable by, the holder thereof, and not
subject to any required sinking fund or other similar payment, prior to the
first anniversary of the Term Maturity Date, (iii) is subordinated to the
Obligations pursuant to subordination provisions at least as favorable to the
holders of the Obligations as the provisions set forth in Exhibit J hereto and
(iv) includes no covenants, events of default or acceleration provisions other
than a customary bankruptcy default and acceleration provision.

         "Qualifying Equity Interest" means, with respect to Holdings or the
Borrower, Equity Interests of Holdings or the Borrower, as the case may be, that
(i) are not mandatorily redeemable or redeemable at the option of the holder
thereof, (ii) are not convertible into or exchangeable for debt securities of
Holdings or any Restricted Subsidiary, Equity Interests in any Restricted
Subsidiary or Equity Interests that are not Qualifying Equity Interests of
Holdings, (iii) are not required to be repurchased or redeemed by Holdings or
any Restricted Subsidiary and (iv) do not require the payment of cash dividends,
in each of the foregoing cases, prior to the date that is one year after the
Term Maturity Date.

         "Qualifying Holdings Debt" means unsecured debt of Holdings (other than
the High Yield Notes) (i) no part of the principal of which is required to be
paid (upon maturity or by mandatory sinking fund, mandatory redemption,
mandatory prepayment or otherwise) prior to the date that is one year after the
Term Maturity Date, (ii) the payment of the principal of and interest on which
and other payment obligations of Holdings in respect of which are subordinated
to the prior payment in full in cash of the principal of and interest (including
Post-Petition Interest) on the Loans and all other obligations under the Loan
Documents and (iii) the terms and conditions of which are reasonably
satisfactory to the Required Lenders.

         "Qualifying Issuances" means (i) any issuance of Qualifying Equity
Interests of Holdings, (ii) any issuance of unsecured Indebtedness described in
clauses (a) or (b) of the definition thereof of Holdings or the Borrower, and
(iii) any Sale and Leaseback Transaction by the Borrower or a Restricted
Subsidiary the subject property of which is the building under construction as
of the Amendment No. 4 Effective Date and adjacent to One Williams Center,
together with the parking garage adjacent thereto, or any one or more of three
corporate jets identified by the Borrower to the Lenders prior to the Amendment
No. 4 Effective Date, so long as the terms and conditions of any such
Indebtedness or Sale and Leaseback Transaction shall have been approved by all
the Incremental Facility Arrangers (if any) and the Administrative Agent prior
to the issuance thereof.

         "Receivables Subsidiary" means any wholly-owned Unrestricted Subsidiary
(regardless of the form thereof) of the Borrower formed solely for the purpose
of, and which engages in no other activities except those necessary for,
effecting Permitted Receivables Financings.

         "Reduction Portion" means, in respect of any reduction of Revolving
Commitments or Additional Incremental Revolving Commitments to be made pursuant
to Section 2.08(f) or (g), a fraction, the numerator of which is the aggregate
Revolving Commitments and Additional Incremental Revolving Commitments of any
Class subject to reduction under such Section on account of Excess Cash Flow or
the applicable type of Prepayment Event, as the case may be (whether or not such
Commitments are actually to be reduced on account of such Prepayment Event or
Excess Cash Flow), and the denominator of which is the sum of such aggregate
Commitments and the aggregate principal amount of Term Loans, Additional
Incremental Term Loans and Incremental Term Loans of any Class subject to
prepayment under Section 2.11(b) or 2.11(c) on account of Excess Cash Flow or
the applicable type of Prepayment Event, as the case may be (whether or not such
Loans are actually to be prepaid on account of such Prepayment Event or Excess
Cash Flow).



                                       21
<PAGE>

         "Register" has the meaning set forth in Section 10.04.

         "Related Parties" means, with respect to any specified Person, such
Person's affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's affiliates.

         "Reorganization" means the contribution to the Borrower by the Parent
and its subsidiaries (other than Holdings and the Subsidiaries) of its material
subsidiaries that hold interests in international communications projects (other
than Algar Telecom S.A. (formerly known as Lightel S.A.) and by Holdings of all
of its material subsidiaries (other than the Borrower and its subsidiaries), in
each case not previously held, directly or indirectly, by the Borrower.

         "Required Lenders" means, at any time, Lenders having outstanding
Revolving Exposures, Additional Incremental Revolving Loans, Term Loans,
Incremental Term Loans, Additional Incremental Term Loans and unused Commitments
representing more than 50% of the sum of the total outstanding Revolving
Exposures, Additional Incremental Revolving Loans, Term Loans, Incremental Term
Loans, Additional Incremental Term Loans and unused Commitments at such time.

         "Restricted Payment" means any dividend or other distribution (whether
in cash, securities or other property) with respect to any shares of any class
of capital stock of Holdings, the Borrower or any Subsidiary, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such shares of capital stock of
Holdings, the Borrower or any Subsidiary or any option, warrant or other right
to acquire any such shares of capital stock of Holdings, the Borrower or any
Subsidiary.

         "Restricted Subsidiary" means the Borrower and each other Subsidiary
(other than any Foreign Subsidiary) of Holdings that has not been designated as
an Unrestricted Subsidiary pursuant to and in compliance with Section 6.14. On
the Effective Date, all Subsidiaries (other than (i) each Structured Note Trust
and (ii) any Foreign Subsidiary) of Holdings are Restricted Subsidiaries.

         "Revolving Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Revolving Maturity Date and
the date of termination of the Revolving Commitments.

         "Revolving Commitment" means, with respect to each Lender, the
commitment, if any, of such Lender to make Revolving Loans and to acquire
participations in Letters of Credit and Swingline Loans hereunder, expressed as
an amount representing the maximum aggregate amount of such Lender's Revolving
Exposure hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 10.04. The amount of
each Lender's Revolving Commitment as of the Amendment No. 5 Effective Date is
set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to
which such Lender shall have assumed its Revolving Commitment, as applicable.
The initial aggregate amount of the Lenders' Revolving Commitments is
$525,000,000.

         "Revolving Commitment Reduction Date" means September 30, 2002.

         "Revolving Exposure" means, with respect to any Lender at any time, the
sum of the outstanding principal amount of such Lender's Revolving Loans and its
LC Exposure and Swingline Exposure at such time.

         "Revolving Facility" means the Revolving Commitments and the Revolving
Loans hereunder.

         "Revolving Lender" means a Lender with a Revolving Commitment or, if
the Revolving Commitments have terminated or expired, a Lender with Revolving
Exposure.

         "Revolving Loan" means a Loan made pursuant to clause (b) of Section
2.01.



                                       22
<PAGE>

         "Revolving Maturity Date" means the sixth anniversary of the Effective
Date.

         "Sale and Leaseback Transaction" has the meaning set forth in Section
6.06.

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

         "Security Agreement" means the security agreement substantially in the
form of Exhibit K hereto among the Borrower, each Restricted Subsidiary and the
Administrative Agent entered into as of the Initial Collateral Date, as amended
from time to time.

         "Segment" means (i) with respect to the Borrower's and the other
Restricted Subsidiaries' intercity network, the through-portion of such network
between two local networks and (ii) with respect to a local network of the
Borrower and the other Restricted Subsidiaries, the entire through-portion of
such network, excluding the spurs which branch off the through-portion.

         "Senior Debt" means, at any date, without duplication, all Indebtedness
(other than Qualifying Borrower Indebtedness permitted under Section 6.01(p)) of
the Borrower and the other Restricted Subsidiaries that are subsidiaries of the
Borrower, determined on a consolidated basis at such date and the ADP
Outstandings at such date; provided that, for purposes of this definition, (i)
Indebtedness in respect of Hedging Agreements shall be equal to (A) the
aggregate net Mark-to-Market Valuation of all Hedging Agreements of the Borrower
and the Restricted Subsidiaries that are subsidiaries of the Borrower then
outstanding, to the extent that such aggregate net Mark-to-Market Valuation
constitutes a net obligation of the Borrower and such Restricted Subsidiaries
and (B) zero, if such aggregate net Mark-to-Market Valuation does not constitute
such a net obligation and (ii) Indebtedness in respect of Permitted Specified
Security Hedging Transactions shall be equal to (A) an amount equal to the
Mark-to-Market Valuation of such Permitted Specified Security Hedging
Transaction less the fair market value of the Specified Securities and related
contract rights securing such Permitted Specified Security Hedging Transaction,
if such amount is greater than zero and (B) zero, if such amount is not greater
than zero."

         "Senior Leverage Ratio" means, at any date, the ratio of (i) Senior Net
Debt at such date, to (ii) Adjusted EBITDA, for the period of four fiscal
quarters most recently ended on or prior to such date.

         "Senior Net Debt" means, at any date, Senior Debt at such date minus
the aggregate amount of all cash and Cash Equivalent Investments of the Borrower
and the other Restricted Subsidiaries that are subsidiaries of the Borrower
(excluding any cash and Cash Equivalent Investments that are blocked or
restricted so that they may not be used for general corporate purposes at such
date) in excess of $10,000,000 at such date.

         "Solutions" means Williams Communications Solutions, LLC, a Delaware
corporation, and its successors and assigns.

         "SPC" has the meaning set forth in Section 10.04(b)(2).

         "Specified Hedging Agreement" has the meaning set forth in Section
9.01.

         "Specified Indebtedness" has the meaning set forth in Section 6.07(b).

         "Specified Security" means publicly traded equity securities of actual
or prospective customers or vendors of the Borrower and its subsidiaries
acquired by the Borrower and its subsidiaries in connection with (or pursuant to
warrants, options or rights acquired in connection with) actual or prospective
commercial agreements with such customers or vendors; provided that securities
of the Borrower or any of its subsidiaries or Affiliates shall not constitute
Specified Securities.



                                       23
<PAGE>

         "Spin-Off" means the distribution by Parent to its shareholders of all
or substantially all of the capital stock of Holdings held by Parent
substantially on the terms described by the Borrower to the Lenders prior to the
Amendment No. 4 Effective Date.

         "Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.

         "Structured Note Bridge Indebtedness" means the Indebtedness permitted
to be incurred by Holdings pursuant to Section 6.01(t).

         "Structured Note Financing" means the issuance by the Structured Note
Trust of notes for cash Net Proceeds of up to $1,500,000,000 substantially on
the terms and conditions described by the Borrower in the "Term Sheet for
Structured Note" included as an attachment to the Borrower's Amendment Request
distributed to the Lenders on or prior to March 7, 2001 or otherwise approved by
all the Incremental Facility Arrangers (if any) and the Administrative Agent
prior to the issuance thereof.

         "Structured Note Trust" means WCG Note Trust and WCG Note Corp., Inc.,
each of which is an Unrestricted Subsidiary created for the purpose of
consummating the Structured Note Financing and conducting no activities other
than the consummation of the Structured Note Financing and activities incidental
thereto.

         "subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.

         "Subsidiary" means any subsidiary of Holdings. For purposes of the
representations and warranties made herein on the Effective Date, the term
"Subsidiary" includes each of the Borrower and the other Restricted
Subsidiaries.

         "Subsidiary Designation" has the meaning set forth in Section 6.14.

         "Subsidiary Guarantee" means the Subsidiary Guarantee, substantially in
the form of Exhibit D, made by the Subsidiary Loan Parties in favor of the
Administrative Agent for the benefit of the Lenders, and any Supplements
thereto.

         "Subsidiary Loan Party" means any Restricted Subsidiary (other than the
Borrower) that is not a Foreign Subsidiary; provided that no Receivables
Subsidiary shall be a Subsidiary Loan Party for any purpose under the Loan
Documents.



                                       24
<PAGE>

         "Swingline Exposure" means, at any time, the aggregate principal amount
of all Swingline Loans outstanding at such time. The Swingline Exposure of any
Lender at any time shall be its Applicable Percentage of the total Swingline
Exposure at such time.

         "Swingline Lenders" means Bank of America and Chase, each in its
capacity as lender of Swingline Loans hereunder.

         "Swingline Loan" means a Loan made pursuant to Section 2.04.

         "Syndication Agent" means Chase, in its capacity as syndication agent
hereunder.

         "Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.

         "Telecommunications Assets" means:

         (a)      any property (other than cash or Cash Equivalent Investments)
                  to be owned or used by the Borrower or any other Restricted
                  Subsidiary and used in the Telecommunications Business; and

         (b)      Equity Interests of a Person that becomes a Restricted
                  Subsidiary as a result of the acquisition of such Equity
                  Interests by the Borrower or any other Restricted Subsidiary
                  from any Person other than an Affiliate of Holdings or the
                  Borrower; provided that such Person is primarily engaged in
                  the Telecommunications Business.

         "Telecommunications Business" means the business of:

         (a)      transmitting, or providing services relating to the
                  transmission of, voice, video or data through owned or leased
                  transmission facilities or the right to use such facilities;

         (b)      constructing, acquiring, creating, developing, operating,
                  managing or marketing communications networks, related network
                  transmission equipment, software and other devices for use in
                  a communications business;

         (c)      computer outsourcing, data center management, computer systems
                  integration, reengineering of computer software for any
                  purpose, including, without limitation, for the purposes of
                  porting computer software from one operating environment or
                  computer platform to another or to address issues commonly
                  referred to as "Year 2000 issues";

         (d)      constructing, managing or operating fiber optic
                  telecommunications networks and leasing capacity on those
                  networks to third parties;

         (e)      the sale, resale, installation or maintenance of
                  communications systems or equipment; or



                                       25
<PAGE>

         (f)      evaluating, participating in or pursuing any other activity or
                  opportunity that is primarily related to those identified in
                  (a), (b), (c), (d) or (e) above;

provided that the determination of what constitutes a Telecommunications
Business shall be made in good faith by the Board of Directors of Holdings.

         "Term Amortization Date" means September 30, 2002.

         "Term Commitment" means, with respect to each Lender, the commitment,
if any, of such Lender to make Term Loans hereunder during the Term Loan
Availability Period, expressed as an amount representing the maximum principal
amount of the Term Loans to be made by such Lender hereunder, as such commitment
may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 10.04. The amount of each Lender's Term Commitment as of the
Amendment No. 5 Effective Date is set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Term Commitment, as applicable. The initial aggregate amount of the Lenders'
Term Commitments is $525,000,000.

         "Term Commitment Termination Date" means September 8, 2000.

         "Term Facility" means the Term Commitments and the Term Loans
hereunder.

         "Term Lender" means a Lender with a Term Commitment or an outstanding
Term Loan.

         "Term Loan" means a Loan made pursuant to Section 2.01(a)(i).

         "Term Loan Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Term Commitment Termination
Date and the date of termination of the Term Commitments.

         "Term Maturity Date" means September 30, 2006.

         "Total Debt" means, at any date, without duplication, the sum of all
Indebtedness of Holdings and the Restricted Subsidiaries, determined on a
consolidated basis at such date, and the ADP Outstandings at such date, provided
that, for purposes of this definition, (i) Indebtedness in respect of Hedging
Agreements shall be equal to (A) the aggregate net Mark-to-Market Valuation of
all Hedging Agreements of Holdings and the Restricted Subsidiaries then
outstanding, to the extent that such aggregate net Mark-to-Market Valuation
constitutes a net obligation of the Borrower and such Restricted Subsidiaries
and (B) zero, if such aggregate net Mark-to-Market Valuation does not constitute
such a net obligation and (ii) Indebtedness in respect of Permitted Specified
Security Hedging Transactions shall be equal to (A) an amount equal to the
Market-to-Market Valuation of such Permitted Specified Security Hedging
Transaction less the fair market value of the Specified Securities and related
contract rights securing such Permitted Specified Security Hedging Transaction,
if such amount is greater than zero and (B) zero, if such amount is not greater
than zero.

         "Total Leverage Ratio" means, at any date, the ratio of (i) Total Net
Debt at such date to (ii) Adjusted EBITDA for the period of four fiscal quarters
most recently ended on or prior to such date.

         "Total Net Debt" means, at any date, Total Debt at such date, minus the
aggregate amount of all cash and Cash Equivalent Investments of Holdings and the
Restricted Subsidiaries (excluding any cash and Cash Equivalent Investments that
are blocked or restricted so that they may not be used for general corporate
purposes at such date) in excess of $10,000,000 at such date.



                                       26
<PAGE>

         "Total Net Debt to Contributed Capital Ratio" means, at any date, the
ratio of (i) Total Net Debt at such date to (ii) Contributed Capital at such
date.

         "Trading Subsidiary" has the meaning assigned to such term in Section
6.03(c).

         "Transactions" means the execution, delivery and performance by each
Loan Party of the Loan Documents to which it is to be a party, the borrowing of
Loans, the use of the proceeds thereof and the issuance of Letters of Credit
hereunder.

         "Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to an Adjusted LIBO Rate or the Alternate
Base Rate.

         "Unrestricted Subsidiary" means (i) any Subsidiary (other than the
Borrower) that is designated by the Board of Directors of Holdings as an
Unrestricted Subsidiary in accordance with Section 6.14, and (ii) each
Structured Note Trust.

         "Voting Stock" means, with respect to any Person, capital stock issued
by such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, whether or not the right so to
vote has been suspended by the happening of such a contingency.

         "Weighted Average Life to Maturity" means, on any date and with respect
to the Revolving Commitments, the Term Loans, any Additional Incremental
Revolving Commitments of any Class, any Incremental Term Loans, any Additional
Incremental Term Loans of any Class or any other Indebtedness or commitments to
provide financing, an amount equal to (i) the sum, for each scheduled repayment
of Term Loans, Additional Incremental Term Loans or Incremental Term Loans of
such Class or of such Indebtedness, as the case may be, to be made after such
date, or each scheduled reduction of Revolving Commitments or Additional
Incremental Revolving Commitments of such Class or other commitments to provide
financing, as the case may be, to be made after such date, of the amount of such
scheduled repayment or reduction multiplied by the number of days from such date
to the date of such scheduled prepayment or reduction divided by (ii) the
aggregate principal amount of such Term Loans, Additional Incremental Term Loans
or Incremental Term Loans or of such Indebtedness, as the case may be, or such
Revolving Commitments or Additional Incremental Revolving Commitments or other
commitments to provide financing, as the case may be.

         "Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.

         SECTION 1.2. Classification of Loans and Borrowings. For purposes of
this Agreement, Loans may be classified and referred to by Class (e.g., a
"Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type
(e.g., a "Eurodollar Revolving Loan"). Borrowings also may be classified and
referred to by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a
"Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving
Borrowing").

         SECTION 1.3. Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and



                                       27
<PAGE>

assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.

         SECTION 1.4. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.

                                    ARTICLE 2

                                   THE CREDITS

         SECTION 2.1. Commitments. Subject to the terms and conditions set forth
herein, (a) each Lender agrees (i) to make Term Loans to the Borrower from time
to time during the Term Loan Availability Period in a principal amount not
exceeding its Term Commitment, if any, (ii) to make Revolving Loans to the
Borrower from time to time during the Revolving Availability Period in an
aggregate principal amount that will not result in such Lender's Revolving
Exposure exceeding such Lender's Revolving Commitment, if any, (iii) to make
Additional Incremental Term Loans to the Borrower under any Additional
Incremental Facility during the period or on the date set forth in the
applicable Additional Incremental Facility Agreement in a principal amount not
exceeding its Additional Incremental Commitment in respect of such Additional
Incremental Facility, if any, and (iv) to make Additional Incremental Revolving
Loans to the Borrower under any Additional Incremental Facility during the
period set forth in the applicable Additional Incremental Facility Agreement in
a principal amount not exceeding at any time its Additional Incremental
Revolving Commitment in respect of such Additional Incremental Facility, if any,
(b) each Incremental Tranche A Lender agrees to make Incremental Tranche A Term
Loans to the Borrower from time to time during the Incremental Tranche A Term
Loan Availability Period in a principal amount not exceeding its Incremental
Tranche A Commitment, provided that the initial Borrowing under the Incremental
Tranche A Facility shall be in an aggregate amount not less than $225,000,000
and shall occur on the First Incremental Borrowing Date. Within the foregoing
limits and subject to the terms and conditions set forth herein, the Borrower
may borrow, prepay and reborrow Revolving Loans and Additional Incremental
Revolving Loans. Amounts repaid in respect of Term Loans, Incremental Term Loans
or Additional Incremental Term Loans may not be reborrowed.

         SECTION 2.2. Loans and Borrowings. (a) Each Loan (other than a
Swingline Loan) shall be made as part of a Borrowing consisting of Loans of the
same Class and Type made by the Lenders ratably in accordance with their
respective Commitments of the applicable Class. The failure of any Lender to
make any Loan required to be made by it shall not relieve any other Lender of
its obligations hereunder; provided that the Commitments of the Lenders are
several and no Lender shall be responsible for any other Lender's failure to
make Loans as required.



                                       28
<PAGE>

         (b) Subject to Section 2.14, each Revolving Borrowing, Term Borrowing,
Additional Incremental Revolving Borrowing, Additional Incremental Term
Borrowing and Incremental Term Borrowing shall be comprised entirely of ABR
Loans or Eurodollar Loans as the Borrower may request in accordance herewith.
Each Swingline Loan shall be an ABR Loan. Each Lender at its option may make any
Eurodollar Loan by causing any domestic or foreign branch or affiliate of such
Lender to make such Loan; provided that any exercise of such option shall not
affect the obligation of the Borrower to repay such Loan in accordance with the
terms of this Agreement.

         (c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing (w) if a Revolving Borrowing shall be in an aggregate
amount that is an integral multiple of $1,000,000 and not less than $10,000,000,
(x) if a Term Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $50,000,000 (y) if an Incremental Term
Borrowing shall be in an aggregate amount that is an integral multiple of
$1,000,000 and not less than $10,000,000 or (z) if an Additional Incremental
Term Borrowing or an Additional Incremental Revolving Borrowing shall be in
aggregate amounts that are permitted under the applicable Incremental Facility
Agreement. At the time that each ABR Borrowing is made, such Borrowing (w) if a
Revolving Borrowing shall be in an aggregate amount that is an integral multiple
of $1,000,000 and not less than $5,000,000, (x) if a Term Borrowing shall be in
an aggregate amount that is an integral multiple of $1,000,000 and not less than
$50,000,000 (y) if an Incremental Term Borrowing shall be in an aggregate amount
that is an integral multiple of $1,000,000 and not less than $10,000,000 or (z)
if an Additional Incremental Term Borrowing or an Additional Incremental
Revolving Borrowing shall be in aggregate amounts that are permitted under the
applicable Incremental Facility Agreement; provided that (i) an ABR Revolving
Borrowing or ABR Additional Incremental Revolving Borrowing may be in an
aggregate amount that is equal to the entire unused balance of the total
Revolving Commitments or Additional Incremental Revolving Commitments of the
applicable Class, as the case may be, (ii) an ABR Revolving Borrowing may be in
an aggregate amount that is required to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.05(e) and (iii) an ABR Term Borrowing,
ABR Incremental Term Borrowing or ABR Additional Incremental Term Borrowing may
be in an aggregate amount that is equal to the entire unused balance of the
total Term Commitments, Incremental Term Commitments, Additional Incremental
Term Commitments of the applicable Class, as the case may be. Each Swingline
Loan shall be in an amount that is an integral multiple of $1,000,000 and not
less than $5,000,000. Borrowings of more than one Type and Class may be
outstanding at the same time; provided that there shall not at any time be more
than a total of 10 Eurodollar Borrowings outstanding.

         (d) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request, or to elect to convert or continue, any
Borrowing if the Interest Period requested with respect thereto would end after
the Revolving Maturity Date, the Term Maturity Date, the Incremental Tranche A
Maturity Date or the maturity date set forth in the applicable Additional
Incremental Facility Agreement, as applicable.



                                       29
<PAGE>

         SECTION 2.3. Requests for Borrowings. To request a Borrowing (other
than a Swingline Borrowing), the Borrower shall notify the Administrative Agent
of such request by telephone (a) in the case of a Eurodollar Borrowing, not
later than 11:00 a.m., Dallas, Texas time, three Business Days before the date
of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than
11:00 a.m., Dallas, Texas time, one Business Day before the date of the proposed
Borrowing; provided that any such notice of an ABR Revolving Borrowing to
finance the reimbursement of an LC Disbursement as contemplated by Section
2.05(e) may be given not later than 10:00 a.m., Dallas, Texas time, on the date
of the proposed Borrowing. Each such telephonic Borrowing Request shall be
irrevocable and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Borrowing Request substantially in the form of
Exhibit B hereto and signed by the Borrower. Each such telephonic and written
Borrowing Request shall specify the following information in compliance with
Section 2.02:

                  (i) whether the requested Borrowing is to be a Revolving
         Borrowing, Term Borrowing, Incremental Tranche A Term Borrowing,
         Additional Incremental Revolving Borrowing or Additional Incremental
         Term Borrowing and, in the case of Additional Incremental Revolving
         Borrowings and Additional Incremental Term Borrowings, the Additional
         Incremental Facility under which such Borrowing is to be made;

                  (ii) the aggregate amount of such Borrowing;

                  (iii) the date of such Borrowing, which shall be a Business
         Day;

                  (iv) whether such Borrowing is to be an ABR Borrowing or a
         Eurodollar Borrowing;

                  (v) in the case of a Eurodollar Borrowing, the initial
         Interest Period to be applicable thereto, which shall be a period
         contemplated by the definition of the term "Interest Period"; and

                  (vi) the location and number of the Borrower's account to
         which funds are to be disbursed, which shall comply with the
         requirements of Section 2.06.

         If no election as to the Type of Borrowing is specified, then the
requested Borrowing shall be an ABR Borrowing. If no Interest Period is
specified with respect to any requested Eurodollar Borrowing, then the Borrower
shall be deemed to have selected an Interest Period of one month's duration.
Promptly following receipt of a Borrowing Request in accordance with this
Section, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender's Loan to be made as part of the
requested Borrowing.

         SECTION 2.4. Swingline Loans. (a) Subject to the terms and conditions
set forth herein, the Swingline Lenders each agree to make Swingline Loans to
the Borrower from time to time during the Revolving Availability Period, in an
aggregate principal amount at any time outstanding that will not result in (i)
the aggregate principal amount of outstanding Swingline Loans of either
Swingline Lender exceeding $25,000,000 or (ii) the sum of the total Revolving
Exposures exceeding the total Revolving Commitments; provided that neither
Swingline Lender shall be required to make a Swingline Loan to refinance an
outstanding Swingline Loan. Within the foregoing limits and subject to the terms
and conditions set forth herein, the Borrower may borrow, prepay and reborrow
Swingline Loans.

         (b) To request a Swingline Loan, the Borrower shall notify the
Administrative Agent of such request by telephone (confirmed by telecopy), not
later than 12:00 noon,



                                       30
<PAGE>

Dallas, Texas time, on the day of a proposed Swingline Loan and shall advise the
Administrative Agent as to which Swingline Lender the Borrower desires to
provide such Swingline Loan. Each such notice shall be irrevocable and shall
specify the requested date (which shall be a Business Day) and amount of the
requested Swingline Loan. The Administrative Agent will promptly advise the
Swingline Lender indicated by the Borrower in such notice of any such notice
received from the Borrower. The applicable Swingline Lender shall make such
Swingline Loan available to the Borrower by means of a credit to the general
deposit account of the Borrower with such Swingline Lender (or, in the case of a
Swingline Loan made to finance the reimbursement of an LC Disbursement as
provided in Section 2.05(e), by remittance to the applicable Issuing Bank) by
3:00 p.m., Dallas, Texas time, on the requested date of such Swingline Loan.

         (c) The applicable Swingline Lender may by written notice given to the
Administrative Agent not later than 10:00 a.m., Dallas, Texas time, on any
Business Day require the Revolving Lenders to acquire participations on such
Business Day in all or a portion of its Swingline Loans outstanding. Such notice
shall specify the aggregate amount of Swingline Loans in which Revolving Lenders
will participate. Promptly upon receipt of such notice, the Administrative Agent
will give notice thereof to each Revolving Lender, specifying in such notice
such Lender's Applicable Percentage of such Swingline Loan or Loans. Each
Revolving Lender hereby absolutely and unconditionally agrees, upon receipt of
notice as provided above, to pay to the Administrative Agent, for the account of
the applicable Swingline Lender, such Lender's Applicable Percentage of such
Swingline Loan or Loans. Each Revolving Lender acknowledges and agrees that its
obligation to acquire participations in Swingline Loans pursuant to this
paragraph is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or reduction or termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever. Each
Revolving Lender shall comply with its obligation under this paragraph by wire
transfer of immediately available funds, in the same manner as provided in
Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall
apply, mutatis mutandis, to the payment obligations of the Revolving Lenders),
and the Administrative Agent shall promptly pay to the applicable Swingline
Lender the amounts so received by it from the Revolving Lenders. The
Administrative Agent shall notify the Borrower of any participations in any
Swingline Loan acquired pursuant to this paragraph, and thereafter payments in
respect of such Swingline Loan shall be made to the Administrative Agent and not
to the applicable Swingline Lender. Any amounts received by a Swingline Lender
from the Borrower (or other party on behalf of the Borrower) in respect of a
Swingline Loan made by such Swingline Lender after receipt by such Swingline
Lender of the proceeds of a sale of participations therein shall be promptly
remitted to the Administrative Agent; any such amounts received by the
Administrative Agent shall be promptly remitted by the Administrative Agent to
the Revolving Lenders that shall have made their payments pursuant to this
paragraph and to the applicable Swingline Lender, as their interests may appear.
The purchase of participations in a Swingline Loan pursuant to this paragraph
shall not relieve the Borrower of any default in the payment thereof.



                                       31
<PAGE>

         SECTION 2.5. Letters of Credit. (a) General. Subject to the terms and
conditions set forth herein, the Borrower may request the issuance of Letters of
Credit for its own account, in a form reasonably acceptable to the
Administrative Agent and the applicable Issuing Bank, at any time and from time
to time during the Revolving Availability Period. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Borrower to, or entered into by the Borrower with, the Issuing
Bank relating to any Letter of Credit, the terms and conditions of this
Agreement shall control.

         (b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing
Bank from whom the Borrower is requesting such Letter of Credit and to the
Administrative Agent (reasonably in advance of the requested date of issuance,
amendment, renewal or extension) a notice requesting the issuance of a Letter of
Credit, or identifying the Letter of Credit to be amended, renewed or extended,
and specifying the date of issuance, amendment, renewal or extension (which
shall be a Business Day), the date on which such Letter of Credit is to expire
(which shall comply with Section 2.05(c)), the amount of such Letter of Credit,
the name and address of the beneficiary thereof and such other information as
shall be necessary to prepare, amend, renew or extend such Letter of Credit. If
requested by the applicable Issuing Bank, the Borrower also shall submit a
letter of credit application on such Issuing Bank's standard form in connection
with any request for a Letter of Credit. A Letter of Credit shall be issued,
amended, renewed or extended only if (and upon issuance, amendment, renewal or
extension of each Letter of Credit the Borrower shall be deemed to represent and
warrant that), after giving effect to such issuance, amendment, renewal or
extension (i) the LC Exposure shall not exceed $350,000,000 and (ii) the total
Revolving Exposures shall not exceed the total Revolving Commitments.

         (c) Expiration Date. Each Letter of Credit shall expire at or prior to
the close of business on the earlier of (i) the date one year after the date of
the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension), provided that a
Letter of Credit may include customary "evergreen" provisions and (ii) the date
that is five Business Days prior to the Revolving Maturity Date.

         (d) Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the applicable Issuing Bank or the Lenders, the
applicable Issuing Bank hereby grants to each Revolving Lender, and each
Revolving Lender hereby acquires from such Issuing Bank, a participation in such
Letter of Credit equal to such Lender's Applicable Percentage of the aggregate
amount available to be drawn under such Letter of Credit. In consideration and
in furtherance of the foregoing, each Revolving Lender hereby absolutely and
unconditionally agrees to pay to the Administrative Agent, for the account of
such Issuing Bank, such Lender's Applicable Percentage of each LC Disbursement
made by such Issuing Bank and not reimbursed by the Borrower on the date due as



                                       32
<PAGE>

provided in paragraph Section 2.05(e), or of any reimbursement payment required
to be refunded to the Borrower for any reason. Each Lender acknowledges and
agrees that its obligation to acquire participations pursuant to this paragraph
in respect of Letters of Credit is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including any amendment, renewal or
extension of any Letter of Credit or the occurrence and continuance of a Default
or reduction or termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever.

         (e) Reimbursement. If an Issuing Bank shall make any LC Disbursement in
respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement
by paying to the Administrative Agent an amount equal to such LC Disbursement
not later than 1:00 p.m., Dallas, Texas time, on the date that such LC
Disbursement is made, if the Borrower shall have received notice of such LC
Disbursement prior to 9:30 a.m., Dallas, Texas time, on such date, or, if such
notice has not been received by the Borrower prior to such time on such date,
then not later than 1:00 p.m., Dallas, Texas time, on (i) the Business Day that
the Borrower receives such notice, if such notice is received prior to 9:30
a.m., Dallas, Texas time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt; provided that,
if such LC Disbursement is not less than $5,000,000, the Borrower may, subject
to the conditions to borrowing set forth herein, request in accordance with
Section 2.03 or 2.04 that such payment be financed with an ABR Revolving
Borrowing or Swingline Loan in an equivalent amount and, to the extent so
financed, the Borrower's obligation to make such payment shall be discharged and
replaced by the resulting ABR Revolving Borrowing or Swingline Loan. If the
Borrower fails to make such payment when due, the Administrative Agent shall
notify each Revolving Lender of the applicable LC Disbursement, the payment then
due from the Borrower in respect thereof and such Lender's Applicable Percentage
thereof. Promptly following receipt of such notice, each Revolving Lender shall
pay to the Administrative Agent its Applicable Percentage of the payment then
due from the Borrower, in the same manner as provided in Section 2.06 with
respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis
mutandis, to the payment obligations of the Revolving Lenders), and the
Administrative Agent shall promptly pay to the applicable Issuing Bank the
amounts so received by it from the Revolving Lenders. Promptly following receipt
by the Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the
applicable Issuing Bank or, to the extent that Revolving Lenders have made
payments pursuant to this paragraph to reimburse the Issuing Bank, then to such
Lenders and the applicable Issuing Bank as their interests may appear. Any
payment made by a Revolving Lender pursuant to this paragraph to reimburse the
applicable Issuing Bank for any LC Disbursement (other than the funding of ABR
Revolving Loans or a Swingline Loan as contemplated above) shall not constitute
a Loan and shall not relieve the Borrower of its obligation to reimburse such LC
Disbursement.



                                       33
<PAGE>

         (f) Obligations Absolute. The Borrower's obligation to reimburse LC
Disbursements as provided in paragraph Section 2.05(e) shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by an Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower's obligations hereunder. Neither
the Administrative Agent, the Lenders nor either Issuing Bank, nor any of their
Related Parties, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank; provided that the foregoing shall not be construed to excuse an
Issuing Bank from liability to the Borrower to the extent of any direct damages
(as opposed to consequential damages, claims in respect of which are hereby
waived by the Borrower to the extent permitted by applicable law) suffered by
the Borrower that are caused by the Issuing Bank's failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or wilful misconduct on the part of an
Issuing Bank (as finally determined by a court of competent jurisdiction), each
Issuing Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented which appear on their
face to be in substantial compliance with the terms of a Letter of Credit, the
Issuing Bank may, in its sole discretion, either accept and make payment upon
such documents without responsibility for further investigation, regardless of
any notice or information to the contrary, or refuse to accept and make payment
upon such documents if such documents are not in strict compliance with the
terms of such Letter of Credit.

         (g) Disbursement Procedures. The applicable Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit. The applicable Issuing
Bank shall promptly notify the Administrative Agent and the Borrower by
telephone (confirmed by telecopy) of such demand for payment and whether the
Issuing Bank has made or will make an LC Disbursement thereunder; provided that
any failure to give or delay in giving such notice shall not relieve the
Borrower of its obligation to reimburse such Issuing Bank and the Revolving
Lenders with respect to any such LC Disbursement.



                                       34
<PAGE>

         (h) Interim Interest. If an Issuing Bank shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans;
provided that, if the Borrower fails to reimburse such LC Disbursement when due
pursuant to Section 2.05(e), then Section 2.13(c) shall apply. Interest accrued
pursuant to this paragraph shall be for the account of the applicable Issuing
Bank, except that interest accrued on and after the date of payment by any
Revolving Lender pursuant to Section 2.05(e) to reimburse the applicable Issuing
Bank shall be for the account of such Lender to the extent of such payment.

         (i) Replacement of the Issuing Bank. An Issuing Bank may be replaced at
any time by written agreement among the Borrower, the Administrative Agent, the
replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent
shall notify the Lenders of any such replacement of an Issuing Bank. At the time
any such replacement shall become effective, the Borrower shall pay all unpaid
fees accrued for the account of the replaced Issuing Bank pursuant to Section
2.12(b). From and after the effective date of any such replacement, (i) the
successor Issuing Bank shall have all the rights and obligations of an Issuing
Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed
to refer to such successor, to any other Issuing Bank or to any previous Issuing
Bank, or to such successor, all other Issuing Banks and all previous Issuing
Banks, as the context shall require. After the replacement of an Issuing Bank
hereunder, the replaced Issuing Bank shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Bank under this
Agreement with respect to Letters of Credit issued by it prior to such
replacement, but shall not be required to issue additional Letters of Credit.

         (j) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Lenders with LC Exposure representing greater
than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, the Borrower shall deposit in an account with the
Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lenders, an amount in cash equal to 105% of the LC Exposure as of
such date plus any accrued and unpaid interest thereon; provided that the
obligation to deposit such cash collateral shall become effective immediately,
and such deposit shall become immediately due and payable, without demand or
other notice of any kind, upon the occurrence of any Event of Default with
respect to the Borrower described in Section 7.01(h) or 7.01(i). Each such
deposit shall be held by the Administrative Agent as collateral for the payment
and performance of the obligations of the Borrower under this Agreement. The
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. Other than any interest earned
on the investment of such deposits, which investments shall be made at the
option and sole discretion of the Administrative Agent



                                       35
<PAGE>

and at the Borrower's risk and expense, such deposits shall not bear interest.
Interest or profits, if any, on such investments shall accumulate in such
account. Moneys in such account shall be applied by the Administrative Agent to
reimburse the applicable Issuing Bank for LC Disbursements for which it has not
been reimbursed and, to the extent not so applied, shall be held for the
satisfaction of the reimbursement obligations of the Borrower for the LC
Exposure at such time or, if the maturity of the Loans has been accelerated (but
subject to the consent of Revolving Lenders with LC Exposure representing
greater than 50% of the total LC Exposure), be applied to satisfy other
obligations of the Borrower under this Agreement. If the Borrower is required to
provide an amount of cash collateral hereunder as a result of the occurrence of
an Event of Default, such amount (to the extent not applied as aforesaid) shall
be returned to the Borrower within three Business Days after all Events of
Default have been cured or waived.

         SECTION 2.6. Funding of Borrowings. (a) Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 1:00 p.m., Dallas, Texas time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders; provided that Swingline Loans shall be made as provided
in Section 2.04. The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower maintained with the Administrative Agent in Dallas,
Texas and designated by the Borrower in the applicable Borrowing Request;
provided that ABR Revolving Loans made to finance the reimbursement of an LC
Disbursement as provided in Section 2.05(e) shall be remitted by the
Administrative Agent to the applicable Issuing Bank.

         (b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with Section 2.06(a) and may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount. In such event, if a Lender has not in fact made its share of the
applicable Borrowing available to the Administrative Agent, then the applicable
Lender and the Borrower severally agree to pay to the Administrative Agent
forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to the Borrower to
but excluding the date of payment to the Administrative Agent, at (i) in the
case of such Lender, the greater of the Federal Funds Effective Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation or (ii) in the case of the Borrower, the interest rate
applicable to ABR Loans. If such Lender pays such amount to the Administrative
Agent, then such amount shall constitute such Lender's Loan included in such
Borrowing.

         SECTION 2.7. Interest Elections. (a) Each Revolving Borrowing,
Additional Incremental Revolving Borrowing, Term Borrowing, Incremental Term
Borrowing and Additional Incremental Term Borrowing initially shall be of the
Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing
to a different Type or to continue such Borrowing and, in the case of a
Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section. The Borrower may elect different options with respect to different
portions of a Borrowing, in which case each such portion shall be allocated
ratably among the Lenders holding the Loans comprising



                                       36
<PAGE>

such Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing. This Section shall not apply to Swingline Borrowings, which
may not be converted or continued.

         (b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
Borrower.

         (c) Each telephonic and written Interest Election Request shall specify
the following information in compliance with Section 2.02 and Section 2.07(f):

                  (i) the Borrowing to which such Interest Election Request
         applies and, if different options are being elected with respect to
         different portions thereof, the portions thereof to be allocated to
         each resulting Borrowing (in which case the information to be specified
         pursuant to clauses (iii) and (iv) below shall be specified for each
         resulting Borrowing);

                  (ii) the effective date of the election made pursuant to such
         Interest Election Request, which shall be a Business Day;

                  (iii) whether the resulting Borrowing is to be an ABR
         Borrowing or a Eurodollar Borrowing; and

                  (iv) if the resulting Borrowing is a Eurodollar Borrowing, the
         Interest Period to be applicable thereto after giving effect to such
         election, which shall be a period contemplated by the definition of the
         term "Interest Period".

         If any such Interest Election Request requests a Eurodollar Borrowing
but does not specify an Interest Period, then the Borrower shall be deemed to
have selected an Interest Period of one month's duration.

         (d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each applicable Lender of the details thereof
and of such Lender's portion of each resulting Borrowing.

         (e) If the Borrower fails to deliver a timely Interest Election Request
with respect to a Eurodollar Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing, then, so long as an Event of Default is
continuing (i) no outstanding Borrowing may be converted to or continued as a
Eurodollar Borrowing and (ii) unless



                                       37
<PAGE>

repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the
end of the Interest Period applicable thereto.

         (f) A Borrowing of any Class may not be converted to or continued as a
Eurodollar Borrowing if after giving effect thereto (i) the Interest Period
therefor would commence before and end after a date on which any principal of
the Loans of such Class is scheduled to be repaid and (ii) the sum of the
aggregate principal amount of outstanding Eurodollar Borrowings of such Class
with Interest Periods ending on or prior to such scheduled repayment date plus
the aggregate principal amount of outstanding ABR Borrowings of such Class would
be less than the aggregate principal amount of Loans of such Class required to
be repaid on such scheduled repayment date.

         SECTION 2.8. Termination and Reduction of Commitments. (a) Unless
previously terminated, (i) the Term Commitments shall terminate on the Term
Commitment Termination Date, (ii) the Revolving Commitments shall terminate on
the Revolving Maturity Date, (iii) the Incremental Tranche A Commitments shall
terminate on the Incremental Tranche A Commitment Termination Date and (iv) the
Additional Incremental Commitments of any Class shall terminate on the date set
forth in the applicable Additional Incremental Facility Agreement.

         (b) Subject to adjustment pursuant to Section 2.08(h), the Revolving
Commitments outstanding on the Revolving Commitment Reduction Date shall be
automatically and permanently reduced in 12 consecutive installments on the last
day of each fiscal quarter (except with respect to the final reduction, which
shall be on the Revolving Maturity Date) set forth below in the percentage
amounts (expressed as a percentage of the aggregate amount of Revolving
Commitments outstanding on the Revolving Commitment Reduction Date) set forth
opposite such quarterly scheduled reduction date (or the Revolving Maturity
Date) below; provided that the final installment shall reduce the remaining
outstanding Revolving Commitments to zero on the Revolving Maturity Date and the
payment made in respect thereof shall equal the sum of (x) the then aggregate
unpaid principal amount of all Revolving Loans plus (y) all other unpaid amounts
owing in respect of Revolving Loans, which payment shall be due and payable not
later than the Revolving Maturity Date:

<Table>
<Caption>
            Scheduled Reduction Date                            Commitment Reduction
            ------------------------                            --------------------
<S>                                                             <C>
                4th Quarter 2002                                       5.00%
                1st Quarter 2003                                       5.00%
                2nd Quarter 2003                                       5.00%
                3rd Quarter 2003                                       5.00%

                4th Quarter 2003                                       7.50%
                1st Quarter 2004                                       7.50%
                2nd Quarter 2004                                       7.50%
                3rd Quarter 2004                                       7.50%

                4th Quarter 2004                                      12.50%
                1st Quarter 2005                                      12.50%
                2nd Quarter 2005                                      12.50%
             Revolving Maturity Date                                  12.50%
</Table>



                                       38
<PAGE>

         (c) Subject to adjustment pursuant to Section 2.08(h), the Additional
Incremental Revolving Commitments of any Class shall be automatically and
permanently reduced on the scheduled dates, and in the scheduled amounts, if
any, set forth in the applicable Additional Incremental Facility Agreement.

         (d) The Borrower may at any time terminate, or from time to time
reduce, the Commitments of any Class; provided that (i) each reduction of the
Commitments of any Class shall be in an amount that is an integral multiple of
$1,000,000 and not less than $10,000,000, (ii) the Borrower shall not terminate
or reduce the Revolving Commitments if, after giving effect to any concurrent
prepayment of the Revolving Loans in accordance with Section 2.11, the sum of
the Revolving Exposures would exceed the total Revolving Commitments and (iii)
the Borrower shall not terminate or reduce the Additional Incremental Revolving
Commitments of any Class if, after giving effect to any concurrent prepayment of
Additional Incremental Revolving Loans of such Class in accordance with Section
2.11, the aggregate principal amount of outstanding Additional Incremental
Revolving Loans of such Class would exceed the total Additional Incremental
Revolving Commitments of such Class.

         (e) The Borrower shall notify the Administrative Agent of any election
to terminate or reduce the Commitments under Section 2.08(d) at least three
Business Days prior to the effective date of such termination or reduction,
specifying such election and the effective date thereof. Promptly following
receipt of any notice, the Administrative Agent shall advise the Lenders of the
contents thereof. Each notice delivered by the Borrower pursuant to this Section
shall be irrevocable; provided that a notice of termination of the Revolving
Commitments or the Additional Incremental Revolving Commitments of any Class
delivered by the Borrower may state that such notice is conditioned upon the
effectiveness of other credit facilities, in which case such notice may be
revoked by the Borrower (by notice to the Administrative Agent on or prior to
the specified effective date) if such condition is not satisfied. Any
termination or reduction of the Commitments of any Class shall be permanent.
Each reduction of the Commitments of any Class shall be made ratably among the
Lenders in accordance with their respective Commitments of such Class.

         (f) In the event and on each occasion that any Net Proceeds in excess
of $5,000,000 are received by or on behalf of Holdings or any Subsidiary in
respect of any Prepayment Event, there shall be a pro rata reduction of
Revolving Commitments, Term Borrowings, Incremental Tranche A Borrowings and, if
provided for in the applicable Additional Incremental Facility Agreement,
Additional Incremental Revolving Commitments and Additional Incremental Term
Borrowings as provided in this Section 2.08(f) and in Section 2.11(b). In such
event, the Revolving Commitments and, if provided for in the applicable
Additional Incremental Facility Agreement, Additional Incremental Revolving
Commitments shall, on the third Business Day after such Net Proceeds are
received, be automatically and permanently reduced in an aggregate amount equal
to the product of 100% (or, in the case of any Prepayment Event referred to in
clause (c) of the definition of Prepayment Event, if, on the date on which any
reduction would otherwise be made in respect of such Prepayment Event either (i)
the Facilities



                                       39
<PAGE>

shall be rated not lower than BBB- by S&P and Baa3 by Moody's or (ii) the Total
Leverage Ratio as of such date is less than 3.5 to 1.0, 50%) of such Net
Proceeds and the Reduction Portion in respect of such Prepayment Event; provided
that, in the case of any event described in clause (a) or (c) of the definition
of Prepayment Event, if the Borrower shall deliver to the Administrative Agent a
certificate of a Financial Officer to the effect that the Borrower intends to
apply the Net Proceeds from such event (or a portion thereof specified in such
certificate) to invest in the Telecommunications Business of the Borrower and
the other Restricted Subsidiaries within 360 days of the receipt thereof and
certifying that no Default has occurred and is continuing, then no reduction
shall be required pursuant to this paragraph in respect of the Net Proceeds in
respect of such event (or the portion of such Net Proceeds specified in such
certificate, if applicable) except to the extent of any such Net Proceeds
therefrom that have not been so applied by the end of such period, at which time
a reduction shall be required in accordance with this paragraph (f).

         (g) Following the end of each fiscal year of the Borrower, commencing
with the fiscal year ending December 31, 2002, the Revolving Commitments and, if
provided for in the applicable Additional Incremental Facility Agreement,
Additional Incremental Revolving Commitments shall be automatically and
permanently reduced in an aggregate amount equal to the product of 50% of Excess
Cash Flow for such fiscal year and the Reduction Portion in respect of such
Excess Cash Flow; provided that if, on the date on which any reduction would
otherwise be made pursuant to this Section 2.08(g), either (i) the Facilities
shall be rated not lower than BBB- by S&P and Baa3 by Moody's or (ii) the Total
Leverage Ratio as of such date is less than 3.5 to 1.0, no such reduction shall
be required pursuant to this Section 2.08(g). Each reduction pursuant to this
paragraph shall be made on the date on which financial statements are delivered
pursuant to Section 5.01 with respect to the fiscal year for which Excess Cash
Flow is being calculated (and in any event within 90 days after the end of such
fiscal year).

         (h) Any reduction of the Revolving Commitments, other than a reduction
pursuant to Section 2.08(a) or 2.08(b) above, shall be applied to reduce the
subsequent scheduled reductions of Revolving Commitments to be made pursuant to
Section 2.08(a) or 2.08(b) above in reverse chronological order. Any reduction
of the Additional Incremental Revolving Commitments of any Class, other than a
reduction pursuant to Section 2.08(a) or 2.08(c) above, shall be applied to
reduce the subsequent scheduled reductions of Additional Incremental Revolving
Commitments of such Class to be made pursuant to Section 2.08(a) or 2.08(c) as
set forth in the applicable Additional Incremental Facility Agreement.

         SECTION 2.9. Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay (i) to the Administrative Agent for the
account of each applicable Lender the then unpaid principal amount of each
Revolving Loan of such Lender on the Revolving Maturity Date, (ii) to the
Administrative Agent for the account of each applicable Lender the then unpaid
principal amount of each Term Loan of such Lender as provided in Section 2.10,
(iii) to the Administrative Agent for the account of each applicable Incremental
Lender the then unpaid principal amount of each Incremental Tranche A Term Loan
of such Incremental Lender as set forth in Section 2.10, (iv) to the
Administrative Agent for the account of each applicable Lender the then unpaid
principal amount of each Additional Incremental Loan



                                       40
<PAGE>

of any Class of such Lender as set forth in the applicable Additional
Incremental Facility Agreement and (v) to each Swingline Lender the then unpaid
principal amount of each Swingline Loan made by it on the earlier of the
Revolving Maturity Date and the first date after such Swingline Loan is made
that is the 15th or last day of a calendar month and is at least two Business
Days after such Swingline Loan is made.

         (b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.

         (c) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Class and Type thereof
and the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender's share thereof.

         (d) The entries made in the accounts maintained pursuant to Section
2.09(b) and 2.09(c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.

         (e) No promissory notes evidencing Loans hereunder will be issued
unless a Lender requests that a promissory note be issued to it to evidence its
Loans of any Class. In such event, the Borrower shall prepare, execute and
deliver to such Lender a promissory note payable to the order of such Lender
(or, if requested by such Lender, to such Lender and its registered assigns) and
in a form approved by the Administrative Agent. Thereafter, the Loans evidenced
by such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 10.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).

         SECTION 2.10. Amortization of Term Loans and Incremental Term Loans.
(a) Subject to adjustment pursuant to Section 2.10(e), the Borrower shall repay
Term Borrowings outstanding on the Term Amortization Date in 16 consecutive
installments of principal, each of which will be due and payable on the last day
of each fiscal quarter (except with respect to the final installment, which
shall be on the Term Maturity Date) set forth below in the percentage amounts
(expressed as a percentage of the aggregate amount of Term Loans outstanding on
the Term Commitment Termination Date) set forth opposite such quarterly
installment date (or the Term Maturity Date) below; provided that the final
installment shall equal the sum of (x) the then aggregate unpaid principal
amount of all Term Loans plus (y) all other unpaid amounts owing in respect of
Term Loans and shall be due and payable not later than the Term Maturity Date:



                                       41
<PAGE>

<Table>
<Caption>
                  Payment Date                                         Amount
                  ------------                                         ------
<S>                                                                    <C>
                4th Quarter 2002                                       3.75%
                1st Quarter 2003                                       3.75%
                2nd Quarter 2003                                       3.75%
                3rd Quarter 2003                                       3.75%

                4th Quarter 2003                                       6.25%
                1st Quarter 2004                                       6.25%
                2nd Quarter 2004                                       6.25%
                3rd Quarter 2004                                       6.25%

                4th Quarter 2004                                       7.50%
                1st Quarter 2005                                       7.50%
                2nd Quarter 2005                                       7.50%
                3rd Quarter 2005                                       7.50%

                4th Quarter 2005                                       7.50%
                1st Quarter 2006                                       7.50%
                2nd Quarter 2006                                       7.50%
               Term Maturity Date                                      7.50%
</Table>

         (b) Subject to adjustment pursuant to Section 2.10(e), the Borrower
shall repay Incremental Tranche A Borrowings outstanding on the Incremental
Tranche A Amortization Date in 16 consecutive installments of principal, each of
which will be due and payable on the last day of each fiscal quarter (except
with respect to the final installment, which shall be on the Incremental Tranche
A Maturity Date) set forth below in the percentage amounts (expressed as a
percentage of the aggregate amount of Incremental Tranche A Term Loans
outstanding on the Incremental Tranche A Commitment Termination Date) set forth
opposite such quarterly installment date (or the Incremental Tranche A Maturity
Date) below; provided that the final installment shall equal the sum of (x) the
then aggregate unpaid principal amount of all Incremental Tranche A Term Loans
plus (y) all other unpaid amounts owing in respect of the Incremental Tranche A
Term Loans, and shall be due and payable not later than the Incremental Tranche
A Maturity Date:

<Table>
<Caption>
                  Payment Date                                         Amount
                  ------------                                         ------
<S>                                                                    <C>
                4th Quarter 2002                                       3.75%
                1st Quarter 2003                                       3.75%
                2nd Quarter 2003                                       3.75%
                3rd Quarter 2003                                       3.75%

                4th Quarter 2003                                       6.25%
                1st Quarter 2004                                       6.25%
                2nd Quarter 2004                                       6.25%
                3rd Quarter 2004                                       6.25%

                4th Quarter 2004                                       7.50%
                1st Quarter 2005                                       7.50%
                2nd Quarter 2005                                       7.50%
                3rd Quarter 2005                                       7.50%

                4th Quarter 2005                                       7.50%
                1st Quarter 2006                                       7.50%
                2nd Quarter 2006                                       7.50%
               Incremental Tranche
                 A Maturity Date                                       7.50%
</Table>



                                       42
<PAGE>

         (c) Subject to adjustment pursuant to Section 2.10(e), the Borrower
shall repay Additional Incremental Term Borrowings of any Class on the scheduled
dates, and in the scheduled amounts, if any, set forth in the applicable
Additional Incremental Facility Agreement.

         (d) To the extent not previously paid, all Term Loans shall be due and
payable on the Term Maturity Date, all Revolving Loans shall be due and payable
on the Revolving Maturity Date, all Incremental Tranche A Term Loans shall be
due and payable on the Incremental Tranche A Maturity Date and all Additional
Incremental Loans of any Class shall be due and payable on the final maturity
date set forth in the applicable Additional Incremental Facility Agreement.

         (e) Any prepayment of a Term Borrowing or an Incremental Term Borrowing
shall be applied to reduce the subsequent scheduled repayments of Term
Borrowings or Incremental Term Borrowings, respectively to be made pursuant to
this Section in reverse chronological order. Any prepayment of an Additional
Incremental Term Borrowing of any Class shall be applied to reduce the
subsequent scheduled repayment of Additional Incremental Term Borrowings of such
Class to be made pursuant to this Section as set forth in the applicable
Additional Incremental Facility Agreement.

         (f) Prior to any repayment of any Term Borrowings or Incremental Term
Borrowings hereunder or any Additional Incremental Term Borrowings of any Class,
the Borrower shall select the Borrowing or Borrowings of such Class to be repaid
and shall notify the Administrative Agent by telephone (confirmed by telecopy)
of such selection not later than 11:00 a.m., Dallas, Texas time, three Business
Days before the scheduled date of such repayment; provided that each repayment
of Term Borrowings or Incremental Term Borrowings or any Additional Incremental
Term Borrowings of any Class shall be applied to repay any outstanding ABR Term
Borrowings or ABR Incremental Term Borrowings or ABR Additional Incremental Term
Borrowings of such Class before any other Borrowings of such Class. Each
repayment of a Borrowing shall be applied ratably to the Loans included in the
repaid Borrowing. Repayments of Term Borrowings, Incremental Term Borrowings and
Additional Incremental Term Borrowings shall be accompanied by accrued interest
on the amount repaid.

         SECTION 2.11. Prepayment of Loans. (a) The Borrower shall have the
right at any time and from time to time to prepay any Borrowing in whole or in
part, subject to the requirements of this Section. All prepayments shall be made
without premium or penalty other than, to the extent applicable, amounts payable
under Section 2.16.

         (b) In the event and on each occasion that any Net Proceeds in excess
of $5,000,000 are received by or on behalf of Holdings or any Subsidiary in
respect of any Prepayment Event, there shall be a pro rata reduction of
Revolving Commitments, Term Borrowings, Incremental Tranche A Borrowings, and if
provided for in the applicable Additional Incremental Facility Agreement,
Additional Incremental Revolving



                                       43
<PAGE>

Commitments and Additional Incremental Term Borrowings as provided in this
Section 2.11(b) and in Section 2.08(f). In such event, the Borrower shall,
within three Business Days after such Net Proceeds are received, prepay Term
Borrowings, Incremental Tranche A Borrowings and, if provided for in the
applicable Additional Incremental Facility Agreement, Additional Incremental
Term Borrowings in an aggregate amount equal to the product of 100% (or, in the
case of any Prepayment Event referred to in clause (c) of the definition of
Prepayment Event, if, on the date on which any prepayment would otherwise be
made in respect of such Prepayment Event either (i) the Facilities shall be
rated not lower than BBB- by S&P and Baa3 by Moody's or (ii) the Total Leverage
Ratio as of such date is less than 3.5 to 1.0, 50%) of such Net Proceeds and the
Prepayment Portion in respect of such Prepayment Event (such product, the
"Prepayment Amount"); provided that, in the case of any event described in
clause (a) or (c) of the definition of Prepayment Event, if the Borrower shall
deliver to the Administrative Agent a certificate of a Financial Officer to the
effect that the Borrower intends to apply the Net Proceeds from such event (or a
portion thereof specified in such certificate) to invest in the
Telecommunications Business of the Borrower and the other Restricted
Subsidiaries within 360 days of the receipt thereof and certifying that no
Default has occurred and is continuing, then no prepayment shall be required
pursuant to this paragraph in respect of the Net Proceeds in respect of such
event (or the portion of such Net Proceeds specified in such certificate, if
applicable) except to the extent of any such Net Proceeds therefrom that have
not been so applied by the end of such period, at which time a prepayment shall
be required in accordance with this paragraph (b).

         (c) Following the end of each fiscal year of the Borrower, commencing
with the fiscal year ending December 31, 2002, the Borrower shall prepay Term
Borrowings, Incremental Tranche A Borrowings and, if provided for in the
applicable Additional Incremental Facility Agreement, Additional Incremental
Term Borrowings in an aggregate amount equal to the product of (i) 50% of Excess
Cash Flow for such fiscal year and (ii) the Prepayment Portion in respect of
such Excess Cash Flow (such product, the "Excess Cash Flow Prepayment Amount");
provided that if, on the date on which any prepayment would otherwise be made
pursuant to this Section 2.11(c), either (i) the Facilities shall be rated not
lower than BBB- by S&P and Baa3 by Moody's or (ii) the Total Leverage Ratio as
of such date is less than 3.5 to 1.0, no such prepayment shall be required
pursuant to this Section 2.11(c). Each prepayment pursuant to this paragraph
shall be made on or before the date on which financial statements are delivered
pursuant to Section 5.01 with respect to the fiscal year for which Excess Cash
Flow is being calculated (and in any event within 90 days after the end of such
fiscal year).

         (d) If, on any date, the aggregate Revolving Exposures of all Lenders
exceeds the aggregate Revolving Commitments of all Lenders, or the aggregate
principal amount of the Additional Incremental Revolving Loans of any Class of
all Lenders exceeds the aggregate Additional Incremental Revolving Commitments
of such Class of all Lenders, the Borrower shall immediately prepay Revolving
Loans or Additional Incremental Revolving Loans of such Class, as the case may
be (and, to the extent that any such excess remains after all Revolving Loans
have been prepaid, deposit cash collateral with



                                       44
<PAGE>

the Administrative Agent to secure outstanding LC Exposure), in an amount equal
to such excess.

         (e) Prior to any optional or mandatory prepayment of Borrowings
hereunder, the Borrower shall select the Borrowing or Borrowings to be prepaid
and shall specify such selection in the notice of such prepayment pursuant to
Section 2.11(f); provided that each prepayment of Borrowings of any Class shall
be applied to prepay ABR Borrowings of such Class before any other Borrowings of
such Class.

         (f) The Borrower shall notify the Administrative Agent (and, in the
case of prepayment of a Swingline Loan, the applicable Swingline Lender) by
telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., Dallas, Texas
time, three Business Days before the date of prepayment, (ii) in the case of
prepayment of an ABR Borrowing, not later than 11:00 a.m., Dallas, Texas time,
one Business Day before the date of prepayment or (iii) in the case of
prepayment of a Swingline Loan, not later than 12:00 noon, Dallas, Texas time,
on the date of prepayment. Each such notice shall be irrevocable and shall
specify the prepayment date, the principal amount of each Borrowing or portion
thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably
detailed calculation of the amount of such prepayment; provided that, if a
notice of optional prepayment is given in connection with a conditional notice
of termination of the Revolving Commitments or any Additional Incremental
Revolving Commitments as contemplated by Section 2.08, then such notice of
prepayment may be revoked if such notice of termination is revoked in accordance
with Section 2.08. Promptly following receipt of any such notice (other than a
notice relating solely to Swingline Loans), the Administrative Agent shall
advise the Lenders of the contents thereof. Each partial prepayment of any
Borrowing shall be in an amount that would be permitted in the case of an
advance of a Borrowing of the same Type as provided in Section 2.02, except as
necessary to apply fully the required amount of a mandatory prepayment. Each
prepayment of a Borrowing shall be applied ratably to the Loans included in the
prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the
extent required by Section 2.13.

         SECTION 2.12. Fees. (a) The Borrower agrees to pay to the
Administrative Agent (i) in the case of Revolving Commitments and Term
Commitments for the account of each Lender fees for each day during the period
from and including the Effective Date to but excluding the date on which such
Commitment terminates at a rate equal to the applicable Commitment Fee Rate for
such day, (ii) in the case of Incremental Tranche A Commitments for the account
of each Incremental Tranche A Lender fees for each day during the period from
and including the Amendment No. 5 Effective Date but excluding the Incremental
Tranche A Commitment Termination Date at a rate equal to the applicable
Commitment Fee Rate for such day and (iii) in the case of any Additional
Incremental Facility Commitment, the rate set forth in the applicable Additional
Incremental Facility Agreement for such day, in each case on the unused amount
of each Commitment of such Lender on such day (collectively, the "COMMITMENT
FEES"). Accrued Commitment Fees shall be payable in arrears on the last day of
March, June, September and December of each year and on the date on which the
applicable Commitments terminate, commencing on the first such date to occur
after the date hereof. All Commitment Fees shall be computed on the basis of a
year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). For purposes of computing
commitment fees with respect to Revolving Commitments, a Revolving Commitment of
a Lender shall be deemed to be used to the extent of the



                                       45
<PAGE>

outstanding Revolving Loans and LC Exposure of such Lender (and the Swingline
Exposure of such Lender shall be disregarded for such purpose).

         (b) The Borrower agrees to pay (i) to the Administrative Agent for the
account of each Revolving Lender a participation fee with respect to its
participations in Letters of Credit for each day during the period from and
including the Effective Date to but excluding the later of the date on which
such Lender's Revolving Commitment terminates and the date on which such Lender
ceases to have any LC Exposure, which fee shall accrue at a rate equal to the
Applicable Margin on Eurodollar Revolving Loans for such day on the amount of
such Lender's LC Exposure on such day (excluding any portion thereof
attributable to unreimbursed LC Disbursements) and (ii) to the applicable
Issuing Bank a fronting fee in respect of Letters of Credit issued by such
Issuing Bank for each day during the period from and including the Effective
Date to but excluding the later of the date of termination of the Revolving
Commitments and the date on which there ceases to be any LC Exposure in respect
of Letters of Credit issued by such Issuing Bank, which shall accrue at the rate
or rates per annum separately agreed upon between the Borrower and such Issuing
Bank on the amount of the LC Exposure on such day (excluding any portion thereof
attributable to unreimbursed LC Disbursements) in respect of Letters of Credit
issued by such Issuing Bank, as well as the Issuing Bank's standard fees with
respect to the issuance, amendment, renewal or extension of any Letter of Credit
or processing of drawings thereunder. Participation fees and fronting fees
accrued through and including the last day of March, June, September and
December of each year shall be payable on the third Business Day following such
last day, commencing on the first such date to occur after the Effective Date;
provided that all such fees shall be payable on the date on which the Revolving
Commitments terminate and any such fees accruing after the date on which the
Revolving Commitments terminate shall be payable on demand. Any other fees
payable to an Issuing Bank pursuant to this paragraph shall be payable within 10
days after demand. All participation fees and fronting fees shall be computed on
the basis of a year of 360 days and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day).

         (c) The Borrower agrees to pay to the Administrative Agent, for its own
account, fees in the amounts and at the times separately agreed upon between the
Borrower and the Administrative Agent.

         (d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the applicable
Issuing Bank, in the case of fees payable to it) for distribution, in the case
of Commitment Fees and participation fees, to the Lenders entitled thereto. Fees
paid shall not be refundable under any circumstances.

         SECTION 2.13. Interest. (a) The Loans comprising each ABR Borrowing
shall bear interest at the Alternate Base Rate plus (i) in the case of any ABR
Borrowing under the Revolving Facility, the Term Facility or the Incremental
Facility (including each Swingline Loan), the ABR Spread and, if applicable to
any loan (other than an Incremental Term Loan), the Leverage Premium (each as
set forth in "Applicable Margin") and (ii) in the case of any ABR Borrowing
under any Additional Incremental Facility, the Applicable Margin for ABR
Borrowings set forth in the applicable Additional Incremental Facility
Agreement.



                                       46
<PAGE>

         (b) The Loans comprising each Eurodollar Borrowing shall bear interest
at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
plus (i) in the case of any Eurodollar Borrowing under the Revolving Facility,
the Term Facility or the Incremental Facility, the Eurodollar Spread and, if
applicable to any loan (other than an Incremental Term Loan), the Leverage
Premium (each as set forth in "Applicable Margin") and (ii) in the case of any
Eurodollar Borrowing under any Additional Incremental Facility, the Applicable
Margin for Eurodollar Borrowings set forth in the applicable Additional
Incremental Facility Agreement.

         (c) Notwithstanding the foregoing, if any principal of or interest on
any Loan or any fee or other amount payable by the Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any ABR Loan under
the Revolving Facility, the Term Facility or the Incremental Facility, 2% plus
the highest Applicable Margin for ABR Loans plus the ABR, (ii) in the case of
overdue principal of any Eurodollar Loan under the Revolving Facility, the Term
Facility or the Incremental Facility, the higher of (x) 2% plus the highest
Applicable Margin for Eurodollar Loans plus the Adjusted LIBO Rate applicable to
such Eurodollar Loan on the day before payment was due and (y) the sum of 2%
plus the highest Applicable Margin for ABR Loans plus the ABR, (iii) in the case
of overdue principal of or overdue interest on any Additional Incremental Loan
of any Class, the rate set forth in the applicable Additional Incremental
Facility Agreement and (iv) in the case of any other amount, 2% plus the rate
applicable to ABR Revolving Loans as provided in Section 2.13(a).

         (d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and, in the case of Revolving Loans, upon
termination of the Revolving Commitments; provided that (i) interest accrued
pursuant to Section 2.13(c) shall be payable on demand, (ii) in the event of any
repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving
Loan prior to the end of the Revolving Availability Period), accrued interest on
the principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.

         (e) All interest hereunder shall be computed on the basis of a year of
360 days, except that interest computed by reference to the Alternate Base Rate
at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate or
Adjusted LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.

         SECTION 2.14. Alternate Rate of Interest. If prior to the commencement
of any Interest Period for a Eurodollar Borrowing:



                                       47
<PAGE>

         (a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or

         (b) the Administrative Agent is advised by the Required Lenders that
the Adjusted LIBO Rate for such Interest Period will not adequately and fairly
reflect the cost to such Lenders (or Lender) of making or maintaining their
Loans (or its Loan) included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.

         SECTION 2.15. Increased Costs.

         (a) If any Change in Law shall:

                  (i) impose, modify or deem applicable any reserve, special
         deposit or similar requirement against assets of, deposits with or for
         the account of, or credit extended by, any Lender (except any such
         reserve requirement reflected in the Adjusted LIBO Rate), Swingline
         Lender or Issuing Bank; or

                  (ii) impose on any Lender, Swingline Lender or Issuing Bank or
         the London interbank market any other condition affecting this
         Agreement or Eurodollar Loans made by such Lender or any Letter of
         Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost (other than
Taxes) to such Lender of making or maintaining any Eurodollar Loan (or of
maintaining its obligation to make any such Loan) or to increase the cost to
such Lender, Swingline Lender or Issuing Bank of participating in, issuing or
maintaining any Letter of Credit or to reduce the amount of any sum received or
receivable by such Lender, Swingline Lender or Issuing Bank hereunder (whether
of principal, interest or otherwise), then the Borrower will pay to such Lender,
Swingline Lender or Issuing Bank, as the case may be, such additional amount or
amounts as will compensate such Lender, Swingline Lender or Issuing Bank, as the
case may be, for such additional costs incurred or reduction suffered.

         (b) If any Lender, Swingline Lender or Issuing Bank determines that any
Change in Law regarding capital requirements has or would have the effect of
reducing the rate of return on such Lender's, Swingline Lender's or Issuing
Bank's capital or on the capital of such Lender's, Swingline Lender's or Issuing
Bank's holding company, if any, as a consequence of this Agreement or the Loans
made by, or participations in Letters of Credit held by, such Lender or
Swingline Lender, or the Letters of Credit issued by such Issuing Bank, to a
level below that which such Lender, Swingline Lender or Issuing Bank or such
Lender's, Swingline Lender's or Issuing Bank's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's,
Swingline Lender's or Issuing Bank's policies and the policies of such Lender's,
Swingline Lender's or Issuing Bank's holding company with respect to capital
adequacy), then from time to time the Borrower will pay to such Lender,
Swingline Lender or Issuing Bank, as the case may be, such additional amount or
amounts as will compensate such Lender, Swingline Lender or Issuing Bank or such
Lender's, Swingline Lender's or Issuing Bank's holding company for any such
reduction suffered.



                                       48
<PAGE>

         (c) A certificate of a Lender, Swingline Lender or Issuing Bank setting
forth the amount or amounts necessary to compensate such Lender, Swingline
Lender or Issuing Bank or its holding company, as the case may be, as specified
in Section 2.15(a) or 2.15(b) shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender or such
Issuing Bank, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.

         (d) Failure or delay on the part of any Lender, Swingline Lender or
Issuing Bank to demand compensation pursuant to this Section shall not
constitute a waiver of such Lender's, Swingline Lender's or Issuing Bank's right
to demand such compensation; provided that the Borrower shall not be required to
compensate a Lender, Swingline Lender or Issuing Bank pursuant to this Section
for any increased costs or reductions incurred more than 120 days prior to the
date that such Lender, Swingline Lender or Issuing Bank, as the case may be,
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender's, Swingline Lender's or Issuing Bank's
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 120-day period referred to above shall be extended to include the period of
retroactive effect thereof.

         SECTION 2.16. Break Funding Payments. In the event of (a) the payment
of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under Section
2.11(f) and is revoked in accordance therewith), or (d) the assignment of any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by the Borrower pursuant to Section 2.19, then,
in any such event, the Borrower shall compensate each Lender for the loss, cost
and expense attributable to such event. In the case of a Eurodollar Loan, such
loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the rate that would have been applicable to such Loan,
for the period from the date of such event to the last day of the then current
Interest Period therefor (or, in the case of a failure to borrow, convert or
continue, for the period that would have been the Interest Period for such
Loan), over (ii) the amount of interest which would accrue on such principal
amount for such period at the interest rate which such Lender would bid were it
to bid, at the commencement of such period, for dollar deposits of a comparable
amount and period from other banks in the eurodollar market. A certificate of
any Lender setting forth any amount or amounts that such Lender is entitled to
receive pursuant to this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender the amount
shown as due on any such certificate within 10 days after receipt thereof.

         SECTION 2.17. Taxes. (a) Any and all payments by or on account of any
obligation of the Borrower hereunder or under any other Loan Document shall be
made free and clear of and without deduction for any Indemnified Taxes or Other
Taxes; provided that if the Borrower shall be required to deduct any Indemnified
Taxes or Other Taxes from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) the
Administrative Agent, Lender or Issuing Bank (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower shall pay
the full amount deducted to the relevant Governmental Authority in accordance
with applicable law.



                                       49
<PAGE>

         (b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

         (c) The Borrower shall indemnify the Administrative Agent, each Lender
and Issuing Bank, within 15 days after the date of receipt of a written demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by
the Administrative Agent, such Lender or such Issuing Bank, as the case may be,
on or with respect to any payment by or on account of any obligation of the
Borrower hereunder or under any other Loan Document (including Indemnified Taxes
or Other Taxes imposed or asserted on or attributable to amounts payable under
this Section) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrower by a Lender or Issuing Bank, or by the
Administrative Agent on its own behalf or on behalf of a Lender or Issuing Bank,
shall be conclusive absent manifest error.

         (d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.

         (e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), on or prior to the first payment by the
Borrower under this Agreement to such Foreign Lender or Participant and from
time to time thereafter as prescribed by applicable law, such properly completed
and executed documentation prescribed by applicable law or reasonably requested
by the Borrower as will permit such payments to be made without withholding or
at a reduced rate.

         (f) If any Lender determines, in its sole discretion, that it has
received a refund of any Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 2.17, it shall pay over such refund
to the Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower under this Section 2.17 with respect to
the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Lender without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund); provided, however,
that the Borrower, upon request of such Lender, agrees to repay the amount paid
over to the Borrower (plus any penalties, interest or other charges imposed by
the relevant Governmental Authority) to the Lender in the event such Lender is
required to repay such refund to such Governmental Authority. Nothing contained
in this Section 2.17(f) shall



                                       50
<PAGE>

require any Lender to make available its tax returns (or any other information
relating to its taxes which it deems confidential) to the Borrower or any other
Person.

         (g) Notwithstanding anything expressed or implied to the contrary in
this Agreement or any other Loan Document (including any schedule or exhibit to
any of the foregoing), this Section 2.17 (and Section 10.04 insofar as it
relates to this Section 2.17) shall constitute the complete and exclusive
understanding of the parties in respect of all matters relating to any Taxes
(including interest thereon, additions thereto and penalties in connection
therewith).

         SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs. (a) The Borrower shall make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal, interest, fees
or reimbursement of LC Disbursements, or of amounts payable under Section 2.15,
2.16 or 2.17, or otherwise) prior to 1:00 p.m., Dallas, Texas time, on the date
when due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at Dallas, Texas,
except that payments pursuant to Sections 2.15, 2.16, 2.17 and 10.03 shall be
made directly to the Persons entitled thereto and payments pursuant to other
Loan Documents shall be made to the Persons specified therein. The
Administrative Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment under any Loan Document shall be due on a day
that is not a Business Day, the date for payment shall be extended to the next
succeeding Business Day (unless, in the case of payments in respect of
Eurodollar Loans, such next succeeding Business Day would fall in the next
calendar month, in which case such payment shall be due on the next preceding
Business Day), and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension. All payments under
each Loan Document shall be made in dollars.

         (b) If at any time insufficient funds are received by and available to
the Administrative Agent to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (ii) second, towards payment of principal
and unreimbursed LC Disbursements then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties.

         (c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans (other than Swingline Loans) or participations in
LC Disbursements or Swingline Loans resulting in such Lender receiving payment
of a greater proportion of the aggregate amount of its Loans (other than
Swingline Loans) and participations in LC Disbursements and Swingline Loans and
accrued interest thereon than the proportion received by any other Lender, then
the Lender receiving such greater proportion shall purchase (for cash at face
value) participations in the Loans (other than Swingline Loans) and
participations in LC Disbursements and Swingline Loans of other Lenders to the
extent necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans (other than Swingline Loans) and
participations in LC



                                       51
<PAGE>

Disbursements and Swingline Loans; provided that (i) if any such participations
are purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by the Borrower pursuant to and in accordance with the express terms of this
Agreement (including without limitation pursuant to Section 2.11) or any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans or participations in LC Disbursements to any
assignee or participant, other than to the Borrower or any Subsidiary or
Affiliate thereof (as to which the provisions of this paragraph shall apply).
The Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.

         (d) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or an Issuing Bank hereunder that the
Borrower will not make such payment, the Administrative Agent may assume that
the Borrower has made such payment on such date in accordance herewith and may,
in reliance upon such assumption, distribute to the Lenders or the applicable
Issuing Bank or Banks, as the case may be, the amount due. In such event, if the
Borrower has not in fact made such payment, then each of the Lenders or Issuing
Banks, as the case may be, severally agrees to repay to the Administrative Agent
forthwith on demand the amount so distributed to such Lender or Issuing Bank
with interest thereon, for each day from and including the date such amount is
distributed to it to but excluding the date of payment to the Administrative
Agent, at the greater of the Federal Funds Effective Rate and a rate determined
by the Administrative Agent in accordance with banking industry rules on
interbank compensation.

         (e) If any Lender shall fail to make any payment required to be made by
it pursuant to Section 2.04(c), 2.05(d) or 2.05(e), 2.06(b), 2.18(d) or
10.03(c), then the Administrative Agent may, in its discretion (notwithstanding
any contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender's
obligations under such Sections until all such unsatisfied obligations are fully
paid.

         SECTION 2.19. Mitigation Obligations; Replacement of Lenders. (a) If
any Lender requests compensation under Section 2.15, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.17, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.



                                       52
<PAGE>

         (b) If any Lender requests compensation under Section 2.15, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 10.04), all its interests, rights and obligations under this Agreement
to an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Borrower
shall have received the prior written consent of the Administrative Agent (and,
if a Revolving Commitment is being assigned, the Issuing Bank and Swingline
Lender), which consent shall not unreasonably be withheld, (ii) such Lender
shall have received payment of an amount equal to the outstanding principal of
its Loans and participations in LC Disbursements and Swingline Loans, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts) and (iii)
in the case of any such assignment resulting from a claim for compensation under
Section 2.15 or payments required to be made pursuant to Section 2.17, such
assignment will result in a reduction in such compensation or payments. A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, (i) as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply or (ii) such Lender elects to withdraw its request.

         SECTION 2.20. Additional Incremental Facilities and Commitments. (a) At
any time prior to December 31, 2002, and so long as no Default or Event of
Default shall have occurred and be continuing or would result therefrom, the
Borrower may request, on one or more occasions, by notice to the Administrative
Agent and the Incremental Facility Arrangers, that one or more Lenders (and/or
one or more other Persons which shall become Lenders as provided in Section
2.20(d) below) provide one or more additional facilities (each, an "Additional
Incremental Facility"), each of which shall provide for commitments (the
"Additional Incremental Commitments") in an aggregate amount of not less than
$100,000,000 and all of which Additional Incremental Facilities shall provide
for Additional Incremental Commitments in an aggregate amount not in excess of
$500,000,000; provided that no Lender shall have any obligation to provide any
Additional Incremental Commitment and any Lender (or any other Person which
becomes a Lender pursuant to Section 2.20(d) below) may provide Additional
Incremental Commitments without the consent of any other Lender.

         (b) The maturity date, scheduled amortization and commitment
reductions, mandatory prepayments and commitment reductions, interest rate,
minimum borrowings and prepayments, commitment fees and other amounts payable in
respect of any Additional Incremental Facility, and certain agent
determinations, shall be as set forth in an agreement (an "Additional
Incremental Facility Agreement") among the Loan Parties, the Administrative
Agent, each Incremental Facility Arranger (but only if it is acting in the
capacity of joint lead arranger with respect to such Additional Incremental
Facility) and the Lenders and other Persons agreeing to provide Additional
Incremental Commitments thereunder; provided that any term Incremental Loans
(the "Additional Incremental Term Loans") shall have a Weighted Average Life to
Maturity of no less than the Weighted Average Life to Maturity of the Term Loans
then outstanding and any revolving Incremental Commitment (the "Additional
Incremental Revolving



                                       53
<PAGE>

Commitments" and any loans made pursuant thereto, the "Additional Incremental
Revolving Loans") shall have a Weighted Average Life to Maturity of not less
than the Weighted Average Life to Maturity of the Revolving Commitments then
outstanding.

         (c) [Intentionally deleted]

         (d) The effectiveness of any Additional Incremental Facility to be
created under this Section 2.20, and the obligation of any Lender or other
Person providing any Additional Incremental Commitment thereunder to make any
Additional Incremental Loans pursuant thereto, is subject to, in addition to the
conditions set forth in Article 4, the satisfaction of each of the following
conditions: each Loan Party, the Administrative Agent, each Incremental Facility
Arranger (but only if it is acting in the capacity of joint lead arranger with
respect to such Additional Incremental Facility) and each Lender or other Person
providing Additional Incremental Commitments thereunder (each, an "Additional
Incremental Lender") shall have executed and delivered to the Administrative
Agent an Additional Incremental Facility Agreement with respect to such
Additional Incremental Facility, (x) the Administrative Agent shall have
received, and (y) the Administrative Agent shall have received for the
respective accounts of any other agents and the Additional Incremental Lenders,
all fees and other amounts payable by the Borrower in respect of such Additional
Incremental Facility on or prior to such date of effectiveness and the
Administrative Agent (or its counsel) shall have received such documents and
certificates, and such legal opinions, as the Administrative Agent and the
Incremental Facility Arrangers or their counsel shall reasonably request,
including documents, certificates and legal opinions relating to the
organization, existence and good standing of each Loan Party, the authorization
of such Additional Incremental Facility and other legal matters relating to the
Loan Parties or the Loan Documents (including the applicable Additional
Incremental Facility Agreement). The Administrative Agent shall notify each
Lender as to the effectiveness of each Additional Incremental Facility
hereunder.

                                    ARTICLE 3

                         REPRESENTATIONS AND WARRANTIES

         Each of Holdings and the Borrower represents and warrants to the
Lenders that:

         SECTION 3.1. Organization; Powers. Each of Holdings and the Restricted
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.

         SECTION 3.2. Authorization; Enforceability. The Transactions to be
entered into by each Loan Party are within such Loan Party's corporate powers
and have been duly authorized by all necessary corporate and, if required,
stockholder action. This Agreement has been duly executed and delivered by each
of Holdings and the Borrower and constitutes, and each other Loan Document to
which any Loan Party is to be a party, when executed and delivered by such Loan
Party, will constitute, a legal, valid and binding obligation of Holdings, the
Borrower or such Loan Party (as the case may be), enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law.

         SECTION 3.3. Governmental Approvals; No Conflicts. The Transactions (a)
do not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority,



                                       54
<PAGE>

except such as have been obtained or made and are in full force and effect and
except filings necessary to perfect Liens created under the Loan Documents (if
any), (b) will not violate any applicable law or regulation or the charter,
by-laws or other organizational documents of Holdings or any Restricted
Subsidiary or any order of any Governmental Authority, (c) will not violate or
result in a default under any indenture, agreement or other instrument binding
upon Holdings or any Restricted Subsidiary or any of their respective assets, or
give rise to a right thereunder to require any payment to be made by Holdings or
any Restricted Subsidiary, and (d) will not result in the creation or imposition
of any Lien on any asset of Holdings or any Restricted Subsidiary, except Liens
created under the Loan Documents (if any).

         SECTION 3.4. Financial Condition; No Material Adverse Change. (a)
Holdings has heretofore furnished to the Lenders Holdings' consolidated balance
sheet and statements of operations, stockholders equity and cash flows as of and
for the fiscal years ended December 31, 1998, December 31, 1999 and December 31,
2000, reported on by Ernst & Young LLP, independent public accountants. Such
financial statements present fairly, in all material respects, the financial
position and results of operations and cash flows of Holdings and the
Subsidiaries as of such dates and for such periods in accordance with GAAP.

         (b) Holdings has heretofore furnished to the Lenders its pro forma
consolidated balance sheet as of December 31, 2000 and projected pro forma
statements of operations and cash flows for the fiscal year ended December 31,
2001, prepared giving effect to (x) the Transactions under the Incremental
Facility and the Structured Note Financing and (y) the transactions described in
clause (x) and, in addition, the sale of its Williams Communications Solutions
business unit, as if such events had occurred on such date or on the first day
of such fiscal year, as the case may be. Such projected pro forma consolidated
balance sheets and statements of operations and cash flows (i) have been
prepared in good faith based on the same assumptions used to prepare the pro
forma financial statements included in the Information Memorandum (which
assumptions are believed by Holdings and the Borrower to be reasonable), (ii)
are based on the best information available to Holdings and the Borrower after
due inquiry, (iii) accurately reflect all adjustments necessary to give effect
to the Transactions under the Incremental Facility and the Structured Note
Financing and, in the case of one such set of financial statements, the sale of
its Williams Communications Solutions business unit, and (iv) present fairly, in
all material respects, the pro forma financial position of Holdings and the
Subsidiaries as of such date and for such periods as if the Transactions, the
Structured Note Financing and, in the case of one such set of financial
statements, the sale of its Williams Communications Solutions business unit had
occurred on such date or at the beginning of such period, as the case may be.

         (c) Except as disclosed in the financial statements referred to above
or the notes thereto or in the Information Memorandum and except for the
Disclosed Matters, after giving effect to the Transactions, none of Holdings or
any Restricted Subsidiary has, as of the Effective Date, any material contingent
liabilities, unusual material long-term commitments or unrealized material
losses.

         (d) The projections delivered to the Lenders on the Amendment No. 5
Effective Date (the "Projections") were based on assumptions believed by the
Borrower and Holdings in good faith to be reasonable when made and as of their
date represented the Borrower's and Holdings' good faith estimate of future
performance of Holdings and the Subsidiaries and of the Borrower and its
consolidated subsidiaries.



                                       55
<PAGE>

         (e) Since December 31, 2000, there has been no Material Adverse Change.

         SECTION 3.5. Properties. (a) Each of Holdings and the Restricted
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business (including its Mortgaged
Properties, if any), except for minor defects in title that do not interfere
with its ability to conduct its business as currently conducted or to utilize
such properties for their intended purposes. None of the properties and assets
of Holdings or any Restricted Subsidiary is subject to any Lien other than
Permitted Encumbrances, Liens created by the Collateral Documents (if any) and
other Liens permitted under Section 6.02.

         (b) Each of Holdings and the Subsidiaries owns, or is licensed to use,
all trademarks, trade names, copyrights, patents and other intellectual property
material to its business, and the use thereof by Holdings and the Subsidiaries
does not infringe upon the rights of any other Person, except for any such
infringements that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.

         (c) Schedule 3.05 sets forth the address of each real property that is
owned or leased by Holdings, the Borrower or any other Loan Party (other than
the Parent) as of the Effective Date after giving effect to the Transactions.

         SECTION 3.6. Litigation and Environmental Matters. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of Holdings or the Borrower,
threatened against or affecting Holdings or any Subsidiary (i) as to which there
is a reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect (other than the Disclosed Matters) or (ii)
that involve any of the Loan Documents or the Transactions.

         (b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, neither Holdings nor any
Subsidiary (i) has failed to comply with any Environmental Law or to obtain,
maintain or comply with any permit, license or other approval required under any
Environmental Law, (ii) has become subject to any Environmental Liability, (iii)
has received written notice of any claim with respect to any Environmental
Liability or (iv) knows of any basis for any violations of any Environmental Law
or any release, threatened release or exposure to any Hazardous Materials that
is likely to form the basis of any Environmental Liability.

         (c) Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.

         SECTION 3.7. Compliance with Laws and Agreements. Each of Holdings and
the Subsidiaries is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.

         SECTION 3.8. Investment and Holding Company Status. Neither Holdings
nor any Restricted Subsidiary is (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.



                                       56
<PAGE>

         SECTION 3.9. Taxes. Each of Holdings and the Subsidiaries has timely
filed or caused to be filed (or the Parent has filed or caused to be filed) all
Tax returns and reports required to have been filed and has paid or caused to be
paid (or the Parent has paid or caused to be paid) all Taxes required to have
been paid by or with respect to it, except (a) Taxes that are being contested in
good faith by appropriate proceedings and for which Holdings or such Subsidiary,
as applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.

         SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $25,000,000 the fair market value of the assets of such Plan, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $25,000,000 the fair
market value of the assets of all such underfunded Plans.

         SECTION 3.11. Disclosure. Holdings and the Borrower have disclosed to
the Lenders all agreements, instruments and corporate or other restrictions to
which Holdings or any Restricted Subsidiary is subject, and all other matters
known to any of them, that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect. Neither the Information
Memorandum nor any of the other reports, financial statements, certificates or
other information furnished by or on behalf of any Loan Party to any Agent or
any Lender in connection with the negotiation of this Agreement or any other
Loan Document or delivered hereunder or thereunder (as modified or supplemented
by other information so furnished) contains any material misstatement of fact or
omits to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided that, with respect to projected financial information, Holdings and the
Borrower represent only that such information was prepared in good faith based
upon assumptions believed to be reasonable at the time.

         SECTION 3.12. Subsidiaries. Schedule 3.12 sets forth the name of, and
the direct or indirect ownership interest of Holdings or the Borrower in, each
Subsidiary and identifies each Subsidiary that is a Subsidiary Loan Party, in
each case as of the Effective Date.

         SECTION 3.13. Insurance. Schedule 3.13 sets forth a description of all
insurance maintained by or on behalf of Holdings and the Restricted Subsidiaries
as of the Effective Date. As of the Effective Date, all premiums in respect of
such insurance have been paid.

         SECTION 3.14. Labor Matters. As of the Effective Date, there are no
strikes, lockouts or slowdowns against Holdings or any Restricted Subsidiary
pending or, to the knowledge of Holdings or the Borrower, threatened. The hours
worked by and payments made to employees of Holdings and the Restricted
Subsidiaries have not been in violation of the Fair Labor Standards Act or any
other applicable Federal, state, local or foreign law dealing with such matters.
All payments due from Holdings or any Restricted Subsidiary, or for which any
claim may be made against Holdings or any Restricted Subsidiary, on account of
wages and employee health and welfare insurance and other benefits, have been
paid or accrued as a liability on the books of Holdings or such Restricted
Subsidiary. The consummation of the Transactions and the Reorganization has not
and will not give rise to any right of termination or right of renegotiation on
the part of any union under any collective bargaining agreement by which
Holdings or any Restricted Subsidiary is bound.

         SECTION 3.15. Solvency. Immediately after the consummation of the
Transactions to occur on the Effective Date and immediately following the making
of each Loan made on the Effective Date and after giving effect to the
application of the proceeds of such Loans, (a) the fair value of the assets of
each Loan Party will exceed its debts and liabilities, subordinated, contingent
or otherwise; (b) the present fair saleable



                                       57
<PAGE>

value of the property of each Loan Party will be greater than the amount that
will be required to pay the probable liability of its debts and other
liabilities, subordinated, contingent or otherwise, as such debts and other
liabilities become absolute and matured; (c) each Loan Party will be able to pay
its debts and liabilities, subordinated, contingent or otherwise, as such debts
and liabilities become absolute and matured; and (d) each Loan Party will not
have unreasonably small capital with which to conduct the business in which it
is engaged as such business is now conducted and is proposed to be conducted
following the Effective Date.

         SECTION 3.16. No Burdensome Restrictions. No contract, lease, agreement
or other instrument to which Holdings or any Restricted Subsidiary is a party or
by which any of their property is bound or affected, no charge, corporate
restriction, judgment, decree or order and no provision of applicable law or
governmental regulation could reasonably be expected to have Material Adverse
Effect.

         SECTION 3.17. Representations in Loan Documents True and Correct. As of
the dates when made and as of the Effective Date, each representation and
warranty of Holdings or any Restricted Subsidiary party thereto contained in any
Loan Document is true and correct.

                                    ARTICLE 4

                                   CONDITIONS

         SECTION 4.1. Effective Date. [Intentionally deleted]

         SECTION 4.2. Each Credit Event. The obligation of each Lender to make a
Loan on the occasion of any Borrowing, and of each Issuing Bank to issue, amend,
renew or extend any Letter of Credit, is subject to the satisfaction of the
following conditions:

         (a) The representations and warranties of each Loan Party set forth in
the Loan Documents (excluding Section 3.04(b)) shall be true and correct on and
as of the date of such Borrowing or the date of issuance, amendment, renewal or
extension of such Letter of Credit, as applicable.

         (b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Default shall have occurred and be continuing.

         Each Borrowing and each issuance, amendment, renewal or extension of a
Letter of Credit shall be deemed to constitute a representation and warranty by
Holdings and the Borrower on the date thereof as to the matters specified in
Sections 4.02(a), 4.02(b) and 4.03.

         SECTION 4.3. First Incremental Borrowing Date with Respect to the
Incremental Facility. The obligation of each Incremental Lender to make a Loan
on the occasion of the First Incremental Borrowing Date is subject to the
satisfaction of the following conditions (in addition to the conditions set
forth in Section 4.02):

         (a) The Spin-Off shall have been consummated.

         (b) The Initial Collateral Date shall have occurred (or shall occur on
the date of such Borrowing) and, prior to the making of any Loan on the occasion
of such Borrowing, Holdings and the Borrower shall have complied with all of the
provisions of Section 5.11A.

         (c) The First Incremental Borrowing Date shall be no later than the
date that is 180 days after the date of Amendment No. 5 Effective Date.



                                       58
<PAGE>

         (d) The Administrative Agent shall have received a certificate, in form
and substance reasonably satisfactory to the Administrative Agent, from the
Financial Officer of each of Holdings and the Borrower, certifying as to
compliance of the matters specified in Sections 4.03(a) and 4.03(b).

                                    ARTICLE 5

                              AFFIRMATIVE COVENANTS

         Until the Commitments have expired or been terminated and the principal
of and interest on each Loan and all fees payable hereunder shall have been paid
in full and all Letters of Credit shall have expired or terminated and all LC
Disbursements shall have been reimbursed, each of Holdings and the Borrower
covenants and agrees with the Lenders that:

         SECTION 5.1. Financial Statements and Other Information. Holdings and
the Borrower will furnish to the Administrative Agent and each Lender:

         (a) (i) within 90 days after the end of each fiscal year of Holdings,
its audited consolidated balance sheets and related audited consolidated
statements of operations, stockholders' equity and cash flows as of the end of
and for such fiscal year (including segment reporting with respect to each of
Holdings' and the Subsidiaries' business segments consistent with that provided
in the Notes Offering Registration Statement), setting forth in each case in
comparative form the figures for the previous fiscal year, all reported on by
Ernst & Young LLP or other independent public accountants of recognized national
standing (without a "going concern" or like qualification or exception and
without any qualification or exception as to the scope of such audit) to the
effect that such consolidated financial statements present fairly in all
material respects the financial condition and results of operations of Holdings
and the Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, (ii) within 90 days after the end of each fiscal year of
the Borrower, its audited consolidated balance sheets and related audited
consolidated statements of operations, stockholders' equity and cash flows as of
the end of and for such fiscal year (including segment reporting with respect to
each of the Borrower's and its consolidated subsidiaries' business segments
consistent with that provided with respect to the Borrower's and its
consolidated subsidiaries' business segments in the Notes Offering Registration
Statement), setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on by Ernst & Young LLP or other independent
public accountants of recognized national standing (without a "going concern" or
like qualification or exception and without any qualification or exception as to
the scope of such audit) to the effect that such consolidated financial
statements present fairly in all material respects the financial condition and
results of operations of the Borrower and its consolidated subsidiaries on a
consolidated basis in accordance with GAAP consistently applied and (iii) within
90 days after the end of each fiscal year of Holdings and the Borrower, (x)
supplemental unaudited balance sheets and related unaudited statements of
operations, stockholders' equity and cash flows as of the end of and for such
fiscal year, setting forth in tabular form in each case the figures for the
previous year, for the Borrower and Holdings and the consolidating adjustments
with respect thereto and (y) segment reporting of EBITDA



                                       59
<PAGE>

and Adjusted EBITDA with respect to each business segment of Holdings and the
Subsidiaries and the Borrower and its consolidated subsidiaries consistent with
the business segments reported on in the Notes Offering Registration Statement;

         (b) (i) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of Holdings, unaudited consolidated and
consolidating balance sheets and related consolidated and consolidating
statements of operations, stockholders' equity and cash flows of Holdings and
the Subsidiaries as of the end of and for such fiscal quarter and the then
elapsed portion of the fiscal year, setting forth in each case in comparative
form the figures for the corresponding period or periods of the previous fiscal
year (or in the case of the balance sheet, as of the end of the previous fiscal
year) (including segment reporting with respect to each of Holdings' and the
Subsidiaries' business segments consistent with that provided in the Notes
Offering Registration Statement and also including segment reporting of EBITDA
and Adjusted EBITDA), all certified by a Financial Officer of Holdings as
presenting fairly in all material respects the financial condition and results
of operations of Holdings and the Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes and (ii) within 45 days after the end
of each of the first three fiscal quarters of each fiscal year of the Borrower,
unaudited consolidated balance sheets and related statements of operations,
stockholders' equity and cash flows of the Borrower and its consolidated
subsidiaries as of the end of and for such fiscal quarter and the then elapsed
portion of the fiscal year, setting forth in each case in comparative form the
figures for the corresponding period or periods of the previous fiscal year (or,
in the case of the balance sheet, as of the end of the previous fiscal year)
(including segment reporting with respect to each of the Borrower's and its
consolidated subsidiaries' business segments consistent with that provided with
respect to the Borrower's and its consolidated subsidiaries' business segments
in the Notes Offering Registration Statement and also including segment
reporting of EBITDA and Adjusted EBITDA), all certified by a Financial Officer
of the Borrower as presenting fairly in all material respects the financial
condition and results of operations of the Borrower and its consolidated
subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of
footnotes;

         (c) concurrently with any delivery of financial statements under
Section 5.01(a) or 5.01(b) above, a certificate of a Financial Officer of the
Borrower (i) certifying as to whether a Default has occurred and, if a Default
has occurred, specifying the details thereof and any action taken or proposed to
be taken with respect thereto, (ii) setting forth in reasonable detail
calculations demonstrating (x) compliance with Section 6.08 and Sections 6.15
through 6.19, including, if applicable, calculations showing capital
contributions made by the Parent pursuant to Section 6.20 and the resulting
effects on the Borrower's compliance with Section 6.08 and Sections 6.15 through
6.19 and (y) Additional Capital at such date, including detail as to the sources
and uses of Additional Capital since June 30, 1999 and (iii) stating whether any
change in GAAP or in the application thereof has occurred since the date of
Holdings' audited financial statements referred to in Section 3.04 and, if any
such change has occurred, specifying the effect of such change on the financial
statements accompanying such certificate;



                                       60
<PAGE>

          (d) concurrently with any delivery of financial statements under
clause 5.01(a) above, a certificate of the accounting firm that reported on such
financial statements stating whether they obtained knowledge during the course
of their examination of such financial statements of any Default (which
certificate may be limited to the extent required by accounting rules or
guidelines);

          (e) as soon as practicable after approval by the Board of Directors of
the Parent and in any event not later than 120 days after the commencement of
each fiscal year of the Borrower, a consolidated and consolidating budget of
Holdings for such fiscal year and a consolidated budget of the Borrower for such
fiscal year (including projected consolidated (and, in the case of Holdings,
consolidating) balance sheets, related consolidated (and, in the case of
Holdings, consolidating) statements of projected operations and cash flow as of
the end of and for such fiscal year and segment information with respect to each
of Holdings' and the Subsidiaries' and the Borrower's and its consolidated
subsidiaries' business segments consistent with the categories of information
provided with respect to Holdings' and the Subsidiaries' business segments in
the Notes Offering Registration Statement, together with projected EBITDA and
Adjusted EBITDA for such segments) and, promptly when available, any significant
revisions of such budget;

         (f) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
Holdings or any Restricted Subsidiary with the Commission, or any Governmental
Authority succeeding to any or all of the functions of the Commission, or with
any national securities exchange, or distributed by Holdings to its shareholders
generally, as the case may be, except to the extent any such report, proxy
statement or other material is available electronically on a publicly-accessible
website; and

         (g) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of Holdings
or any Restricted Subsidiary, or compliance with the terms of any Loan Document,
as the Administrative Agent or any Lender may reasonably request.

         SECTION 5.2. Notices of Material Events. Upon knowledge thereof,
Holdings or the Borrower will furnish to the Administrative Agent and each
Lender prompt written notice of the following:

         (a) the occurrence of any Default;

         (b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting Holdings,
the Borrower or any Affiliate thereof that could reasonably be expected to
result in a Material Adverse Effect;

         (c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
a Material Adverse Effect;



                                       61
<PAGE>

         (d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.

         Each notice delivered under this Section shall be accompanied by a
statement of a Financial Officer or other executive officer of the Borrower
setting forth the details of the event or development requiring such notice and
any action taken or proposed to be taken with respect thereto.

         SECTION 5.3. Existence; Conduct of Business. Each of Holdings and the
Borrower will, and will cause each other Restricted Subsidiary to, (i) continue
to engage in business of the same general type as now conducted and (ii) do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect its legal existence and the rights, licenses, permits, privileges,
franchises, patents, copyrights, trademarks and trade names material to the
conduct of its business; provided that the foregoing shall not prohibit any
merger, consolidation, liquidation or dissolution permitted under Section 6.03.

         SECTION 5.4. Payment of Obligations. Each of Holdings and the Borrower
(i) will, and will cause each other Restricted Subsidiary to, pay its
Indebtedness and other material obligations, including tax liabilities, before
the same shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
Holdings, the Borrower or such other Restricted Subsidiary has set aside on its
books adequate reserves with respect thereto in accordance with GAAP, (c) such
contest effectively suspends collection of the contested obligation and the
enforcement of any Lien securing such obligation and (d) the failure to make
payment pending such contest could not reasonably be expected to result in a
Material Adverse Effect and (ii) shall not breach, or permit any other
Restricted Subsidiary to breach, in any material respect, or permit to exist any
material default under, the terms of any material lease, commitment, contract,
instrument or obligation to which it is a party, or by which its properties or
assets are bound, except where the failure to do the foregoing would not in the
aggregate have a Material Adverse Effect.

         SECTION 5.5. Maintenance of Properties. Each of Holdings and the
Borrower will, and will cause each other Restricted Subsidiary to, keep and
maintain all property material to the conduct of its business in good working
order and condition, ordinary wear and tear excepted.

         SECTION 5.6. Insurance. Holdings and the Borrower will, and will cause
each other Restricted Subsidiary to, maintain, with financially sound and
reputable insurance companies, insurance in such amounts and against such risks
as are customarily maintained by companies engaged in the same or similar
businesses operating in the same or similar locations.

         SECTION 5.7. Casualty and Condemnation. The Borrower will (a) furnish
to the Administrative Agent and the Lenders prompt written notice of any
casualty or other insured damage to any portion of any of Holdings' and the
Restricted Subsidiaries' property or assets or the commencement of any action or
proceeding for the taking of any of Holdings' and the Restricted Subsidiaries'
property or assets or any part thereof or interest therein under power of
eminent domain or by condemnation or similar proceeding (in each case with a
value in excess of $10,000,000) and (b) ensure that the Net Proceeds of any such
event (whether in the form of insurance proceeds, condemnation awards or
otherwise) are applied, to the extent such Net Proceeds have not been utilized
to repair, restore or replace such property or assets or to acquire other
Telecommunications Assets within 360 days after such event, to prepay Loans and
reduce Commitments as provided in Sections 2.11(b) and 2.08(f), respectively.

         SECTION 5.8. Books and Records; Inspection and Audit Rights. Each of
Holdings and the Borrower will, and will cause each other Restricted Subsidiary
to, keep proper books of record and account in which materially full, true and
correct entries are made of all dealings and transactions in relation to its
business and activities. Each of Holdings and the Borrower will, and will cause
each other Restricted Subsidiary to, permit any representatives designated by
the Administrative Agent or any Lender at the expense of the Administrative
Agent or Lender, as the case may be, or, if an Event of Default shall have
occurred and be continuing, at the expense of the Borrower, upon reasonable
prior notice, to visit and inspect its properties, to examine and make extracts
from its books and records, and to discuss its affairs,



                                       62
<PAGE>

finances and condition with its officers and independent accountants, all at
such reasonable times and as often as reasonably requested, subject to Section
10.12.

         SECTION 5.9. Compliance with Laws. Each of Holdings and the Borrower
will, and will cause each other Subsidiary to, comply with all laws, rules,
regulations and orders of any Governmental Authority applicable to it or its
property (including, without limitation, Environmental Laws and ERISA and the
rules and regulations thereunder), except where the necessity of compliance
therewith is contested in good faith by appropriate action and such failure to
comply, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.

         SECTION 5.10. Use of Proceeds and Letters of Credit. (a) The proceeds
of Loans will be used (i) for working capital requirements and general corporate
purposes of the Borrower and the other Restricted Subsidiaries and (ii) to pay
the fees and expenses associated with the Facilities.

         (b) No part of the proceeds of any Loan will be used, whether directly
or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board, including Regulations U and X.

         SECTION 5.11A. Initial Collateral Date. On the Initial Collateral Date,
Holdings and the Borrower hereby agree that they will, and will cause each other
Restricted Subsidiary to:

         (a) Deliver to the Administrative Agent duly executed counterparts of
the Security Agreement, together with the following:

                  (i) duly executed counterparts of each supplemental agreement
                  required to be executed and delivered by the terms of the
                  Security Agreement (including, without limitation, any Patent
                  Security Agreement, and Trademark Security Agreement and any
                  Control Agreement, in each case as defined in the Security
                  Agreement);

                  (ii) stock certificates representing any or all of the
                  outstanding shares of capital stock or other Equity Interests
                  of the Borrower and each Restricted Subsidiary and stock
                  powers and instruments of transfer, endorsed in blank, with
                  respect to such stock certificates;

                  (iii) any or all documents and instruments, including Uniform
                  Commercial Code financing statements, required by law or
                  reasonably requested by the Administrative Agent to be filed,
                  registered or recorded to create or perfect the Liens intended
                  to be created under the Security Agreement; and

                  (iv) a completed perfection certificate dated the Initial
                  Collateral Date, in form and substance reasonably satisfactory
                  to the Administrative Agent and the Incremental Facility
                  Arrangers and signed by an executive officer or Financial
                  Officer of Holdings, together with all attachments
                  contemplated thereby, including the results of a search of the
                  Uniform Commercial Code (or equivalent) filings made with
                  respect to the Loan Parties in the jurisdictions contemplated
                  by such perfection certificate and copies of the financing
                  statements (or similar documents) disclosed by such search and
                  evidence reasonably satisfactory to the Administrative Agent
                  and the Incremental Facility Arrangers that the Liens
                  indicated by such financing statements (or similar documents)
                  are permitted by Section 6.02 or have been released.

         (b) Deliver to the Administrative Agent a favorable written opinion
(addressed to the Agents, the Issuing Banks, the Swingline Lenders and the
Lenders and dated the Initial Collateral Date) of each of (i) counsel for
Holdings, the Borrower and each Subsidiary Loan Party reasonably acceptable to
the Administrative Agent and the Incremental Facility Arrangers, (ii) the
general counsel of Holdings and (iii) local counsel in the jurisdictions where
the Borrower is incorporated and where its chief executive office is located
and, in the case of each such opinion required by this paragraph, covering such
matters relating to



                                       63
<PAGE>

the Loan Parties, the Loan Documents, the Collateral and the Transactions as the
Administrative Agent (or its counsel), the Incremental Facility Arrangers (or
its counsel) or the Required Lenders shall reasonably request.

         SECTION 5.11B. Collateral Event. If a Collateral Event shall have
occurred and be continuing, the Administrative Agent, the Incremental Facility
Arrangers or the Required Lenders may by written notice to the Borrower (a
"Collateral Notice"), request, and Holdings and the Borrower hereby agree that
they will, and will cause each other Restricted Subsidiary to, within 30 days of
the Borrowers' receipt of such Collateral Notice (such thirtieth day, a
"Collateral Establishment Date"):

         (a) Subject to subsection (d) of this Section 5.11B, deliver to the
Administrative Agent duly executed counterparts of the Security Agreement (to
the extent not previously delivered pursuant to Section 5.11A) and each other
Collateral Document reasonably requested by the Administrative Agent, the
Incremental Facility Arrangers or the Required Lenders, in form and substance
satisfactory to the Administrative Agent, the Incremental Facility Arrangers or
the Required Lenders, signed on behalf of Holdings, the Borrower and each
Subsidiary Loan Party requested by the Administrative Agent, the Incremental
Facility Arrangers or the Required Lenders, together with (to the extent not
previously delivered pursuant to Section 5.11A) such of the following as shall
have been so requested:

                  (i) stock certificates representing any or all of the
                  outstanding shares of capital stock of the Borrower and each
                  other Subsidiary of Holdings owned by or on behalf of any Loan
                  Party as of such Collateral Establishment Date (except that
                  stock certificates representing shares of common stock of a
                  Foreign Subsidiary may be limited to 66% of the outstanding
                  shares of common stock of such Foreign Subsidiary) and stock
                  powers and instruments of transfer, endorsed in blank, with
                  respect to such stock certificates;

                  (ii) any or all documents and instruments, including Uniform
                  Commercial Code financing statements, required by law or
                  reasonably requested by the Administrative Agent to be filed,
                  registered or recorded to create or perfect the Liens intended
                  to be created under the Collateral Documents; and

                  (iii) a completed perfection certificate dated such Collateral
                  Establishment Date, in form and substance reasonably
                  satisfactory to the Administrative Agent and the Incremental
                  Facility Arrangers and signed by an executive officer or
                  Financial Officer of Holdings, together with all attachments
                  contemplated thereby, including the results of a search of the
                  Uniform Commercial Code (or equivalent) filings made with
                  respect to the Loan Parties in the jurisdictions contemplated
                  by such perfection certificate and copies of the financing
                  statements (or similar documents) disclosed by such search and
                  evidence reasonably satisfactory to the Administrative Agent
                  and the Incremental Facility Arrangers that the Liens
                  indicated by such financing statements (or similar documents)
                  are permitted by Section 6.02 or have been released.

         (b) If requested by the Administrative Agent, the Incremental Facility
Arrangers or the Required Lenders, on or before the thirtieth day following any
Collateral Establishment Date or such later day as shall be acceptable to the
Administrative Agent, the Incremental Facility Arrangers or the Required Lenders
(a "Mortgage Establishment Date"), Holdings and the Borrower shall, and shall
cause each other Restricted Subsidiary to, deliver to the Administrative Agent
(i) counterparts of a Mortgage with respect to each Mortgaged Property as to
which such request is made, in each case signed on behalf of the record owner of
such Mortgaged Property, (ii) a policy or policies of title insurance issued by
a nationally recognized title insurance company, insuring the Lien of each such
Mortgage as a valid first Lien on the Mortgaged Property described therein, free
of any other Liens except as permitted by Section 6.02, together with such
endorsements, coinsurance and reinsurance as the Collateral Agent, the
Incremental Facility Arrangers or the Required Lenders may reasonably request,
and (iii) such surveys, abstracts and appraisals as may be required pursuant to
such Mortgages or as the Administrative Agent, the Incremental Facility
Arrangers or the Required Lenders may reasonably request.



                                       64
<PAGE>

         (c) On or before any Collateral Establishment Date or Mortgage
Establishment Date, Holdings and the Borrower shall deliver a favorable written
opinion (addressed to the Agents, the Incremental Facility Arrangers, the
Issuing Banks, the Swingline Lenders and the Lenders and dated on or prior to
such Collateral Establishment Date or Mortgage Establishment Date) of each of
(i) counsel for Holdings, the Borrower and each Subsidiary Loan Party reasonably
acceptable to the Administrative Agent, (ii) the general counsel of Holdings and
(iii) local counsel in each jurisdiction where any Collateral or Mortgaged
Property is located and, in the case of each such opinion required by this
paragraph, covering such matters relating to the Loan Parties, the Loan
Documents, the Collateral and the Transactions as the Administrative Agent (or
its counsel), the Incremental Facility Arrangers (or its counsel) or the
Required Lenders shall reasonably request.

         (d) Anything in this Agreement to the contrary notwithstanding, the
Liens created under any Collateral Document may also secure, to the extent, but
only to the extent, required under the indentures and other documents governing
such Indebtedness (without taking into account any general exceptions to any
such requirements contained in any such indentures and other documents), equally
and ratably with some or all of the Obligations, the obligations of the Parent
and Holdings under any public Indebtedness of either of them that, by its terms,
requires that such Indebtedness be equally and ratably secured by such Liens.

         (e) None of the Borrower, Holdings or any Restricted Subsidiary of
Holdings shall be required to grant to the Administrative Agent or any Lender,
pursuant to the provisions of this Section 5.11B, a Lien on any of the following
assets: (i) voting Equity Interests of any Foreign Subsidiary representing in
excess of 66% of the outstanding voting Equity Interests of such Foreign
Subsidiary, (ii) any ADP Property to the extent such ADP Property secures any
ADP Obligation and (iii) any other asset subject to a security interest
permitted by clauses (iv), (v), (viii), or (ix) of Section 6.02 but only, in the
case of any asset described in clauses (ii) or (iii), to the extent the granting
of such Lien is prohibited by the terms of the agreement pursuant to which such
security interest has been granted.

         SECTION 5.12. Information Regarding Collateral. (a) (i) The Borrower
will furnish to the Administrative Agent prompt written notice of any change (A)
in any Loan Party's corporate name or in any trade name used to identify it in
the conduct of its business or in the ownership of its properties, (B) in the
location of any Loan Party's chief executive office, its principal place of
business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility), (C)
in any Loan Party's identity or corporate structure or (D) in any Loan Party's
Federal Taxpayer Identification Number; (ii) Holdings and the Borrower will not,
and will not permit any other Restricted Subsidiary to, effect or permit any
change referred to in the preceding sentence unless all filings have been made
under the Uniform Commercial Code or otherwise that are required in order for
the Administrative Agent to continue at all times following such change to have
a valid, legal and perfected security interest in all the Collateral; and (iii)
Holdings and the Borrower will, and will cause each other Restricted Subsidiary
to, promptly notify the Administrative Agent if any material portion of the
Collateral owned by it is damaged or destroyed.

         (b) At the time of the delivery of annual financial statements with
respect to the preceding fiscal year pursuant to Section 5.01(a), the Borrower
shall also deliver to the Administrative Agent a certificate of a Financial
Officer or the chief legal officer of the Borrower (i) setting forth the
information required pursuant to the perfection certificate or confirming that
there has been no change in such information since the date of the perfection
certificate most recently delivered or the date of the most recent certificate
delivered pursuant to this Section and (ii) certifying that all Uniform
Commercial Code financing statements (including fixture filings, as applicable)
or other appropriate filings, recordings or registrations, including all
refilings, rerecordings and reregistrations, containing a description of the
Collateral have been filed of record in each governmental, municipal or other
appropriate office in each jurisdiction identified pursuant to Section



                                       65
<PAGE>

5.12 to the extent necessary to protect and perfect the security interests under
the Collateral Documents for a period of not less than 18 months after the date
of such certificate (except as noted therein with respect to any continuation
statements to be filed within such period).

         SECTION 5.13. Additional Subsidiaries. (a) If any additional Subsidiary
is formed or acquired, Holdings and the Borrower will notify the Administrative
Agent and the Lenders thereof and if such Subsidiary is a Subsidiary Loan Party,
(i) cause such Subsidiary, within ten Business Days after such Subsidiary Loan
Party is formed or acquired, to become a party to the Subsidiary Guarantee as an
additional guarantor thereunder and to the Security Agreement as a "Lien
Grantor" thereunder, (ii) deliver all stock certificates representing the
capital stock or other Equity Interests of such Subsidiary to the Administrative
Agent, together with stock powers and instruments of transfer, endorsed in
blank, with respect to such certificates and (iii) take all actions required
under the Security Agreement to perfect, register and/or record the Liens
granted by it thereunder and the Lien on such capital stock or other Equity
Interests or as may be reasonably requested by the Administrative Agent, the
Incremental Facility Arrangers or the Required Lenders.

         (b) If a Collateral Establishment Date has occurred and any Collateral
Event is then continuing, such Subsidiary is a Subsidiary Loan Party and the
Administrative Agent, the Incremental Facility Arrangers or the Required Lenders
so request in writing, Holdings and the Borrower shall (i) within 30 days after
such Subsidiary is formed or acquired, cause such Subsidiary to become a party
to such Collateral Documents (in addition to the Security Agreement) as the
Administrative Agent, the Incremental Facility Arrangers or the Required Lenders
shall request and promptly take such actions as the Administrative Agent, the
Incremental Facility Arrangers or the Required Lenders shall reasonably request
to create and perfect Liens on such of such Subsidiary's assets (in accordance
with the standards set forth in Section 5.11B(a)) as the Administrative Agent,
the Incremental Facility Arrangers or the Required Lenders shall so request to
secure its obligations under the Subsidiary Guarantee, and (ii) within 60 days
after such Subsidiary is formed or acquired, cause such Subsidiary to enter into
such Mortgage or Mortgages as the Administrative Agent, the Incremental Facility
Arrangers or the Required Lenders shall so request with respect to any or all
material real property owned by such Subsidiary to secure some or all of its
obligations under the Subsidiary Guarantee and to take such actions (including,
without limitation, actions of the type referred to in Section 5.11B(a)) with
respect thereto as the Administrative Agent, the Incremental Facility Arrangers
or the Required Lenders shall reasonably request.

         (c) None of the Borrower, Holdings or any Subsidiary Loan Party shall
be required to grant to the Administrative Agent or any Lender, pursuant to the
provisions of this Section 5.13, a Lien on any of the following assets: (i)
voting Equity Interests of any Foreign Subsidiary representing in excess of 66%
of the outstanding voting Equity Interests of such Foreign Subsidiary, (ii) any
ADP Property to the extent such ADP Property secures any ADP Obligation and
(iii) any other asset subject to a security interest permitted by clauses (iv),
(v), (viii), or (ix) of Section 6.02 but only, in the case of any asset
described in clauses (ii) or (iii), to the extent the granting of such Lien is
prohibited by the terms of the agreement pursuant to which such security
interest has been granted.



                                       66
<PAGE>

         SECTION 5.14. Further Assurances. (a) On any date each of Holdings and
the Borrower will, and will cause each Subsidiary Loan Party to, execute any and
all further documents, financing statements, agreements and instruments, and
take all such further actions (including the filing and recording of financing
statements, fixture filings, mortgages, deeds of trust and other documents),
which may be required under any applicable law, or which the Administrative
Agent, the Incremental Facility Arrangers or the Required Lenders may reasonably
request, to effectuate the transactions contemplated by the Loan Documents or to
grant, preserve, protect or perfect the Liens created or intended to be created
by the Collateral Documents required to be in effect on such date or the
validity or priority of any such Lien, all at the expense of the Loan Parties.
Holdings and the Borrower also agree to provide to the Administrative Agent,
from time to time upon request, evidence reasonably satisfactory to the
Administrative Agent as to the perfection and priority of the Liens created or
intended to be created by the Collateral Documents required to be in effect on
such date.

         (b) If any material assets (including any real property or improvements
thereto or any interest therein) are acquired by Holdings, the Borrower or any
Subsidiary Loan Party (other than assets constituting Collateral under any
Collateral Document that become subject to the Lien of such Collateral Document
automatically upon the acquisition thereof), the Borrower will notify the
Administrative Agent and the Lenders thereof, and, if requested by the
Administrative Agent, the Incremental Facility Arrangers or the Required
Lenders, Holdings and the Borrower will, or will cause the applicable Restricted
Subsidiary to, cause such assets to be subjected to a Lien securing some or all
of the Obligations, as requested by the Administrative Agent, the Incremental
Facility Arrangers or the Required Lenders, and will take, and cause such
Subsidiary Loan Parties to take, such actions as shall be necessary or
reasonably requested by the Administrative Agent, the Incremental Facility
Arrangers or the Required Lenders to grant and perfect such Liens, including
actions described in Section 5.11B, all at the expense of the Loan Parties;
provided that, none of the Borrower, Holdings or any Subsidiary Loan Party shall
be required to grant to the Administrative Agent or any Lender, pursuant to the
provisions of this Section 5.14, a Lien on any of the following assets: (i) at
any time prior to any Collateral Establishment Date, any assets of a type other
than a type constituting "Collateral" under the form of Security Agreement set
forth on Exhibit K hereto as in effect on the Amendment No. 4 Effective Date,
(ii) voting Equity Interests of any Foreign Subsidiary representing in excess of
66% of the outstanding voting Equity Interests of such Foreign Subsidiary, (iii)
any ADP Property to the extent such ADP Property secures any ADP Obligation and
(iv) any other asset subject to a security interest permitted by clauses (iv),
(v), (viii), or (ix) of Section 6.02 but only, in the case of any asset
described in clauses (iii) or (iv), to the extent the granting of such Lien is
prohibited by the terms of the agreement pursuant to which such security
interest has been granted.

         SECTION 5.15. Concentration Accounts. At all times after any Collateral
Establishment Date and before a Collateral Release Date, Holdings and the
Borrower will maintain Holdings' and each Restricted Subsidiary's principal
concentration account with one or more Lenders.

         SECTION 5.16. [Intentionally deleted]

         SECTION 5.17. Sale of Solutions and ATL(a) Not later than September 30,
2001, Holdings and the Borrower shall have sold, or caused to be sold, to one or
more Persons that are not Affiliates of Holdings or any of its Subsidiaries, in
one or more transactions (x) its Williams Communications Solutions business unit
in existence on the Amendment No. 4 Effective Date (except for the portion of
such unit described in clause (b) below) and (y) all of the capital stock of ATL
held by the Borrower, Holdings or any of its



                                       67
<PAGE>

Subsidiaries for fair market value and for Net Proceeds in cash in an aggregate
amount of at least $700,000,000.

         (b) Not later than December 31, 2001, Holdings and the Borrower shall
have sold or otherwise disposed of, or caused to be sold or otherwise disposed
of, to one or more Persons that are not Affiliates of Holdings or any of its
Subsidiaries, in one or more transactions, substantially all of the Canadian
assets of its Williams Communications Solutions business unit in existence on
the Amendment No. 4 Effective Date.

         SECTION 5.18. Qualifying Issuances. Not later than December 31, 2001,
the Borrower and/or Holdings shall have consummated Qualifying Issuances for Net
Proceeds in cash in an aggregate amount of at least $500,000,000; provided that
Net Proceeds in cash in an aggregate amount of not more than $350,000,000 shall
have resulted from Qualifying Issuances described in clause (ii) or (iii) of the
definition thereof.

                                    ARTICLE 6

                               NEGATIVE COVENANTS

         Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full
and all Letters of Credit have expired or terminated and all LC Disbursements
shall have been reimbursed, each of Holdings and the Borrower covenants and
agrees with the Lenders that:

         SECTION 6.1. Indebtedness; Certain Equity Securities. Holdings and the
Borrower will not, and will not permit any other Restricted Subsidiary to,
create, incur, assume or permit to exist any Indebtedness, except:

         (a) Indebtedness under the Loan Documents;

         (b) Indebtedness of Holdings under Qualifying Holdings Debt;

         (c) Indebtedness of Holdings under the High Yield Notes and
refinancings thereof, provided that any Indebtedness issued in any such
refinancing shall be on terms no less favorable to Holdings and its Restricted
Subsidiaries than the High Yield Notes, shall be in an aggregate principal
amount no greater than the High Yield Notes refinanced and shall not require any
payment of principal thereof (upon maturity or by mandatory sinking fund,
mandatory redemption, mandatory prepayment or otherwise) prior to the date that
is one year after the Term Maturity Date;

         (d) ADP Outstandings in an aggregate amount not to exceed $750,000,000
at any time outstanding;

         (e) Indebtedness existing on the date hereof and set forth in Schedule
6.01 and extensions, renewals and replacements of any such Indebtedness that do
not increase the outstanding principal amount thereof or result in an earlier
maturity date or decrease the Weighted Average Life to Maturity thereof;



                                       68
<PAGE>

          (f) Indebtedness of Holdings to any Subsidiary and of any Restricted
Subsidiary to any other Subsidiary; provided that Indebtedness of any Subsidiary
that is not a Loan Party to any Loan Party shall be subject to Section 6.04;

         (g) Guarantees by Holdings of Indebtedness of any Subsidiary and by any
Subsidiary of Indebtedness of the Borrower or any other Subsidiary; provided
that Guarantees by Holdings, the Borrower or any Subsidiary Loan Party of
Indebtedness of any Subsidiary that is not a Loan Party shall be subject to
Section 6.04;

         (h) Indebtedness of any Person that becomes a Restricted Subsidiary or
is merged into a Restricted Subsidiary after the date hereof (provided that such
Indebtedness exists at the time such Person becomes a Restricted Subsidiary and
is not created in contemplation of or in connection with such Person becoming a
Restricted Subsidiary) and extensions, renewals or replacements of any such
Indebtedness that do not increase the principal amount thereof or result in an
earlier maturity date or decreased Weighted Average Life to Maturity thereof;

         (i) Indebtedness in respect of performance, surety or appeal bonds and
Guarantees incurred or provided in the ordinary course of business securing the
performance of contractual, franchise, lease, self-insurance or license
obligations and not in connection with an incurrence of Indebtedness;

         (j) Indebtedness in respect of customary agreements providing for
indemnification, purchase price adjustments after closing or similar obligations
in connection with the disposition of any assets (other than Guarantees of
Indebtedness incurred by any Person acquiring all or any portion of such assets
for the purpose of financing such acquisition); provided that (i) any such
disposition is permitted by Section 6.05, (ii) the aggregate principal amount of
such Indebtedness does not exceed the gross proceeds actually received by
Holdings or any Restricted Subsidiary in connection with such disposition and
(iii) to the extent the gross proceeds thereof constitute Net Proceeds
hereunder, such Net Proceeds are applied in accordance with Sections 2.08(f) and
2.11(b);

         (k) Indebtedness of Holdings and the Restricted Subsidiaries pursuant
to Hedging Agreements entered into with Lenders or their affiliates in the
ordinary course of business and not for speculative purposes;

         (l) [Intentionally deleted];

         (m) [Intentionally deleted];

         (n) [Intentionally deleted];

         (o) other Indebtedness of Holdings or any Restricted Subsidiary in an
aggregate principal amount at any time outstanding, together with the aggregate
amount of Attributable Debt in respect of all Sale and Leaseback Transactions
then outstanding, not exceeding 15% of the consolidated net property, plant and
equipment of Holdings and the Restricted Subsidiaries at such time;



                                       69
<PAGE>

         (p) Indebtedness of the Borrower consisting of Qualifying Borrower
Indebtedness;

         (q) Permitted Specified Security Hedging Transactions;

         (r) Indebtedness of Holdings or the Borrower incurred pursuant to a
Qualifying Issuance; provided that the aggregate Net Proceeds in cash received
by Holdings and/or the Borrower from the issuance of such Indebtedness, plus the
Net Proceeds in cash from any Sale and Leaseback Transaction constituting a
Qualifying Issuance shall not exceed $350,000,000;

         (s) Indebtedness with respect to industrial revenue bonds issued for
the benefit of the Borrower, Holdings or any Restricted Subsidiary in an
aggregate principal or face amount not to exceed $50,000,000;

         (t) unsecured Indebtedness of Holdings in an aggregate principal amount
not to exceed $100,000,000 incurred prior to the consummation of the Structured
Note Financing so long as (i) the proceeds of such Indebtedness are used solely
to make the capital contributions described in Section 6.04(u) and (ii) the
terms and conditions of any such Indebtedness shall have been approved by all
the Incremental Facility Arrangers (if any) and the Administrative Agent prior
to the issuance thereof;

         (u) unsecured Indebtedness of Holdings owed to the Structured Note
Trust in an aggregate principal amount up to $1,500,000,000 in connection with
the consummation of the Structured Note Financing, so long as the terms and
conditions of such Indebtedness shall have been approved by all the Incremental
Facility Arrangers (if any) and the Administrative Agent prior to the issuance
thereof; and

         (v) on any date on or after the Leverage Target Date, Indebtedness of
the Borrower owing to a Receivables Subsidiary under a Permitted Receivables
Financing;

provided that, notwithstanding anything in this Agreement to the contrary, the
Borrower and the other Restricted Subsidiaries may not Guarantee any
Indebtedness of Holdings under (i) the High Yield Notes or (ii) any Qualifying
Holdings Debt.

         SECTION 6.2. Liens. (a) Holdings and the Borrower will not, and will
not permit any other Restricted Subsidiary to, create, incur, assume or permit
to exist any Lien on any property or asset now owned or hereafter acquired by
it, or assign or sell any income or revenues or rights in respect of any
thereof, except:

                  (i) Liens created under the Loan Documents (including, without
         limitation, Liens securing Indebtedness of Holdings and the Parent
         created thereunder in accordance with Section 5.11B(d));

                  (ii) Permitted Encumbrances;

                  (iii) Liens on any ADP Property securing only ADP Obligations;



                                       70
<PAGE>

                  (iv) any Lien on any property or asset of Holdings or any
         Restricted Subsidiary existing on the date hereof and set forth in
         Schedule 6.02; provided that (A) such Lien shall not apply to any other
         property or asset of Holdings or any Restricted Subsidiary and (B) such
         Lien shall secure only those obligations which it secures on the date
         hereof and extensions, renewals and replacements thereof that do not
         increase the outstanding principal amount thereof or decrease the
         Weighted Average Life to Maturity thereof;

                  (v) any Lien existing on any property or asset prior to the
         acquisition thereof by Holdings or any Restricted Subsidiary or
         existing on any property or asset of any Person that becomes a
         Restricted Subsidiary after the date hereof prior to the time such
         Person becomes a Subsidiary; provided that (A) such Lien is not created
         in contemplation of or in connection with such acquisition or such
         Person becoming a Restricted Subsidiary, as the case may be, (B) such
         Lien shall not apply to any other property or assets of Holdings or any
         Restricted Subsidiary and (C) such Lien shall secure only those
         obligations which it secures on the date of such acquisition or the
         date such Person becomes a Restricted Subsidiary, as the case may be,
         and extensions, renewals and replacements thereof that do not increase
         the outstanding principal amount thereof or decrease the Weighted
         Average Life to Maturity thereof;

                  (vi) Liens in favor of the Borrower or any Subsidiary Loan
         Party;

                  (vii) Liens on property of Holdings or any Restricted
         Subsidiary consisting of, or securing, licenses of such property;

                  (viii) Liens of a Specified Security securing Permitted
         Specified Security Hedging Transactions with respect to such Specified
         Security;

                  (ix) on any date on or after the Leverage Target Date, Liens
         created in connection with Permitted Receivables Financings, including,
         without limitation, Liens on proceeds in any form and bank accounts in
         which any such proceeds are deposited; provided that, except for the
         assets transferred pursuant to Permitted Receivables Dispositions made
         in connection with such Permitted Receivables Financings, no such Lien
         may extend to any assets of Borrower or any Subsidiary of the Borrower
         that is not a Receivables Subsidiary; and

                  (x) other Liens securing Indebtedness at any time outstanding
         that, together with the aggregate amount of Attributable Debt in
         respect of all Sale and Leaseback Transactions then outstanding, does
         not exceed 5% of the consolidated net property, plant and equipment of
         Holdings and the Restricted Subsidiaries at such time.

         (b) Notwithstanding anything to the contrary contained herein, Holdings
and the Borrower will not, and will not permit any other Restricted Subsidiary
to, create, incur, assume or permit to exist any Lien on any of its assets to
secure (i) except in accordance with Section 5.11B(d), any obligations in
respect of the High Yield Notes or any



                                       71
<PAGE>

refinancing thereof, permitted under Section 6.01(c), or (ii) except in
accordance with Section 5.11B(d), any Qualifying Holdings Debt.

         SECTION 6.3. Fundamental Changes. (a) Neither Holdings nor the Borrower
will, nor will they permit any other Restricted Subsidiary to, merge into or
consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, or liquidate or dissolve, except that, if at the time
thereof and immediately after giving effect thereto no Default shall have
occurred and be continuing (i) any Person may merge into the Borrower in a
transaction in which the Borrower is the surviving corporation, (ii) any Person
may merge into any Restricted Subsidiary in a transaction in which the surviving
entity is a Restricted Subsidiary and (iii) any Restricted Subsidiary may
liquidate or dissolve if the Borrower determines in good faith that such
liquidation or dissolution is in the best interests of the Borrower and is not
materially disadvantageous to the Lenders; provided that any such merger
involving a Person that is not a wholly owned Restricted Subsidiary immediately
prior to such merger shall not be permitted unless also permitted by Section
6.04.

         (b) The Borrower will not, and will not permit any other Restricted
Subsidiary to, engage to any material extent in any business other than
businesses of the type conducted by the Borrower and its Subsidiaries on the
date of execution of this Agreement and businesses reasonably related thereto.

         (c) Holdings will not engage in any business or activity other than (i)
the ownership of all of the outstanding Equity Interests in the Borrower, (ii)
the issuance of the High Yield Notes, (iii) issuances of Qualifying Holdings
Debt, (iv) issuances of its Equity Interests, (v) the holding of 100% of the
Equity Interests of any Unrestricted Subsidiary which is engaged exclusively in
the buying, selling and trading of telecommunications services as a commodity on
a developing or an established market (a "Trading Subsidiary") and (vi) the
holding of Qualifying Borrower Indebtedness permitted under Section 6.01(q) and,
with respect to each of the foregoing, activities incidental thereto. Holdings
will not own or acquire any assets (other than Qualifying Equity Interests in
the Borrower, Qualifying Borrower Indebtedness, Equity Interests in any Trading
Subsidiary, cash and Cash Equivalent Investments) or incur any liabilities
(other than liabilities under the Loan Documents, liabilities in respect of the
High Yield Notes, liabilities in respect of Qualified Holdings Debt permitted
hereunder, liabilities in respect of the Structured Note Financing, liabilities
imposed by law, including tax liabilities, and other liabilities incidental to
its existence and permitted business and activities).

         SECTION 6.4. Investments, Loans, Advances, Guarantees and Acquisitions.
Holdings will not, and will not permit any Restricted Subsidiary to, purchase,
hold or acquire (including pursuant to any merger with any Person that was not a
wholly owned Restricted Subsidiary prior to such merger) any capital stock,
evidences of indebtedness or other securities (including any option, warrant or
other right to acquire any of the foregoing) of, make or permit to exist any
loans or advances to, Guarantee any obligations of, or make or permit to exist
any investment or any other interest in, any other Person, or purchase or
otherwise acquire (in one transaction or a series of transactions) any assets of
any other Person constituting a business unit (collectively, "Investments"),
except:

         (a) Cash Equivalent Investments;

         (b) Investments existing on the date hereof and set forth on Schedule
6.04;



                                       72
<PAGE>

         (c) Investments by Holdings and the Restricted Subsidiaries in Equity
Interests in Subsidiaries; provided that, (i) the aggregate amount of
Investments by Loan Parties in, and Guarantees by Loan Parties of Indebtedness
of, Subsidiaries that are not Loan Parties (including, without limitation, any
Deemed Subsidiary Investment pursuant to Section 6.14) shall be subject to the
proviso to this Section 6.04 and (ii) all Equity Interests acquired or held by
Holdings pursuant to this Section 6.04(c) shall be Qualifying Equity Interests
in the Borrower or Equity Interests in a Trading Subsidiary;

         (d) loans or advances made by Holdings to any Restricted Subsidiary and
made by any Restricted Subsidiary to any other Restricted Subsidiary; provided
that the amount of such loans and advances made by Loan Parties to Subsidiaries
that are not Loan Parties shall be subject to the proviso to this Section 6.04;

         (e) Guarantees constituting Indebtedness permitted by Section 6.01;
provided that (i) no Restricted Subsidiary shall Guarantee any High Yield Notes,
any Indebtedness of Holdings or the Borrower constituting a Qualifying Issuance
or Qualifying Holdings Debt and (ii) the aggregate principal amount of
Indebtedness of Subsidiaries that are not Loan Parties that is Guaranteed by any
Loan Party shall be subject to the proviso to this Section 6.04;

         (f) Investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;

         (g) acquisitions by the Borrower of ADP Property for consideration paid
on and prior to any date not exceeding Additional Capital as of such date; minus
(i) Investments permitted under clause (ii) of the proviso to this Section 6.04
made on or prior to such date and (iii) Capital Expenditures permitted under
Section 6.08(b) made on or prior to such date;

         (h) Hedging Agreements permitted under Section 6.01(k);

         (i) Capital Expenditures made in accordance with Section 6.08;

         (j) subject to the proviso to this Section 6.04, Investments in the
Telecommunications Business;

         (k) subject to the proviso to this Section 6.04, Investments in
Existing International Joint Ventures; provided that the acquisition by Holdings
or any Restricted Subsidiary of any equity interest in Algar Telecom S.A.
(formerly known as Lightel S.A.) owned by the Parent or its subsidiaries (other
than Holdings and the Subsidiaries) shall not be permitted under this clause (k)
but shall only be permitted under clause (p) of this Section 6.04;

         (l) exchanges and substitutions of ADP Property for like property which
take place prior to the occurrence of the Completion Date, the Expiration Date,
the



                                       73
<PAGE>

Termination Date, or an ADP Event of Default, Environmental Trigger or Unwind
Event under the Operative Documents;

         (m) any Investment by a Restricted Subsidiary in any Person engaged in
the Telecommunication Business if such Investment is made in connection with an
agreement by such Person to utilize certain of the Borrower's or the Subsidiary
Loan Parties' Telecommunications Business, provided that, at any date, (i) the
aggregate amount of Investments made in all such Persons at any time outstanding
pursuant to this paragraph (m) (valued at the cost of acquisition thereof,
without regard to any increase or decrease in the value thereof based on
subsequent performance of such Person, but net of any distributions received by
the Borrower or any Subsidiary Loan Party in respect of such Investment) shall
not exceed 15% of Consolidated Assets at such time and (ii) the aggregate amount
of such Investments made in all such Persons with cash or Cash Equivalent
Investments that are at any time outstanding pursuant to this paragraph (m)
shall not exceed 5% of Consolidated Assets;

         (n) (i) loans to directors, officers and employees of Holdings or any
Restricted Subsidiary all of the proceeds of which are used (A) to pay
relocation expenses of any such director, officer or employee or (B) to purchase
Equity Interests in Holdings pursuant to and in accordance with stock option
plans or other benefit plans for directors, officers and employees of Holdings
and its Restricted Subsidiaries, provided that, in the case of any of the Loans
referred to in this subclause (B), any proceeds to Holdings of any such
purchases of Equity Interests shall be contributed to the Borrower and (ii)
other loans to directors, officers and employees of Holdings and its Restricted
Subsidiaries made in the ordinary course of business in an aggregate principal
amount not to exceed $5,000,000 at any time outstanding;

         (o) trade accounts receivable for goods sold or services provided
arising in the ordinary course of business and on customary payment terms (not
to exceed 120 days after the date such receivables are accrued in accordance
with GAAP);

         (p) Investments for which the consideration paid by Holdings and its
Restricted Subsidiaries consists exclusively of Qualifying Equity Interests in
Holdings;

         (q) Investments made in any Person (a "REINVESTMENT PERSON") in whom
the Borrower or any of its Subsidiaries has, or at any time after the Closing
Date had, an Investment permitted under clause (b), (f) or (p) above or this
clause (q) (an "ORIGINAL INVESTMENT"); provided that the aggregate amount of
Investments in any Reinvestment Person permitted under this clause (q) may not
exceed the aggregate amount of the cash proceeds received, within 270 days prior
to the making of such Investment, by the Borrower and its Subsidiaries from
sales or other dispositions of, or distributions with respect to Original
Investments in such Reinvestment Person;

         (r) Permitted Specified Security Hedging Transactions; and

         (s) Investments in Persons that become Subsidiary Loan Parties if such
Persons, prior to such Investments, were engaged principally in the transmission
of voice, video or



                                       74
<PAGE>

data through or over owned or leased fiber optic cable and/or the holding,
developing or constructing of assets or technology used therein;

         (t) Letters of Credit to support obligations of a Trading Subsidiary
incurred in the ordinary course of business; and

         (u) capital contributions made by Holdings to the Borrower and by the
Borrower to the Structured Note Trust, in each case in an aggregate principal
amount not to exceed $100,000,000 and in order to consummate the Structured Note
Financing;

         (v) Investments in Receivables Subsidiaries made in connection with
Permitted Receivables Financings;

provided that the aggregate amount of all Investments (valued at the cost of
acquisition thereof, without regard to any increase or decrease in the value
thereof based on subsequent performance of the Person in which such Investment
is held), but net, in case of each such Investment (but not below zero), of any
distributions received by the Borrower or any Subsidiary Loan Party in respect
of such Investment and any proceeds received upon any disposition (other than a
disposition to Holdings or any of its Subsidiaries or the Parent or any of its
Subsidiaries) of such Investment, made pursuant to Sections 6.04(j) and 6.04(k)
on or prior to any date, or referred to in Section 6.04(c)(i), the proviso to
Section 6.04(d) and Section 6.04(e)(ii) and made on or prior to such date, shall
not exceed the sum of an amount (which amount, for purposes of this proviso
only, shall not be less than zero) equal to (x) the amount of Additional Capital
as of such date minus (y) (A) acquisitions of ADP Property permitted under
Section 6.04(g) made on or prior to such date and (B) Capital Expenditures
permitted under Section 6.08(b) made on or prior to such date.

         SECTION 6.5. Asset Sales. Holdings and the Borrower will not, and will
not permit any other Restricted Subsidiary to, sell, transfer, lease or
otherwise dispose of any asset, including any Equity Interests owned by it, nor
will Holdings permit any of its Restricted Subsidiaries to issue any additional
Equity Interests, except:

         (a) sales, transfers, leases or other dispositions of fiber optic cable
capacity, sales of inventory, and sales of used or surplus equipment and Cash
Equivalent Investments, in each case in the ordinary course of business;

         (b) sales, transfers and dispositions to the Borrower or a Subsidiary;
provided that any such sales, transfers or dispositions involving a Subsidiary
that is not a Loan Party shall be made in compliance with Section 6.09;

         (c) issuances to the Borrower or any other Restricted Subsidiary of
Equity Interests in any Restricted Subsidiary other than the Borrower;

         (d) issuances to Holdings by the Borrower of Qualifying Equity
Interests in the Borrower;

         (e) Permitted Telecommunications Asset Dispositions;

         (f) sales, transfers and dispositions of assets to the extent
constituting Investments permitted under Section 6.04;



                                       75
<PAGE>

         (g) Restricted Payments permitted under Section 6.07(a) and payments of
principal and interest permitted under Section 6.07(b);

         (h) the sale, transfer or other dispositions required by Section 5.17
or 5.18;

         (i) any transfer of Receivables and Related Transferred Rights (each as
defined in the Security Agreement attached hereto as Exhibit K) in order to
consummate a Permitted Receivables Transaction or to transfer such assets
pursuant to a factoring arrangement; and

         (j) sales, transfers and dispositions of assets (other than
Telecommunications Assets) that are not permitted by any other clause of this
Section; provided that the aggregate fair market value of all assets sold,
transferred or otherwise disposed of in reliance upon this Section 6.05(j) shall
not exceed $25,000,000 during any fiscal year of the Borrower;

provided that all sales, transfers, leases and other dispositions permitted
under Sections 6.05(e) and 6.05(j) shall be made (x) for fair value and (y) only
if at least 75% of the consideration paid therefor is cash or Cash Equivalent
Investments (or, if less than 75%, the remainder of such consideration consists
of Telecommunications Assets).

         SECTION 6.6. Sale and Leaseback Transactions. Holdings and the Borrower
will not, and will not permit any other Restricted Subsidiary to, enter into any
arrangement, directly or indirectly, whereby it shall (a) sell or transfer any
property, real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other property
that it intends to use for substantially the same purpose or purposes as the
property sold or transferred or (b) lease any property, real or personal, from
any entity substantially all of whose activities consist of acquiring,
constructing or developing property to be leased to Holdings and the Restricted
Subsidiaries pursuant to leases intended to cover, and measured by the cost of
or the financing incurred by such entity to finance, such property (the
transactions referred to in clause (a) and (b) being collectively referred to as
"Sale and Leaseback Transactions"), except for (i) sales and leases of ADP
Property pursuant to the ADP in respect of ADP Outstandings not to exceed
$750,000,000 at any time outstanding and (ii) (x) any such sale referred to in
clause (a) above of any fixed or capital assets that is made for cash
consideration in an amount not less than the cost of such fixed or capital asset
and is consummated within 270 days after the Borrower or such other Restricted
Subsidiary acquires or completes the construction of such fixed or capital asset
and (y) any such lease referred to in clause (b) above providing for rental
payments measured by the cost of the property leased or the financing incurred
by the lessor thereof to acquire, construct or develop the property so leased;
provided that the sum of the aggregate amount of Attributable Debt in respect of
all such Sale and Leaseback Transactions permitted under this clause (ii) at any
time outstanding (other than any such Attributable Debt with respect to any Sale
and Leaseback Transaction constituting a Qualifying Issuance) and the aggregate
amount of Indebtedness secured by Liens permitted by Section 6.02(a)(viii) at
such time outstanding shall not exceed 5% of consolidated net property, plant
and equipment of Holdings and the Restricted Subsidiaries at such time. For
purposes of determining compliance with the proviso set forth in the immediately
preceding sentence, Capital Lease Obligations shall not in any event be included
in the calculation of "Attributable Debt."

         SECTION 6.7. Restricted Payments; Certain Payments of Indebtedness. (a)
Neither Holdings nor the Borrower will, nor will they permit any other
Restricted Subsidiary to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, or enter into any transaction the economic
effect of which is substantially similar to any Restricted Payment, except (i)
Holdings and the Borrower may declare and pay dividends with respect to their
capital stock payable solely in additional shares of their respective common
stock, (ii) Restricted Subsidiaries (other than the Borrower) may declare and
pay dividends ratably with respect to their capital stock, (iii) Holdings may
make Restricted Payments, not exceeding $3,000,000



                                       76

<PAGE>
during any fiscal year, pursuant to and in accordance with stock option plans or
other benefit plans for management or employees of Holdings and the Restricted
Subsidiaries; (iv) so long as no Default shall have occurred and be continuing
or result from the making of such payment, the Borrower may pay dividends to
Holdings at such times and in such amounts as shall be necessary to permit
Holdings to discharge, to the extent permitted hereunder, its permitted
liabilities; (v) on and after the Leverage Target Date, Holdings may declare and
pay dividends in cash with respect to its convertible preferred stock
outstanding as of the Amendment No. 4 Effective Date in an amount not exceeding
$40,000,000 in any fiscal year and the Borrower may declare and pay dividends to
Holdings to permit Holdings to declare and pay such dividends and (vi) at any
time after the consummation of the Structured Note Financing, the Borrower may
declare and pay a dividend to Holdings so long as (x) the aggregate amount of
such dividend shall not exceed the principal amount of the Structured Note
Bridge Indebtedness outstanding at the time such dividend is paid plus accrued
interest thereon, (y) no Default has occurred and is continuing or would result
therefrom and (z) immediately upon receipt thereof, Holdings shall apply all of
the proceeds of such dividend to repay in full the Structured Note Bridge
Indebtedness then outstanding.

         (b) Neither Holdings nor the Borrower will, nor will they permit any
Restricted Subsidiary to, make, directly or indirectly, any voluntary payment or
other distribution (whether in cash, securities or other property) of or in
respect of principal of or interest on any High Yield Notes, any Qualifying
Holdings Debt or any Qualifying Borrower Indebtedness (collectively "Specified
Indebtedness"), or any voluntary payment or other distribution (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any Specified Indebtedness (or enter into any transaction the
economic effect of which is substantially similar to any of the foregoing),
except, provided no Default has occurred and is continuing or would result
therefrom, payments of regularly scheduled interest as and when due in respect
of any Specified Indebtedness other than Qualifying Borrower Indebtedness.

         SECTION 6.8. Limitation on Capital Expenditures. (a) Capital
Expenditures (other than Capital Expenditures permitted under Section 6.08(b)
below) for any fiscal year set forth below shall not exceed the amount set forth
below opposite such fiscal year:

<Table>
<Caption>
FISCAL YEAR                                               AMOUNT
- -----------                                               ------
<S>                                                   <C>
2001                                                  $2,750,000,000
2002                                                  $2,500,000,000
2003                                                  $2,250,000,000
2004                                                  $2,250,000,000
2005                                                  $2,250,000,000
2006 and each fiscal year thereafter                  $2,800,000,000
</Table>

provided that if the aggregate amount of Capital Expenditures (other than
Capital Expenditures permitted under Section 6.08(b) below) actually made in any
such period or fiscal year shall be less than the limit with respect thereto set
forth above (before giving effect to any increase therein pursuant to this
proviso) (the "Base Amount"), then an amount equal to 50% of such shortfall may
be added to the amount of such Capital Expenditures permitted for the
immediately succeeding fiscal year (such amount to be added for any fiscal year,
the "Rollover Amount"); provided further that any Capital Expenditures (other
than Capital Expenditures permitted under Section 6.08(b) below) made during any
fiscal year for which any Rollover Amount shall have been so added shall be
applied, first, to the Rollover Amount added for such fiscal year and, second,
to the Base Amount for such fiscal year.

         (b) In addition to Capital Expenditures permitted under Section 6.08(a)
above, Holdings and the Restricted Subsidiaries may make (i) Capital
Expenditures consisting of acquisitions of ADP Property permitted under Section
6.04(g) or 6.04(l) and (ii) Capital Expenditures on any date after the Amendment



                                       77
<PAGE>

No. 4 Effective Date in an aggregate amount not to exceed Additional Capital as
of such date minus (A) Investments permitted under clause (ii) of the proviso to
Section 6.04 made on or prior to such date and (B) purchases of ADP Property
permitted under Section 6.04(g) made on or prior to such date.

         SECTION 6.9. Transactions with Affiliates. Neither Holdings nor the
Borrower will, nor will they permit any other Restricted Subsidiary to, sell,
lease or otherwise transfer any property or assets to, or purchase, lease or
otherwise acquire any property or assets from, or otherwise engage in any other
transactions with, any of their respective Affiliates, except (a) transactions
that are at prices and on terms and conditions not less favorable to Holdings,
the Borrower or such other Restricted Subsidiary than could be obtained on an
arm's-length basis from unrelated third parties, (b) transactions between or
among the Borrower and the Subsidiary Loan Parties not involving any other
Affiliate, (c) any Restricted Payment permitted by Section 6.07 and (d)
transactions required to be effected pursuant to, and on terms provided for in,
existing agreements (as in effect on the date hereof) listed in Schedule 6.09
hereto.

         SECTION 6.10. Restrictive Agreements. Neither Holdings nor the Borrower
will, nor will they permit any other Restricted Subsidiary to, directly or
indirectly, enter into, incur or permit to exist any agreement or other
arrangement that prohibits, restricts or imposes any condition upon (a) the
ability of Holdings or any Restricted Subsidiary to create, incur or permit to
exist any Lien upon any of its property or assets, or (b) the ability of any
Restricted Subsidiary to pay dividends or other distributions with respect to
any shares of its capital stock or to make or repay loans or advances to the
Borrower or any other Restricted Subsidiary or to Guarantee Indebtedness of the
Borrower or any other Restricted Subsidiary; provided that (i) the foregoing
shall not apply to restrictions and conditions imposed by law or by any Loan
Document, the High Yield Notes or, to the extent that any such restrictions
therein, taken as a whole, are no more restrictive than those contained in the
High Yield Notes, any Qualifying Holdings Debt, (ii) the foregoing shall not
apply to restrictions and conditions existing on the date hereof identified on
Schedule 6.10 (but shall apply to any extension or renewal of, or any amendment
or modification expanding the scope of, any such restriction or condition),
(iii) the foregoing shall not apply to customary restrictions and conditions
contained in agreements relating to the sale of a Subsidiary pending such sale,
provided such restrictions and conditions apply only to the Subsidiary that is
to be sold and such sale is permitted hereunder, (iv) Section 6.10(a) of the
foregoing shall not apply to restrictions or conditions imposed by any agreement
relating to secured Indebtedness permitted by this Agreement if such
restrictions or conditions apply only to the property or assets securing such
Indebtedness and (v) Section 6.10(a) of the foregoing shall not apply to
customary provisions in leases and other contracts restricting the assignment
thereof.

         SECTION 6.11. Fiscal Year. Holdings and the Borrower will not, and will
not permit any other Restricted Subsidiary to, change its fiscal year from a
fiscal year ending December 31.

         SECTION 6.12. Change in Business. Holdings and the Borrower will not,
and will not permit any other Restricted Subsidiary to, engage in any material
line of business other than the Telecommunications Business.

         SECTION 6.13. Amendment of Material Documents. Holdings and the
Borrower will not, and will not permit any other Restricted Subsidiary to,
without the prior written consent of the Required Lenders, consent to any
amendment, modification or waiver of (a) its certificate of incorporation,
by-laws or other organizational documents (except for the filing of a
Certificate of Designation with the Secretary of State of Delaware relating to
the issuance of preferred securities that are Qualifying Equity Interests of
such Person, to the extent provided for in its certificate of incorporation,
by-laws or other organizational documents), (b) the Other Financing Documents,
(c) any agreements governing any Qualifying Holdings Debt, (d) the Parent
Indemnity or (e) the Operative Documents, in each of the foregoing cases if such
amendment, modification of waiver could reasonably be expected to have (i) an
adverse effect on the ability of any Loan Party to perform any of its
obligations under any Loan Document or the rights of, or benefits available to,
the Lenders under any Loan Document or (ii) a Material Adverse Effect.

         SECTION 6.14. Designation of Unrestricted Subsidiaries. Holdings and
the Borrower will not designate any Restricted Subsidiary (other than a newly
created Subsidiary in which no Investment has previously been made) as an
Unrestricted Subsidiary (a "Subsidiary Designation") unless:



                                       78
<PAGE>

         (i)      no Default shall have occurred and be continuing at the time
                  of or after giving effect to such Subsidiary Designation;

         (ii)     after giving effect to such Subsidiary Designation, Holdings
                  would be in compliance with the covenants contained in Section
                  6.08 and Sections 6.15 through 6.19 on a pro forma basis as if
                  such Subsidiary Designation had been made on the first day of
                  the period of four fiscal quarters most recently ended in
                  respect of which financial statements have been delivered by
                  the Company pursuant to Section 5.01(a) or 5.01(b);

         (iii)    Holdings has delivered to the Administrative Agent (x) written
                  notice of such Subsidiary Designation and (y) a certificate of
                  a Financial Officer setting forth in reasonable detail
                  calculations demonstrating pro forma compliance with the
                  financial covenants contained in Section 6.08 and Sections
                  6.15 through 6.19, as required by clause (ii) above; and

         (iv)     on the date of such Subsidiary Designation, Holdings and the
                  Borrower would not be prohibited by Section 6.04(c) and the
                  proviso to Section 6.04 from making an Investment (a "Deemed
                  Subsidiary Investment") in an aggregate amount equal to the
                  fair market value (valued at the date of such Subsidiary
                  Designation) of (x) the net assets of such Restricted
                  Subsidiary or (y) if less than 100% of the Equity Interests in
                  such Restricted Subsidiary are held by Holdings and its
                  Restricted Subsidiaries, in an aggregate amount equal to the
                  percentage interest of Holdings and the Restricted
                  Subsidiaries in such net assets.

         Holdings and the Borrower will not, and will not permit any other
Restricted Subsidiary to (x) Guarantee any Indebtedness of any Unrestricted
Subsidiary, (y) be directly or indirectly liable for any Indebtedness of any
Unrestricted Subsidiary or (z) be directly or indirectly liable for any other
Indebtedness which provides that the holder thereof may (upon notice, lapse of
time or both) declare a default thereon (or cause such Indebtedness or the
payment thereof to be accelerated, payable or subject to repurchase prior to its
final scheduled maturity) upon the occurrence of a default with respect to any
other Indebtedness that is Indebtedness of an Unrestricted Subsidiary, except in
the case of clause (x) or (y) to the extent permitted under Section 6.01 and
Section 6.04 hereof. In no event may the Borrower be designated as an
Unrestricted Subsidiary.

         SECTION 6.15. Total Net Debt to Contributed Capital Ratio. The Total
Net Debt to Contributed Capital Ratio shall at no time prior to January 1, 2002
exceed .65 to 1.00.

         SECTION 6.16. Minimum EBITDA. The amount equal to (i) EBITDA for the
period of four fiscal quarters ending during any period set forth below plus
(ii) ADP Interest Expense for such period minus (iii) gains for such period
attributable to Dark Fiber and Capacity Dispositions plus (iv) Dark Fiber and
Capacity Proceeds for such period shall not be less than the amount set forth
below opposite such period:

<Table>
<Caption>
PERIOD                                                AMOUNT
- ------                                                ------
<S>                                                   <C>
January 1, 2001-March 31, 2001                        $200,000,000
April 1, 2001-June 30, 2001                           $300,000,000
July 1, 2001-September 30, 2001                       $350,000,000
October 1, 2001-December 31, 2001                     $350,000,000
</Table>



                                       79
<PAGE>

         SECTION 6.17. Total Leverage Ratio. (a) The Total Leverage Ratio during
any period set forth below shall not exceed the ratio set forth below opposite
such period:

<Table>
<Caption>
                                                      TOTAL
PERIOD                                                LEVERAGE RATIO
- ------                                                --------------
<S>                                                   <C>
March 31, 2002-December 30, 2002                      12.50:1.00
December 31, 2002-December 30, 2003                   9.50:1.00
December 31, 2003 and thereafter                      4.00:1.00
</Table>

         SECTION 6.18. Senior Leverage Ratio. The Senior Leverage Ratio during
any period set forth below shall not exceed the ratio set forth below opposite
such period:

<Table>
<Caption>
                                                      SENIOR
PERIOD                                                LEVERAGE RATIO
- ------                                                --------------
<S>                                                   <C>
March 31, 2002-December 30, 2002                      5.25:1.00
December 31, 2002-December 30, 2003                   3.25:1.00
December 31, 2003 and thereafter                      2.50:1.00
</Table>

         SECTION 6.19. Interest Coverage Ratio. The Interest Coverage Ratio for
any period of four consecutive fiscal quarters ending during any period set
forth below shall not be less than the ratio set forth below opposite such
period:

<Table>
<Caption>
                                                     INTEREST
PERIOD                                               COVERAGE RATIO
- ------                                               --------------
<S>                                                  <C>
June 30, 2002-June 29, 2003                          1.00:1.00
June 30, 2003-December 30, 2003                      1.50:1.00
December 31, 2003 and thereafter                     2.00:1.00
</Table>

         SECTION 6.20. Financial Covenant Non-Compliance Cure. (a) At any time
prior to the consummation of the Spin-Off, in the event that Holdings and the
Restricted Subsidiaries fail to comply with any of Sections 6.15 through 6.19,
inclusive, for any period or on any date set forth therein, the Parent shall
have the right, but not the obligation, to make, within three Business Days of
the date upon which financial statements as of the last day of such period are
delivered or required to be delivered pursuant to Section 5.01(a) or (b), a cash
equity contribution to Holdings in exchange for Qualifying Equity Interests of
Holdings (which Holdings shall thereupon contribute to the Borrower, in exchange
for Qualifying Equity Interests of the Borrower) to cure such failure.

         (b) If such contribution is made to cure a failure to comply with the
covenant contained in Section 6.16, such contribution shall be in an amount
sufficient, when added to EBITDA for the applicable period, to enable Holdings
and the Restricted Subsidiaries to comply with such covenant on a consolidated
basis. Upon the making of any such capital contribution to Holdings and to the
Borrower in the amount specified above, the amount so contributed (to the
extent, but only to the extent, of the shortfall in EBITDA for the applicable
period) shall thereafter be deemed to have been EBITDA in the last fiscal
quarter of such period for purposes of all calculations in respect of compliance
with Section 6.16 thereafter.

         (c) If such contribution is made to cure a failure to comply with a
covenant contained in Section 6.15, 6.17, 6.18 or 6.19, such contribution shall
be in an amount sufficient, when applied to repay or prepay Indebtedness of
Holdings and the Restricted Subsidiaries, to enable Holdings and the Restricted
Subsidiaries, on a pro forma basis



                                       80
<PAGE>

after giving effect to such contribution and application, to comply with such
covenant on a consolidated basis.

         (d) The right to cure provided in this Section 6.20 may not be
exercised in respect of more than two consecutive quarters or more than three
times in the aggregate during the term of the Facilities.

                                    ARTICLE 7

                                EVENTS OF DEFAULT

         SECTION 7.1. Events of Default. If any of the following events ("Events
of Default") shall occur:

         (a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise;

         (b) the Borrower shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount referred to in Section 7.01(a))
payable under this Agreement or any other Loan Document, when and as the same
shall become due and payable, and such failure shall continue unremedied for a
period of three Business Days;

         (c) any representation or warranty made or deemed made by or on behalf
of the Parent or any Loan Party in or in connection with any Loan Document or
any amendment or modification thereof or waiver thereunder, or in any report,
certificate, financial statement or other document furnished pursuant to or in
connection with any Loan Document or any amendment or modification thereof or
waiver thereunder, shall prove to have been incorrect in any material respect
when made or deemed made;

         (d) (i) Holdings or the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.02, 5.03 (with respect
to the existence of Holdings or the Borrower), 5.10, 5.11A, 5.11B, 5.13, 5.17,
5.18 or in Article 6, or (i) such failure shall continue unremedied for a period
of 30 days after the earlier to occur of (x) knowledge thereof by any Loan Party
or (y) notice thereof from the Administrative Agent to the Borrower (which
notice will be given at the request of any Lender);

         (e) any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in any Loan Document (other than those
specified in Sections 7.01(a), 7.01(b) or 7.01(d)), and such failure shall
continue unremedied for a period of 30 days after the earlier to occur of (i)
knowledge thereof by any Loan Party or (ii) notice thereof from the
Administrative Agent to the Borrower (which notice will be given at the request
of any Lender);



                                       81
<PAGE>

         (f) Holdings or any Restricted Subsidiary shall fail to make any
payment (whether of principal or interest and regardless of amount) in respect
of any Material Indebtedness, when and as the same shall become due and payable
(subject to any applicable grace period);

         (g) any event or condition occurs that results in any Material
Indebtedness or Permitted Receivables Financing becoming due prior to its
scheduled maturity or that enables or permits (with or without the giving of
notice, the lapse of time or both) the holder or holders of any Material
Indebtedness or Permitted Receivables Financing or any trustee or agent on its
or their behalf to cause any Material Indebtedness or Permitted Receivables
Financing to become due, or to require the prepayment, repurchase, redemption or
defeasance thereof, prior to its scheduled maturity; provided that this Section
7.01(g) shall not apply to secured Indebtedness permitted hereunder that becomes
due as a result of the voluntary sale or transfer of the property or assets
securing such Indebtedness;

         (h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of Holdings or any Restricted Subsidiary or its debts, or of a
substantial part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for Holdings or any Restricted Subsidiary or for a substantial
part of its assets, and, in any such case, such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or ordering any
of the foregoing shall be entered;

         (i) Holdings or any Restricted Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation, reorganization
or other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in Section 7.01(h), (iii) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for Holdings or any Restricted Subsidiary or for a
substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;

         (j) Holdings or any Restricted Subsidiary shall become unable, admit in
writing its inability or fail generally, to pay its debts as they become due;

         (k) one or more judgments for the payment of money in an aggregate
amount in excess of $25,000,000 shall be rendered against Holdings, any
Restricted Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution shall
not be effectively stayed, or any action shall be legally taken by a judgment
creditor to attach or levy upon any assets of Holdings or any Restricted
Subsidiary to enforce any such judgment;

         (l) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that have
occurred, could



                                       82
<PAGE>

reasonably be expected to result in liability of Holdings and the Restricted
Subsidiaries in an aggregate amount exceeding $25,000,000 for all periods;

         (m) any Lien (if any) purported to be created under any Collateral
Document shall cease to be, or shall be asserted by any Loan Party not to be, a
valid and perfected Lien on any Collateral having a fair market value in excess
of $1,000,000, with the priority required by the applicable Collateral Document,
except (i) as a result of the sale or other disposition of the applicable
Collateral in a transaction permitted under the Loan Documents or (ii) pursuant
to a Collateral Release Event;

         (n) any Guarantee by Holdings or any Subsidiary Loan Party under any
Loan Document shall cease for any reason (other than the merger out of existence
of such Guarantor pursuant to a transaction permitted hereunder or pursuant to
the express terms of such Guarantee) to be in full force and effect, or Holdings
or any Subsidiary Loan Party shall so assert in writing;

         (o) a Change in Control shall occur; and

         (p) at any time prior to the consummation of the Spin-Off, the senior
unsecured long-term debt of the Parent shall be rated less than BBB- by S&P or
less than Baa3 by Moody's;

then, and in every such event (other than an event with respect to Holdings or
the Borrower described in Section 7.01(h) or 7.01(i)), and at any time
thereafter during the continuance of such event, the Administrative Agent may,
and at the request of the Required Lenders shall, by notice to the Borrower,
take either or both of the following actions, at the same or different times:
(i) terminate the Commitments, and thereupon the Commitments shall terminate
immediately, and (ii) declare the Loans then outstanding to be due and payable
in whole (or in part, in which case any principal not so declared to be due and
payable may thereafter be declared to be due and payable), and thereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon and all fees and other obligations of the Borrower accrued
hereunder, shall become due and payable immediately, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
Holdings and the Borrower; and in the case of any event with respect to Holdings
or the Borrower described in Section 7.01(h) or 7.01(i), the Commitments shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of the
Borrower accrued hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by Holdings and the Borrower.

                                    ARTICLE 8

                                   THE AGENTS

         SECTION 8.1. Appointment, Powers, Immunities. (a) Each Lender,
Swingline Lender and Issuing Bank hereby irrevocably appoints the Administrative
Agent as its agent and authorizes the Administrative Agent to take such actions
on its behalf and to exercise such powers as are delegated to the Administrative
Agent by the terms of the Loan Documents, together with such actions and powers
as are reasonably incidental thereto.

         (b) The institutions serving as Agents hereunder shall have the same
rights and powers in their capacities as Lenders, Swingline Lenders or Issuing
Banks, as the case



                                       83
<PAGE>

may be, as any other Lenders, Swingline Lenders or Issuing Banks and may
exercise the same as though they were not Agents, and each such institution and
its affiliates may accept deposits from, lend money to and generally engage in
any kind of business with Holdings or any Subsidiary or other Affiliate thereof
as if it were not an Agent hereunder.

         (c) The Agents shall not have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the generality of
the foregoing, (i) the Agents shall not be subject to any fiduciary or other
implied duties, regardless of whether a Default has occurred and is continuing,
(ii) the Agents shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated by the Loan Documents that an Agent is required to
exercise in writing by the Required Lenders (or such other number or percentage
of the Lenders as shall be necessary under the circumstances as provided in
Section 10.02), and (iii) except as expressly set forth in the Loan Documents,
the Agents shall not have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to Holdings or any Subsidiary that
is communicated to or obtained by any institution serving as an Agent or any of
its affiliates in any capacity.

         (d) No Agent shall be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 10.02) or in the absence of its own gross negligence or
wilful misconduct.

         (e) No Agent shall be deemed to have knowledge of any Default unless
and until written notice thereof is given to such Agent by Holdings, the
Borrower or a Lender, and no Agent shall be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with any Loan Document, (ii) the contents of any certificate,
report or other document delivered thereunder or in connection therewith, (iii)
the performance or observance of any of the covenants, agreements or other terms
or conditions set forth in any Loan Document, (iv) the validity, enforceability,
effectiveness or genuineness of any Loan Document or any other agreement,
instrument or document, or (v) the satisfaction of any condition set forth in
Article 4 or elsewhere in any Loan Document, other than, in the case of the
Administrative Agent, to confirm receipt of items expressly required to be
delivered to the Administrative Agent.

         SECTION 8.2. Reliance by Agents. Each Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person. Each
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to be made by the proper Person, and shall not incur any
liability for relying thereon. Each Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.

         SECTION 8.3. Delegation to Sub-Agents. Each Agent may perform any and
all of its duties and exercise any of its rights and powers by or through any
one or more sub-agents appointed by such Agent. The Agents and any such
sub-agents may perform any and all of their duties and exercise rights and
powers through their respective Related Parties. The exculpatory provisions of
the preceding paragraphs shall



                                       84
<PAGE>

apply to any such sub-agent and to the Related Parties of each Agent and any
such sub-agent, and shall apply to their respective activities in connection
with the syndication of the credit facilities provided for herein as well as
activities as Agent.

         SECTION 8.4. Resignation of Agents. Subject to the appointment and
acceptance of a successor Agent as provided in this paragraph, any Agent may
resign at any time by notifying the Lenders, the Issuing Banks and the Borrower.
Upon any such resignation, the Required Lenders shall have the right, in
consultation with the Borrower, to appoint a successor. If no successor shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Agent gives notice of its
resignation, then the retiring Agent may, on behalf of the Lenders and the
Issuing Banks, appoint a successor Agent which shall be a bank organized under
the laws of the United States or any State thereof, having (x) an office in any
State of the United States and (y) capital, surplus and undivided profits
aggregating at least $200,000,000, or an affiliate of any such bank. Upon the
acceptance of its appointment as Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged from
its duties and obligations hereunder. The fees payable by the Borrower to a
successor Agent shall be the same as those payable to its predecessor unless
otherwise agreed between the Borrower and such successor. After the Agent's
resignation hereunder, the provisions of this Article and Section 10.03 shall
continue in effect for the benefit of such retiring Agent, its sub-agents and
their respective Related Parties in respect of any actions taken or omitted to
be taken by any of them while it was acting as Agent.

         SECTION 8.5. Non-reliance on Agents or other Lenders. Each Lender
acknowledges that it has, independently and without reliance upon any Agent or
any other Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon any Agent, any Issuing Bank or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any other Loan Document or related agreement or any
document furnished hereunder or thereunder.

         SECTION 8.6. Syndication Agent, Incremental Facility Arrangers and
Co-Documentation Agents. Notwithstanding anything in this Agreement or any Loan
Document to the contrary, the Syndication Agent, the Incremental Facility
Arrangers and the Co-Documentation Agents shall have no obligation or
responsibility as such hereunder other than, in the case of the Syndication
Agent or the Incremental Facility Arrangers, as expressly set forth herein.

                                    ARTICLE 9

                               HOLDINGS GUARANTEE

         SECTION 9.1. The Guarantee. Holdings unconditionally and irrevocably
guarantees the full and punctual payment of all present and future indebtedness
and other obligations of the Borrower evidenced by or arising under any Loan
Document and all present and future indebtedness and other obligations of the
Borrower or any other Restricted Subsidiary under any Hedging Agreement
permitted under Section 6.01 (a "Specified Hedging Agreement") as and when the
same shall become due and payable, whether at maturity or by declaration or
otherwise, according to the terms hereof and thereof (including, without
limitation, any Post-Petition Interest). If the Borrower or any other Restricted
Subsidiary fails punctually to pay any indebtedness or other obligation
guaranteed hereby which is due and payable, Holdings unconditionally agrees to
cause such payment to be made punctually as and when the same shall become due
and payable, whether at maturity or by declaration or otherwise, and as if such
payment were made by the Borrower or such other Restricted Subsidiary.



                                       85
<PAGE>

         SECTION 9.2. Guarantee Unconditional. The obligations of Holdings under
this Article 9 shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:

                  (a) any extension, renewal, settlement, compromise, waiver or
         release in respect of any obligation of the Borrower or any other Loan
         Party under any Loan Document or Specified Hedging Agreement, by
         operation of law or otherwise;

                  (b) any modification, amendment or waiver of or supplement to
         any Loan Document or Specified Hedging Agreement;

                  (c) any release, impairment, non-perfection or invalidity of
         any direct or indirect security, or of any guarantee or other liability
         of any third party, for any obligation of the Borrower or any Loan
         Party under any Loan Document or Specified Hedging Agreement;

                  (d) any change in the corporate existence, structure or
         ownership of the Borrower or any other Loan Party or any insolvency,
         bankruptcy, reorganization or other similar proceeding affecting the
         Borrower or any other Loan Party or its assets, or any resulting
         release or discharge of any obligation of the Borrower or any other
         Loan Party contained in any Loan Document or Specified Hedging
         Agreement;

                  (e) the existence of any claim, set-off or other rights which
         Holdings may have at any time against the Borrower or any other Loan
         Party, any Agent, any Issuing Bank, any Lender or any other Person,
         whether or not arising in connection herewith or any unrelated
         transaction; provided that nothing herein shall prevent the assertion
         of any such claim by separate suit or compulsory counterclaim;

                  (f) any invalidity or unenforceability relating to or against
         the Borrower or any other Loan Party for any reason of any Loan
         Document or Specified Hedging Agreement, or any provision of applicable
         law or regulation purporting to prohibit the payment by any other Loan
         Party of any amount payable by it under any Loan Document or Specified
         Hedging Agreement; or

                  (g) any other act or omission to act or delay of any kind by
         any other Loan Party, any Lender or any other Person or any other
         circumstance that might, but for the provisions of this Section,
         constitute a legal or equitable discharge of Holdings' obligations
         under this Article 9.

         SECTION 9.3. Discharge Only Upon Payment in Full; Reinstatement in
Certain Circumstances. Holdings' obligations under this Article 9 constitute a
continuing guaranty and shall remain in full force and effect until the
Commitments shall have been terminated, all Letters of Credit shall have expired
or been terminated, all Specified Hedging Agreements shall have been terminated
and all amounts payable under the Loan Documents and the Specified Hedging
Agreements shall have been indefeasibly paid in full. If at any time any amount
payable by the Borrower under any Loan Document or by the Borrower or any other
Restricted Subsidiary under any Specified Hedging Agreement is rescinded or must
be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of any Loan Party or otherwise,



                                       86
<PAGE>

Holdings' obligations under this Article 9 with respect to such payment shall be
reinstated at such time as though such payment had become due but had not been
made at such time.

         SECTION 9.4. Waiver. Holdings irrevocably waives acceptance hereof,
presentment, demand, protest and any notice not provided for herein, as well as
any requirement that at any time any action be taken by any Person against the
Borrower or any other Restricted Subsidiary or any other Person.

         SECTION 9.5. Subrogation. When Holdings makes any payment under this
Article 9 with respect to the obligations of the Borrower or any other
Restricted Subsidiary, Holdings shall be subrogated to the rights of the payee
against the Borrower or such other Restricted Subsidiary with respect to the
portion of such obligations paid by Holdings; provided that Holdings shall not
enforce any payment by way of subrogation or contribution against the Borrower
or any Subsidiary so long as any amount payable under any Loan Document or
Specified Hedging Agreement remains unpaid.

         SECTION 9.6. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by any Loan Party under any Loan Document or
Specified Hedging Agreement is stayed upon the insolvency, bankruptcy or
reorganization of such Loan Party, all such amounts otherwise subject to
acceleration under the terms of such Loan Document or Specified Hedging
Agreement shall nonetheless be payable by Holdings under this Article 9
forthwith on demand by the Administrative Agent made, in the case of any Loans,
at the request of the requisite number of Lenders specified in Section 7.01
hereof or, in the case of obligations under a Specified Hedging Agreement, at
the request of the relevant Lender or Lenders or affiliate or affiliates of such
Lender or Lenders.

         SECTION 9.7. Successors and Assigns. This guarantee is for the benefit
of the Lenders, the Hedge Counterparties and their respective successors and
assigns. If any Loans, participations in Letters of Credit or Swingline Loans or
other amounts payable under the Loan Documents are assigned pursuant to Section
10.04 of the Credit Agreement, or any rights under any Specified Hedging
Agreement are assigned pursuant thereto, the rights under this Article 9, to the
extent applicable to the indebtedness so assigned, shall be transferred with
such indebtedness.

                                   ARTICLE 10

                                  MISCELLANEOUS

         SECTION 10.1. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

         (a) if to Holdings or the Borrower, to it at Williams Communications
Group, Inc., One Williams Center, Suite 2600, Tulsa, Oklahoma 74172, Attention
of (other than administrative notices) Scott E. Schubert (Telecopy No.
918-573-6024) or (for administrative notices) Attention of Kerri Lyle (Telecopy
No. 918-573-6558);

         (b) if to the Administrative Agent, to it at Bank of America, N.A., 901
Main Street, Dallas, Texas 75202, Attention of (other than Borrowing Requests)
Pamela Kurtzman, 64th Floor (Telecopy No. (214) 209-9390) or (for Borrowing
Requests) Judy Schneidmiller, 14th Floor (Telecopy No. 214-209-2118);



                                       87
<PAGE>

         (c) if to Bank of America, as Issuing Bank, to it at 901 Main Street,
64th Floor, Main Street, Dallas, Texas 75202, Attention of Pamela Kurtzman
(Telecopy No. 214-209-9390);

         (d) if to Chase, as Issuing Bank, to it at 270 Park Avenue, 37th Floor,
New York, New York 10017, Attention of Joe Brusco (Telecopy No. 212-270-4164);

         (e) if to Bank of America, as Swingline Lender, to it at 901 Main
Street, 64th Floor, Main Street, Dallas, Texas 75202, Attention of Pamela
Kurtzman (Telecopy No. 214-209-9390);

         (f) if to Chase, as Swingline Lender, to it at One Chase Manhattan
Plaza, 8th Floor, New York, New York 10081, Attention of Winslowe Ogbourne
(Telecopy No. 212-552-5700); and

         (g) if to any other Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.

         Any party hereto may change its address or telecopy number for notices
and other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.

         SECTION 10.2. Waivers; Amendments. (a) No failure or delay by the
Administrative Agent, any Issuing Bank, any Swingline Lender or any Lender in
exercising any right or power hereunder or under any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Administrative Agent, the Issuing Banks, the Swingline Lenders and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of any Loan Document or consent to any departure by any Loan Party
therefrom shall in any event be effective unless the same shall be permitted by
Section 10.02(b), and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the making of a Loan or issuance of a Letter of
Credit shall not be construed as a waiver of any Default, regardless of whether
the Administrative Agent, any Lender, any Issuing Bank or any Swingline Lender
may have had notice or knowledge of such Default at the time.

         (b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by Holdings, the Borrower and the Required Lenders or, in the case
of any other Loan Document, pursuant to an agreement or agreements in writing
entered into by the Administrative Agent and the Loan Party or Loan Parties that
are parties thereto, in each case with the consent of the Required Lenders;
provided that no such agreement shall (i) increase the Commitment of any Lender
without the written consent of such Lender, (ii) reduce the principal amount of
any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce
any fees payable hereunder, without the written consent of each Lender affected
thereby, (iii) postpone the scheduled date of payment of the principal amount of
any Loan or LC Disbursement, or any interest thereon, or any fees payable
hereunder, or



                                       88
<PAGE>

reduce the amount of, waive or excuse any such payment, or postpone the
scheduled date of expiration of any Commitment, without the written consent of
each Lender affected thereby, (iv) change Section 2.18(b) or 2.18(c) in a manner
that would alter the pro rata sharing of payments required thereby, without the
written consent of each Lender, (v) change any of the provisions of this Section
or the definition of "Required Lenders" or any other provision of any Loan
Document specifying the number or percentage of Lenders (or Lenders of any
Class) required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, without the written consent of
each Lender (or each Lender of such Class, as the case may be), (vi) release
Holdings or substantially all of the Subsidiary Loan Parties from their
respective Guarantees hereunder under the Subsidiary Guarantee (except as
expressly provided herein or therein), or limit its liability in respect of such
Guarantee, without the written consent of each Lender, (vii) change any
condition set forth in Section 4.03 without the written consent of each
Incremental Lender, or (viii) change any provisions of any Loan Document in a
manner that by its terms adversely affects the rights in respect of payments due
to, or requirements to make loans by, Lenders holding Loans of any Class
differently than those holding Loans of any other Class, without the written
consent of Lenders holding a majority in interest of the outstanding Loans and
unused Commitments of each affected Class; provided further that (A) no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent, any Issuing Bank or any Swingline Lender without the prior
written consent of the Administrative Agent, the affected Issuing Bank or the
affected Swingline Lender, as the case may be, and (B) any waiver, amendment or
modification of this Agreement that by its terms affects the rights or duties
under this Agreement of the Lenders with Commitments or Loans of any Class or
Classes (but not Lenders with Commitments or Loans of any other Class or
Classes) may be effected by an agreement or agreements in writing entered into
by Holdings, the Borrower and the requisite percentage in interest of the
Lenders with Commitments or Loans of the affected Class or Classes.

         SECTION 10.3. Expenses; Indemnity; Damage Waiver. (a) The Borrower
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent, the Syndication Agent and the Incremental Facility
Arrangers and their respective affiliates, including the reasonable fees,
charges and disbursements of counsel for the Administrative Agent, the
Syndication Agent and the Incremental Facility Arrangers in connection with the
syndication of the credit facilities provided for herein, the preparation and
administration of the Loan Documents or any amendments, modifications or waivers
of the provisions thereof (whether or not the transactions contemplated hereby
or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses
incurred by any Issuing Bank in connection with the issuance, amendment, renewal
or extension of any Letter of Credit or any demand for payment thereunder and
(iii) all out-of-pocket expenses incurred by the Administrative Agent, the
Syndication Agent, the Incremental Facility Arrangers, any Issuing Bank, any
Swingline Lender or any Lender, including the fees, charges and disbursements of
any counsel for the Administrative Agent, the Incremental Facility Arrangers and
the Syndication Agent, any Issuing Bank, any Swingline Lender or any Lender, in
connection with the enforcement or protection of its rights in connection with
the Loan Documents, including its rights under this Section, or in connection
with the Loans made or Letters of Credit issued hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.

         (b) The Borrower shall indemnify the Administrative Agent, the
Syndication Agent, the Incremental Facility Arrangers, the Issuing Banks, the
Swingline Lenders and each Lender, and each Related Party of any of the
foregoing Persons (each such Person



                                       89
<PAGE>

being called an "Indemnitee") against, and hold each Indemnitee harmless from,
any and all losses, claims, damages, liabilities and related expenses, including
the fees, charges and disbursements of any counsel for any Indemnitee, incurred
by or asserted against any Indemnitee arising out of, in connection with, or as
a result of (i) the execution or delivery of any Loan Document or any other
agreement or instrument contemplated hereby, the performance by the parties to
the Loan Documents of their respective obligations thereunder or the
consummation of the Transactions or any other transactions contemplated hereby,
(ii) any Loan or Letter of Credit or the use of the proceeds therefrom
(including any refusal by any Issuing Bank to honor a demand for payment under a
Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), (iii) any actual
or alleged presence or release of Hazardous Materials on or from any property
owned or operated by Holdings or any Subsidiary, or any Environmental Liability
related in any way to Holdings or any Subsidiary, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or wilful misconduct of such Indemnitee.

         (c) To the extent that the Borrower fails to pay any amount required to
be paid by it to the Administrative Agent, the Incremental Facility Arrangers,
any Issuing Bank or any Swingline Lender under Sections 10.03(a) or 10.03(b),
each Lender severally agrees to pay to the Administrative Agent, the Syndication
Agent, the Incremental Facility Arrangers, any Issuing Bank or any Swingline
Lender, as the case may be, such Lender's pro rata share (determined as of the
time that the applicable unreimbursed expense or indemnity payment is sought) of
such unpaid amount; provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Administrative Agent, the Syndication Agent, the
Incremental Facility Arrangers, any Issuing Bank or any Swingline Lender in its
capacity as such. For purposes hereof, a Lender's "pro rata share" shall be
determined based upon its share of the sum of the total Revolving Exposures,
outstanding Loans (other than Revolving Loans) and unused Commitments (other
than Revolving Commitments) at the time.

         (d) To the extent permitted by applicable law, Holdings and the
Borrower will not and will not permit any other Restricted Subsidiary to assert,
and each hereby waives for itself and on behalf of its subsidiaries, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the Transactions, any Loan or
Letter of Credit or the use of the proceeds thereof.

         (e) All amounts due under this Section shall be payable promptly after
written demand therefor.



                                       90
<PAGE>

         SECTION 10.4. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including any
affiliate of any Issuing Bank that issues any Letter of Credit), except that the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender, each Issuing Bank
and each Swingline Lender (and any attempted assignment or transfer by the
Borrower without such consent shall be null and void). Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby (including any affiliate of any Issuing Bank that issues any
Letter of Credit) and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent, the Issuing Banks, the Swingline
Lenders and the Lenders) any legal or equitable right, remedy or claim under or
by reason of this Agreement.

         (b) (1) Any Lender may assign to one or more assignees all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its Commitments and the Loans at the time owing to it); provided that (i)
each of the Borrower (except in the case of an assignment to a Lender or an
affiliate of a Lender) and Administrative Agent (except in the case of an
assignment to an affiliate of a Lender) (and, in the case of an assignment of
all or a portion of a Revolving Commitment or any Lender's obligations in
respect of its LC Exposure or Swingline Exposure, the Issuing Banks and the
Swingline Lenders) must give its prior written consent to such assignment (which
consent shall not be unreasonably withheld), (ii) except in the case of an
assignment to a Lender or an affiliate of a Lender or an assignment of the
entire remaining amount of the assigning Lender's Commitments or Loans, after
giving effect to such assignment, the amount of the Commitments or Loans of each
Class held by each of the assignor Lender and its affiliates and the assignee
Lender and its affiliates (determined in each case as of the date the Assignment
and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $1,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, (iii) each partial
assignment shall be made as an assignment of a proportionate part of all the
assigning Lender's rights and obligations under this Agreement, except that this
Section 10.04(b)(iii) shall not be construed to prohibit the assignment of a
proportionate part of all the assigning Lender's rights and obligations in
respect of one Class of Commitments or Loans, (iv) the parties to each
assignment (excluding any assignment by a Lender to an affiliate of such Lender)
shall execute and deliver to the Administrative Agent an Assignment and
Acceptance, together with a processing and recordation fee of $3,500, (v) the
parties to each assignment by a Lender to an affiliate of such Lender shall
execute and deliver to the Administrative Agent an Assignment and Acceptance,
together with a processing and recordation fee of $1,500, (vi) the assignee, if
it shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire and (vii) the Incremental Facility Arrangers shall
be notified by the Administrative Agent of any assignment of the Incremental
Facility; and provided further that any consent of the Borrower otherwise
required under this paragraph shall not be required if an Event of Default has
occurred and is continuing. Subject to acceptance and recording thereof pursuant
to Section 10.04(d), from and after the effective date specified in each
Assignment and Acceptance the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Acceptance, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and



                                       91
<PAGE>

Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 10.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with Section 10.04(e). Each Lender that is an
investment fund hereby agrees to notify the Administrative Agent and the
Incremental Facility Arrangers of any change of the identity of the investment
manager for such fund.

         (2) Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Lender") may grant to a special purpose funding vehicle (an
"SPC") identified as such in writing from time to time by the Granting Lender to
the Administrative Agent and the Borrower, the option to provide to the Borrower
all or any part of any Loan that such Granting Lender would otherwise be
obligated to make to the Borrower pursuant to this Agreement; provided that (i)
nothing herein shall constitute a commitment by any SPC to make any Loan, (ii)
if an SPC elects not to exercise such option or otherwise fails to provide all
or any part of such Loan, the Granting Lender shall be obligated to make such
Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder
shall utilize the Commitment of the Granting Lender to the same extent, and as
if, such Loan were made by such Granting Lender. Each party hereto hereby agrees
that no SPC shall be liable for any indemnity or similar payment obligation
under this Agreement (all liability for which shall remain with the Granting
Lender). In furtherance of the foregoing, each party hereto hereby agrees (which
agreement shall survive the termination of this Agreement) that, prior to the
date that is one year and one day after the payment in full of all outstanding
commercial paper or other senior indebtedness of any SPC, it will not institute
against, or join any other person in instituting against, such SPC any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under the laws of the United States or any State thereof. In addition,
notwithstanding anything to the contrary contained in this Section 10.04, any
SPC may (i) with notice to, but without the prior written consent of, the
Borrower and the Administrative Agent and without paying any processing fee
therefor, assign all or a portion of its interests in any Loans to the Granting
Lender or to any financial institutions (consented to by the Borrower and
Administrative Agent) providing liquidity and/or credit support to or for the
account of such SPC to support the funding or maintenance of Loans and (ii)
disclose on a confidential basis any non-public information relating to its
Loans to any rating agency, commercial paper dealer or provider of any surety,
guarantee or credit or liquidity enhancement to such SPC. This section may not
be amended without the written consent of each SPC that, at the time of such
proposed amendment, has an outstanding Loan or Loans to the Borrower. For
purposes of Section 10.02 of this Agreement and any other provision of any Loan
Document requiring the consent or approval of any Lender, the Granting Lender
shall, notwithstanding the funding of any Loans by any SPC, have the sole right
to consent to or approve any waiver or amendment of any provision of this
Agreement or any other Loan Document or to exercise any other right to consent
or to grant approval under any Loan Document.

         (c) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in any State of the United
States, a copy of each Assignment and Acceptance delivered to it and a register
for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amount of the Loans and LC Disbursements owing to,
each Lender pursuant to the terms hereof from time to time (the "Register"). The
entries in the Register shall be conclusive, and Holdings, the Borrower, the
Administrative Agent, the Issuing Banks, the Swingline Lenders and the Lenders
may treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower, any Issuing Bank, any Swingline Lender and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.



                                       92
<PAGE>

         (d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in Section 10.04(b)
and any written consent to such assignment required by Section 10.04(b), the
Administrative Agent shall accept such Assignment and Acceptance and record the
information contained therein in the Register. No assignment shall be effective
for purposes of this Agreement unless it has been recorded in the Register as
provided in this paragraph.

         (e) Any Lender may, without the consent of the Borrower, the
Administrative Agent, any Issuing Bank or any Swingline Lender, sell
participations to one or more banks or other entities (a "Participant") in all
or a portion of such Lender's rights and obligations under this Agreement
(including all or a portion of its Commitments and the Loans owing to it);
provided that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) Holdings, the Borrower,
the Administrative Agent, the Issuing Banks, the Swingline Lenders and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce the Loan
Documents and to approve any amendment, modification or waiver of any provision
of the Loan Documents; provided that such agreement or instrument may provide
that such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section
10.02(b) that affects such Participant. Subject to Section 10.04(f), the
Borrower agrees that each Participant shall be entitled to the benefits of
Sections 2.15, 2.16 and 2.17 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to Section 10.04(b). To the extent
permitted by law, each Participant also shall be entitled to the benefits of
Section 10.08 as though it were a Lender, provided such Participant agrees to be
subject to Section 2.18(c) as though it were a Lender.

         (f) A Participant shall not be entitled to receive any greater payment
under Section 2.15 or 2.17 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Borrower's
prior written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 2.17 unless the Borrower
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 2.17(e) as
though it were a Lender.

         (g) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of



                                       93
<PAGE>

its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.

         SECTION 10.5. Survival. All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, any Issuing
Bank, any Swingline Lender or any Lender may have had notice or knowledge of any
Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount
payable under this Agreement is outstanding and unpaid or any Letter of Credit
is outstanding and so long as the Commitments have not expired or terminated.
The provisions of Sections 2.15, 2.16, 2.17 and 10.03 and Article 8 shall
survive and remain in full force and effect regardless of the consummation of
the transactions contemplated hereby, the repayment of the Loans, the expiration
or termination of the Letters of Credit and the Commitments or the termination
of this Agreement or any provision hereof.

         SECTION 10.6. Counterparts; Integration; Effectiveness. This Agreement
may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and any separate letter agreements with respect to fees payable
to the Administrative Agent or any Issuing Bank constitute the entire contract
among the parties relating to the subject matter hereof and supersede any and
all previous agreements and understandings, oral or written, relating to the
subject matter hereof. Except as provided in Section 4.01, this Agreement shall
become effective when it shall have been executed by the Administrative Agent
and when the Administrative Agent shall have received counterparts hereof which,
when taken together, bear the signatures of each of the other parties hereto,
and thereafter shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.

         SECTION 10.7. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

         SECTION 10.8. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender, Issuing Bank and Swingline Lender and
each of their respective affiliates is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other obligations at any time owing by such Lender, Issuing
Bank, Swingline Lender or affiliate to or for the credit or the account of the
Borrower or Holdings against any and all of the obligations of the Borrower or
Holdings, as the case may be, now or hereafter existing under this Agreement
held by such Lender, Issuing Bank or Swingline Lender, irrespective of whether
or not such Lender, Issuing Bank or Swingline Lender shall have made any demand
under this Agreement and although such obligations may be unmatured. The rights
of each Lender, Issuing Bank and Swingline Lender under this Section are in
addition to other rights and remedies (including other rights of setoff) which
such Lender, Issuing Bank or Swingline Lender may have.

         SECTION 10.9. Governing Law; Jurisdiction; Consent to Service of
Process. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.

         (b) Each of Holdings and the Borrower hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District



                                       94
<PAGE>

Court of the Southern District of New York, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to any Loan
Document, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State or, to the extent permitted by law, in such Federal court. Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement or
any other Loan Document shall affect any right that the Administrative Agent,
any Issuing Bank, any Swingline Lender or any Lender may otherwise have to bring
any action or proceeding relating to this Agreement or any other Loan Document
against Holdings, the Borrower or their respective properties in the courts of
any jurisdiction.

         (c) Each of Holdings and the Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
any other Loan Document in any court referred to in Section 10.09(b). Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.

         (d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 10.01. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.

         SECTION 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.

         SECTION 10.11. Headings. Article and Section headings used herein and
the Table of Contents are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

         SECTION 10.12. Confidentiality. Each of the Administrative Agent, the
Issuing Banks, the Swingline Lenders and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its affiliates' (other than affiliates that are
direct competitors of any material business of Holdings and the Restricted
Subsidiaries) directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal



                                       95
<PAGE>

process, (d) to any other party to this Agreement, (e) in connection with the
exercise of any remedies hereunder or any suit, action or proceeding relating to
this Agreement or any other Loan Document or the enforcement of rights hereunder
or thereunder, (f) subject to an agreement containing provisions substantially
the same as those of this Section, to any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement (other than a direct competitor of any material business of
Holdings and the Restricted Subsidiaries), (g) with the consent of the Borrower
or (h) to the extent such Information (i) becomes publicly available other than
as a result of a breach of this Section or (ii) becomes available to the
Administrative Agent, any Issuing Bank, any Swingline Lender or any Lender on a
nonconfidential basis from a source other than Holdings or the Borrower. For the
purposes of this Section, "Information" means all information received from
Holdings or the Borrower relating to Holdings or the Borrower or its business,
other than any such information that is available to the Administrative Agent,
any Issuing Bank, any Swingline Lender or any Lender on a nonconfidential basis
prior to disclosure by Holdings or the Borrower; provided that, in the case of
information received from Holdings or the Borrower after the date hereof, such
information is clearly identified at the time of delivery as confidential. Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.

         SECTION 10.13. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.



                                       96
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.


                                       WILLIAMS COMMUNICATIONS, LLC


                                       By /s/ Scott E. Schubert
                                         ---------------------------------------
                                         Title: Senior Vice President and Chief
                                                        Financial Officer


                                       WILLIAMS COMMUNICATIONS GROUP, INC.


                                       By /s/ Scott E. Schubert
                                         ---------------------------------------
                                         Title: Senior Vice President and Chief
                                                        Financial Officer


                                       BANK OF AMERICA, N.A.


                                       By /s/ Pamela S. Kurtzman
                                         ---------------------------------------
                                         Title: Principal


                                       THE CHASE MANHATTAN BANK


                                       By  /s/ Constance M. Coleman
                                         ---------------------------------------
                                         Title: Vice President


                                       BANK OF MONTREAL


                                       By /s/ W.T. Calder
                                         ---------------------------------------
                                         Title: Managing Director



                                       97
<PAGE>

                                       THE BANK OF NEW YORK


                                       By /s/ Brendan T. Nedzi
                                         ---------------------------------------
                                         Title: Senior Vice President


                                       SCOTIABANC INC.


                                       By /s/ M. D. Smith
                                         ---------------------------------------
                                         Title: Treasurer


                                       ABN AMRO BANK, N.V.


                                       By /s/
                                         ---------------------------------------
                                         Title:


                                       By /s/
                                         ---------------------------------------
                                         Title:


                                       FLEET NATIONAL BANK


                                       By /s/ Suzanne M. MacKay
                                         ---------------------------------------
                                         Title: Vice President


                                       CIBC INC.


                                       By /s/ Amy V. Kothari
                                         ---------------------------------------
                                         Title: Executive Director



                                       98
<PAGE>

                                       CREDIT SUISSE FIRST BOSTON


                                       By /s/ David L. Sawyer
                                         ---------------------------------------
                                         Title: Vice President


                                       By /s/ Lalita Advani
                                         ---------------------------------------
                                         Title: Assistant Vice President


                                       DEUTSCHE BANK AG
                                       NEW YORK BRANCH AND/OR CAYMAN ISLANDS
                                       BRANCH


                                       By /s/ Steve M. Godeke
                                         ---------------------------------------
                                         Title: Director


                                       By /s/ Alexander Richarz
                                         ---------------------------------------
                                         Title: Vice President


                                       CREDIT LYONNAIS NEW YORK BRANCH


                                       By /s/ Jeremy Horn
                                         ---------------------------------------
                                         Title: Authorized Signature



                                       99
<PAGE>

                                       BANK AUSTRIA CREDIT ANSTALT
                                       CORPORATE FINANCE, INC.


                                       By /s/ John T. Murphy
                                         ---------------------------------------
                                         Title: Senior Vice President

                                       By /s/ William W. Hunter
                                         ---------------------------------------
                                         Title: Vice President


                                       FIRST UNION NATIONAL BANK


                                       By /s/ Brand Hosford
                                         ---------------------------------------
                                         Title: Vice President


                                       IBM CREDIT CORPORATION


                                       By /s/ Thomas S. Curcio
                                         ---------------------------------------
                                         Title: Manager of Credit


                                       THE INDUSTRIAL BANK OF JAPAN, LIMITED,
                                       NEW YORK BRANCH


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



                                      100
<PAGE>

                                       BANK OF OKLAHAMA N.A.


                                       By /s/ Robert D. Mattax
                                         ---------------------------------------
                                         Title: Senior Vice President


                                       BANK ONE, N.A.


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


                                       KBC BANK, N.V.


                                       By /s/ Robert Snauffer
                                         ---------------------------------------
                                         Title: First Vice President


                                       By /s/ Eric Raskin
                                         ---------------------------------------
                                         Title: Assistant Vice President


                                       THE FUJI BANK, LIMITED


                                       By /s/ Nobuoki Koike
                                         ---------------------------------------
                                         Title: Vice President & Senior Team
                                                Leader



                                      101
<PAGE>

                                       INCREMENTAL TRANCHE A LENDERS:


                                       BANK OF AMERICA, N.A.


                                       By /s/ Pamela S. Kurtzman
                                         ---------------------------------------
                                         Title: Principal


                                       THE CHASE MANHATTAN BANK


                                       By /s/ Constance M. Coleman
                                         ---------------------------------------
                                         Title: Vice President


                                       LEHMAN COMMERCIAL PAPER INC.


                                       By /s/ G. Andrew Keith
                                         ---------------------------------------
                                         Title: Authorized Signatory


                                       CITICORP USA, INC.


                                       By /s/ Caesar W. Wyszomirski
                                         ---------------------------------------
                                         Title: Vice President


                                       MERRILL LYNCH & CO., INC.


                                       By /s/ Merrill Lynch & Co., Inc.
                                         ---------------------------------------
                                         Name:  Parker A. Weil
                                         Title: Managing Director



                                      102
<PAGE>

Acknowledged and agreed:

CRITICAL CONNECTIONS, INC.
SBCI - PACIFIC NETWORKS, INC.
WCS COMMUNICATIONS SYSTEMS, INC.
WCS, INC.
WILLIAMS COMMUNICATIONS OF VIRGINIA, INC.
WILLIAMS COMMUNICATIONS PROCUREMENT, L.L.C.
WILLIAMS COMMUNICATIONS PROCUREMENT, L.P.
WILLIAMS GLOBAL COMMUNICATIONS HOLDINGS, INC.
WILLIAMS INTERNATIONAL VENTURES COMPANY
WILLIAMS LEARNING NETWORK, INC.
WILLIAMS LOCAL NETWORK, INC.
WILLIAMS WIRELESS, INC.
WILLIAMS TECHNOLOGY CENTER, LLC
WILLIAMS COMMUNICATIONS AIRCRAFT, LLC


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



                                      103
<PAGE>

                                  SCHEDULE 2.01
                                   COMMITMENTS

<Table>
<Caption>
REVOLVING AND TERM                        REVOLVING           TERM
LENDERS                                   COMMITMENT       COMMITMENT
<S>                                      <C>            <C>
Bank of America, N.A.                     32,500,000       32,500,000
The Chase Manhattan Bank                  50,000,000       50,000,000
Bank of Montreal                          42,625,000       42,625,000
The Bank of New York                      42,625,000       42,625,000
ABN AMRO Bank N.V.                        34,250,000       34,250,000
CIBC Inc.                                 34,250,000       34,250,000
Credit Lyonnais
   New York Branch                        34,250,000       34,250,000
Credit Suisse First Boston                34,250,000       34,250,000
Deutsche Bank AG
   New York Branch and/or
   Cayman Islands Branch                  34,250,000       34,250,000
Fleet National Bank                       34,250,000       34,250,000
Scotiabanc Inc.                           34,250,000       34,250,000
Bank Austria Creditanstalt
   Corporate Finance, Inc.                17,500,000       17,500,000
First Union National Bank                 17,500,000       17,500,000
The Fuji Bank, Limited                    17,500,000       17,500,000
IBM Credit Corporation                    17,500,000       17,500,000
The Industrial Bank of Japan, Limited
   New York Branch                        17,500,000       17,500,000
Bank of Oklahoma N.A.                     10,000,000       10,000,000
Bank One, N.A.                            10,000,000       10,000,000
KBC Bank N.V.                             10,000,000       10,000,000
                           Total         525,000,000      525,000,000

         GRAND TOTAL                                    1,050,000,000


INCREMENTAL LENDERS

Citicorp USA, Inc.                                        150,000,000
Lehman Commercial Paper, Inc.            150,000,000
Merrill Lynch & Co., Inc.                 75,000,000
The Chase Manhattan Bank                                   40,000,000
Bank of America, N.A.                     35,000,000

         GRAND TOTAL                                      450,000,000
</Table>



                                      104
<PAGE>

                                    EXHIBIT D

                              Lessee's Certificate


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

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

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

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

         LEASE:            Master Lease dated September 11, 2001, by and among
                           Williams Headquarters Building Company, as Lessor,
                           Williams Technology Center, LLC, as Lessee
                           ("Lessee"), and Williams Communications, LLC, as
                           Guarantor ("Guarantor") (the "Lease"), covering the
                           Williams Technology Center and related land and
                           improvements, all located in the City of Tulsa,
                           Oklahoma (the "Premises").

                  Lessee hereby certifies and states to you the following:

                  1.       The Lease is presently in full force and effect and
                           unmodified [LIST AMENDMENTS IF APPLICABLE], and has
                           not been cancelled or terminated.

                  2.       The term of the Lease has commenced and the full
                           rental is now accruing thereunder.

                  3.       The undersigned has accepted possession of the
                           Premises covered by the Lease and any and all
                           improvements located thereon.

                  4.       All improvements required by the terms of the Lease
                           to be constructed by Lessor have been completed to
                           the satisfaction of the undersigned.

                  5.       Rent in the amount of $____________ was last paid on
                           _______________________________, 20___, and no rent
                           under the Lease has been paid more than thirty (30)
                           days in advance of its due date.

                  6.       The address for notices to be sent to the Lessee is
                           as set forth in the Lease or, if there has been a
                           change, at the address set forth hereinbelow.

                  7.       Neither the Lessee nor the Guarantor, as of the date
                           hereof, has any charge, lien or claim of offset under
                           the Lease, the Guaranty or otherwise, against any
                           rents or other charges due or to become due to the
                           Lessor thereunder.

                  8.       Neither the Lessor nor the Lessee, is in default
                           under any of the terms of the Lease, and there
                           currently exists no circumstance or event which with



                                      105
<PAGE>

                           the passage of time, could mature into a default by
                           any party under the Lease.

                  9.       The Guaranty dated of even date with the Lease, and
                           all of its terms, covenants and conditions, are in
                           full force and effect.

                  [ADD ADDITIONAL PROVISIONS NECESSARY FOR PARTICULAR
TRANSACTION].

                  The Lessee understands that in connection with [DESCRIBE
         TRANSACTION IN QUESTION], your company is specifically relying on the
         accuracy and completeness of all of the statements contained herein.

                  EXECUTED this ____ day of _________________, 20___.


                                       WILLIAMS TECHNOLOGY CENTER, LLC,
                                       A Delaware Limited Liability Company



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


                                       -----------------------------------------
                                                       (Address)

                                       -----------------------------------------
                                                  (City, State, Zip)



                                      106
<PAGE>

                                    EXHIBIT E

                             Permitted Encumbrances

         (a)      Encumbrances imposed by law for taxes that are not yet due or
                  are being contested in compliance with the Lease;

         (b)      carriers', warehousemen's, mechanics', materialmen's,
                  repairmen's and other like Encumbrances imposed by law,
                  arising in the ordinary course of business and securing
                  obligations that are not overdue by more than thirty (30) days
                  or are being contested in compliance with the Lease;

         (c)      pledges and deposits made in the ordinary course of business
                  in compliance with workers' compensation, unemployment
                  insurance and other social security laws or regulations;

         (d)      deposits to secure the performance of bids, trade contracts,
                  leases, statutory obligations, surety and appeal bonds,
                  performance bonds and other obligations of a like nature, in
                  each case in the ordinary course of business;

         (e)      judgment liens in respect of judgments that do not constitute
                  an Event of Default under the Lease; and

         (f)      easements, zoning restrictions, rights-of-way and similar
                  Encumbrances on real property imposed by law or arising in the
                  ordinary course of business that do not secure any monetary
                  obligations and do not materially detract from the value of
                  the Leased Properties or interfere with the ordinary conduct
                  of business of Lessee or Guarantor;

provided that the term "Permitted Encumbrances" shall not include any
Encumbrance securing any Debt.

                        [ADD TITLE COMMITMENT EXCEPTIONS]



                                      107
<PAGE>

                                    EXHIBIT F


CONSENT AND NON-DISTURBANCE AGREEMENT

         THIS CONSENT AND NON-DISTURBANCE AGREEMENT is entered into as of the
____ day of _____________, 20__, between WILLIAMS HEADQUARTERS BUILDING COMPANY,
a Delaware corporation ("Lessor"), having an office at One Williams Center,
Suite 2200, Tulsa, Oklahoma 74172, and ________________________________________,
a ____________________ ("Sublessee"), having an office at ______________________
______________________________________.

                                    RECITALS

         A. By that certain Master Lease entered into between Lessor and
WILLIAMS TECHNOLOGY CENTER, LLC, a Delaware limited liability company
("Lessee"), dated effective as of September 11, 2001, Lessor leased certain real
property and improvements commonly known as the Williams Technology Center,
Tulsa, Oklahoma (collectively the "Premises") to Lessee (the "Master Lease").

         B. By that certain Sublease Agreement dated _____________, 20__,
entered into between Lessee and Sublessee, Lessee subleased a portion of the
Premises to Sublessee (the "Sublease"), which Sublease's effectiveness was
conditioned upon the receipt of Lessor's consent thereto.

         C. The parties hereto desire to provide for the consent by Lessor to
the Sublease, and the non-disturbance of Sublessee by the Lessor, in specified
circumstances in the event the Master Lease is terminated.

         IN CONSIDERATION of the premises, the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:

         1. CONSENT TO SUBLEASE. Lessor hereby consents to the Sublease and all
of its terms, covenants and conditions, subject to the terms of this Agreement.
Sublessee agrees that no amendment or modification of the Sublease shall be
valid or enforceable unless and until the Lessor has specifically consented to
such amendment or modification in writing, in each and every instance.

         2. SUBLEASE CONTINUATION. In the event the Master Lease is terminated,
provided Sublessee is not then in default under the Sublease, the Sublease shall
continue in full force and effect, without necessity for executing any new
lease, as a direct lease between Sublessee and the Lessor, upon all of the same
terms, covenants and provisions contained in the Sublease and in such event:

                  2.1 Sublessee Bound. Sublessee shall be bound to Lessor under
         all of the terms, covenants and provisions of the Sublease for the
         remainder of the term thereof (including any extension periods, if
         Sublessee elects or has elected to exercise any option



                                      108
<PAGE>

         to extend the term) and Sublessee hereby agrees to attorn to Lessor
         under the Sublease; and

                  2.2 Lessor Bound. From and after the termination of the Master
         Lease, so long as Lessor is the owner of the Premises, Lessor shall be
         subject to and shall be deemed to have assumed all of the terms,
         covenants and provisions of the Sublease for the remainder of the term
         thereof (including also any extension periods, if Sublessee elects or
         has elected to exercise its option to extend the term).

         3. NOTICES. Any notices or communications given under this Agreement
shall be in writing and shall be deemed given on the earlier of actual receipt
or three (3) days after deposit in the U.S. Mail, by registered or certified
mail, return receipt requested, postage prepaid, at the respective addresses set
forth above, or at such other address as the party entitled to notice may
designate by written notice as provided herein.

         4. SUCCESSORS AND ASSIGNS. Except as otherwise provided in Paragraph 2
hereinabove, this Agreement shall bind and inure to the benefit the parties
hereto and their respective successors and assigns.

         5. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties and cannot be changed, modified, waived or canceled except
by an agreement in writing executed by the parties against whom enforcement of
such modification, change, waiver or cancellation is sought.

         EXECUTED as of the date first hereinabove written.

LESSOR:                                WILLIAMS HEADQUARTERS BUILDING COMPANY, A
                                       Delaware Corporation

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

SUBLESSEE:                                                                     ,
                                       ----------------------------------------
                                       A
                                         ---------------------------

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



                                      109
<PAGE>

                                    EXHIBIT G

                        Memorandum or Short Form of Lease

AFTER RECORDING RETURN TO


Ms. Arlene M. Phillips
Guaranty Abstract Company
320 S. Boulder
Tulsa, Oklahoma 74103-3400
                                 (This space reserved for recording information)

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


                           MEMORANDUM OF MASTER LEASE

                  THIS MEMORANDUM OF MASTER LEASE, is entered into this 11th day
of September, 2001, by and among WILLIAMS HEADQUARTERS BUILDING COMPANY, a
Delaware corporation ("Lessor"), WILLIAMS TECHNOLOGY CENTER, LLC, a Delaware
limited liability company ("Lessee"), and WILLIAMS COMMUNICATIONS, LLC, a
Delaware limited liability company ("Guarantor").

                                   WITNESSETH:

                  For and in consideration of the sum of TEN AND NO/100 DOLLARS
($10.00) and other good and valuable consideration the receipt and sufficiency
of which are hereby acknowledged, the Lessor hereby demises, leases and lets to
the Lessee, and Lessee hereby takes, leases and lets from Lessor, certain real
property more particularly described on Exhibit "A" attached hereto and made a
part hereof, together with the improvements located thereon and various items of
personal property and fixtures connected therewith, in the City of Tulsa, County
of Tulsa, State of Oklahoma (all of which are more particularly described in the
Master Lease hereinafter referenced), together with all the hereditaments,
privileges and appurtenances thereto belonging (hereinafter collectively called
the "Leased Properties").

                  TO HAVE AND TO HOLD the Leased Properties for a term of ten
(10) years, commencing on September 11, 2001, and terminating at 12:00 P.M. on
September 10, 2011 (the "Term"), with the option (i) in Lessee to purchase the
Leased Properties by written notice to Lessor ,and (ii) in Lessor to require the
Lessee to purchase the Leased Properties, all as provided under the terms of a
certain Master Lease Agreement dated effective as of September 11, 2001, entered
into by and among Lessor, Lessee and Guarantor (hereinafter called the "Master
Lease"), at the rentals and subject to the terms, covenants and conditions
appearing in the Master Lease. The Master Lease also contains the guaranty by
Guarantor, of all of the duties and obligations of Lessee set forth therein as
well as certain other duties and obligations.

         1. MORTGAGE. Subject to the terms and conditions of the Master Lease,
and in addition to all other rights and remedies of Lessor as contained herein
or under applicable law, the Lessee does hereby mortgage, pledge, grant,
bargain, sell, convey, assign, warrant, transfer and set over to the Lessor,
WITH POWER OF SALE, to the extent permitted by applicable law: (i) all of the
Lessee's right, title and interest, if any, in the Leased Properties, and (ii)
all of the



                                      110
<PAGE>

Lessee's right, title and interest in and to all proceeds of the conversion,
whether voluntary or involuntary, of any of the Leased Properties into cash or
other liquid claims, including, without limitation, all awards, payments or
proceeds, including interest thereon, and the right to receive the same, which
may be made as a result of casualty, any exercise of the right of eminent domain
or deed in lieu thereof, the alteration of the grade of any street and any
injury to or decrease in the value thereof, the foregoing collectively being
referred to hereinafter as the "Security Property".

TO HAVE AND TO HOLD the foregoing rights, interests and properties, and all
rights, estates, powers and privileges appurtenant thereto, unto the Lessor, its
successors and assigns, forever, for the uses and purposes herein expressed, but
not otherwise.

2. SECURITY INTEREST. Subject to the terms and conditions of the Master Lease,
the Lessee hereby grants to the Lessor a security interest in the Lessee's
interest, if any, in that portion of the Security Property (the "UCC Property")
subject to the Uniform Commercial Code of the State of Oklahoma (the "UCC"). The
Master Lease shall also be deemed to be a security agreement and a financing
statement filed as a fixture filing pursuant to 12A O.S. Section 9-402(6) and
shall support any financing statement showing the Lessor's interest as a secured
party with respect to any portion of the UCC Property described in such
financing statement. The Lessee agrees, at its sole cost and expense, to
execute, deliver and file from time to time such further instruments as may be
requested by the Lessor to confirm and perfect the lien of the security interest
in the collateral described in the Master Lease.

3. ASSIGNMENT OF LEASES AND RENTS. The Lessee hereby irrevocably assigns,
conveys, transfers and sets over unto the Lessor (subject, however, to the
Master Lease and the rights of the Lessee thereunder and hereunder) all and
every part of the rents, issues and profits that may from time to time become
due and payable on account of any and all subleases or other occupancy
agreements now existing, or that may hereafter come into existence with respect
to the Leased Properties or any part thereof, including any guaranties of such
subleases or other occupancy agreements. Upon request of the Lessor, the Lessee
shall execute and cause to be recorded, at its expense, supplemental or
additional assignments of any subleases or other occupancy agreements, of the
Leased Properties. Upon the occurrence and continuance of a Event of Default,
the Lessor is hereby fully authorized and empowered in its discretion (in
addition to all other powers and rights herein granted), to apply for and
collect and receive all such rents, issues and profits and to enforce any
guaranty or guaranties, and all money so received under and by virtue of this
assignment shall be held and applied as further security for the payment of the
indebtedness secured hereby and to assure the performance by the Lessee of its
covenants, agreements and obligations under the Master Lease.

A POWER OF SALE HAS BEEN GRANTED IN THIS INSTRUMENT. A POWER OF SALE MAY ALLOW
THE LESSOR TO TAKE THE SECURITY PROPERTY AND SELL IT WITHOUT GOING TO COURT IN A
FORECLOSURE ACTION UPON THE OCCURRENCE AND CONTINUANCE OF AN EVENT OF DEFAULT BY
THE LESSEE.

         4. INCORPORATION OF TERMS. The terms, covenants and conditions of the
Master Lease are incorporated herein by reference with the same force and effect
as though fully set forth herein. Capitalized terms not specifically defined
herein shall have the meanings as set forth in the Master Lease.



                                      111
<PAGE>

         5. EFFECT OF MEMORANDUM. The purpose of this Memorandum of Master Lease
is to give notice of the existence of such Master Lease, and it is understood
that this Memorandum of Master Lease shall not modify or amend the Master Lease
in any respect. In the event there are any conflicts between the Master Lease
and this Memorandum of Master Lease, the Master Lease shall control in all
cases.

                  IN WITNESS WHEREOF, the parties have executed this instrument
as of the date first above written.

LESSOR                                 WILLIAMS HEADQUARTERS BUILDING
                                       COMPANY, A Delaware Corporation


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



LESSEE                                 WILLIAMS TECHNOLOGY CENTER, LLC,
                                       A Delaware Limited Liability Company


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






GUARANTOR                              WILLIAMS COMMUNICATIONS, LLC,
                                       A Delaware Limited Liability Company


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



                                      112
<PAGE>

STATE OF OKLAHOMA          )
                           ) SS.
COUNTY OF TULSA            )

                  The foregoing instrument was acknowledged before me on
September _____, 2001, by Mark W. Husband, as Assistant Treasurer of WILLIAMS
HEADQUARTERS BUILDING COMPANY, a Delaware corporation.


                                       -----------------------------------------
                                       Notary Public
My Commission Expires:

- -----------------------------
(SEAL)



STATE OF OKLAHOMA          )
                           ) SS.
COUNTY OF TULSA            )

                  The foregoing instrument was acknowledged before me on
September ____, 2001, by __________________________, as Vice President of
WILLIAMS TECHNOLOGY CENTER, LLC, a Delaware limited liability company.


                                       -----------------------------------------
                                       Notary Public
My Commission Expires:

- -----------------------------
(SEAL)



                                      113
<PAGE>

STATE OF OKLAHOMA          )
                           ) SS.
COUNTY OF TULSA            )

                  The foregoing instrument was acknowledged before me on
September ______, 2001, by __________________________________, as Vice President
of WILLIAMS COMMUNICATIONS, LLC, a Delaware limited liability company.


                                       -----------------------------------------
                                       Notary Public
My Commission Expires:

- -----------------------------
(SEAL)



                                      114
<PAGE>

                                    EXHIBIT H

                                    GUARANTY


TO:      WILLIAMS HEADQUARTERS BUILDING COMPANY ("Lessor")
         One Williams Center, Suite 2200
         Tulsa, Oklahoma 74172

                  Lessor is hereby requested by the undersigned (the
"Guarantor"), to extend credit to Williams Technology Center, LLC, a Delaware
limited liability company (hereinafter called the "Lessee") in the principal
amount of TWO HUNDRED FORTY-FIVE MILLION AND NO/100 DOLLARS ($245,000,000.00)
evidenced by that certain Master Lease of even date herewith, and executed among
Lessee, Lessor and Guarantor (the "Master Lease"), as further described in that
certain Agreement of Purchase and Sale of even date herewith, between Lessee and
Lessor (the "Purchase Agreement").

                  To induce Lessor to extend such credit, in consideration
thereof, and in consideration of the benefits to accrue to the undersigned
therefrom, the undersigned hereby guarantees to Lessor the prompt payment at
maturity, and at all times thereafter, of such indebtedness, including interest
thereon and all costs, reasonable attorney's fees, and expenses which may be
suffered by Lessor by reason of the Lessee's default in the payment of such
indebtedness or the default of the Guarantor hereunder. Guarantor further
guarantees to Lessor the full, punctual and faithful performance of each and
every covenant, term, condition or obligation to be performed by the Lessee in
respect to the Master Lease and/or the terms of any other instrument executed in
connection with or as security for the payment of the indebtedness, including
without limitation, the Purchase Agreement.

                  This is an absolute and continuing guarantee of payment in any
event and shall not terminate until Lessor has been paid in full the total
amount of such indebtedness and the Lessee has performed all obligations as
prescribed in the Master Lease.

                  Guarantor agrees that the liability under this Guaranty shall
not be released, diminished, impaired, reduced or affected by:

                  a. The taking or accepting of any other security or guaranty
for any or all of such indebtedness or obligation;

                  b. Any release, surrender, exchange, subordination or loss of
any security at any time existing in connection with any or all of such
indebtedness;

                  c. Any partial release of the liability of the undersigned
hereunder or under any other instrument executed in connection with or as
security for such indebtedness;

                  d. The insolvency, bankruptcy, disability or lack of entity
power of Lessee, Guarantor, or any party at any time liable for the payment of
any or all of such indebtedness whether now existing or hereafter occurring;



                                      115
<PAGE>

                  e. Any renewal, extension and/or rearrangement of the Master
Lease or the payment of any or all of the indebtedness or the performance of any
covenants contained in any instrument executed in connection with such
indebtedness, either with or without notice to or consent of Guarantor, or any
adjustment, indulgence, forbearance or compromise that may be granted or given
by Lessor to any party;

                  f. Any neglect, delay, omission, failure or refusal of Lessor
to take or prosecute any action for the collection of any of such indebtedness
or to foreclose or take or prosecute any action in connection with the Master
Lease or as security for any of such indebtedness; or

                  g. Any failure of Lessor to notify Guarantor of any renewal,
extension or assignment of the indebtedness guaranteed hereby, or any part
thereof, or the release of any security or of any other action taken or
refrained from being taken by Lessor against Lessee or any new agreement between
Lessor and Lessee, it being understood that Lessor shall not be required to give
Guarantor any notice of any kind under any circumstances whatsoever with respect
to or in connection with the indebtedness hereby guaranteed.

                  In the event of default in payment or performance by Lessee,
Guarantor agrees that after the expiration of any applicable cure period set
forth in the Master Lease, Lessor may first proceed against this Guaranty and
against any security given by Guarantor in connection herewith to satisfy such
indebtedness, without first having (i) to proceed against the Lessee, or (ii) to
proceed against or give credit for any security which may have been given to
Lessor by the Lessee or any other party.

                  Guarantor hereby waives notice of acceptance hereof and the
presentment, demand, protest and notice of nonpayment or nonperformance, or
protest in connection with the Master Lease, and Guarantor waives all set-offs
and counterclaims. Payment and performance by Guarantor hereunder shall not
entitle Guarantor, by subrogation or otherwise, to any payment by Lessee except
after Lessor has received full payment and performance of all amounts and
obligations to be paid and performed by the Lessee contingently, absolutely or
otherwise, by reason of the instruments described herein.

                  Guarantor hereby waives and relinquishes any right of
reimbursement, subrogation, indemnification or other recourse or claim, whether
contingent or matured, which Guarantor may have against Lessee. It is the
express intent of Guarantor to eliminate any debtor/creditor relationship
between Guarantor and Lessee. Guarantor hereby expressly releases and waives any
and all present and future rights as a creditor of Lessee in all respects.
Guarantor further waives and relinquishes all rights, remedies, defenses and
claims and/or rights of counterclaim, recoupment, offset or setoff, including,
but not limited to, all offsets, setoffs, rights, remedies or defenses which may
be afforded Guarantor by any of Title 12, OKLA. STAT. Section 686 and/or Title
15, OKLA. STAT. Sections 334, 337, 338 and 344, as any of such statutes may be
amended from time to time.

                  This Guaranty shall be binding on Guarantor, its successors
and assigns, and shall inure to the benefit of Lessor and its successors and
assigns. All of Lessor's rights hereunder shall be cumulative and not
alternative.



                                      116
<PAGE>

                  This instrument is executed and delivered as an incident to a
lending transaction negotiated and consummated in Tulsa, Oklahoma, and shall be
construed according to the laws of the State of Oklahoma.

                  If any provision of this Guaranty shall be held to be void or
unenforceable for any reason, such provision shall be deemed modified so as to
constitute a provision conforming as nearly as possible to such void or
unenforceable provision while still remaining valid and enforceable, and the
remaining terms or provisions hereof shall not be affected thereby.

                  EXECUTED this 11th day of September, 2001.


                                       WILLIAMS COMMUNICATIONS, LLC,
                                       A Delaware Limited Liability Company



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



                                       117
<PAGE>

                                    EXHIBIT I

                            Interest Rate Calculation


The following definitions shall apply to this EXHIBIT I:

         "ABR", when used herein, refers to interest at a rate determined by
reference to the Alternate Base Rate.

         "Applicable Margin" means, for any day, (i) the applicable rate per
annum set forth below under the caption "Eurodollar Spread" or "ABR Spread", as
the case may be, based upon the Guarantor's Bank Facility Rating set by S&P and
Moody's, respectively, applicable on such date plus (ii) the applicable rate per
annum set forth below under the caption "Leverage Premium", unless the Total
Leverage Ratio, as determined by reference to the financial statements delivered
to the Lessor in respect of the most recently ended fiscal quarter of WCG, is
less than 6:00 to 1:00.

         "Eurodollar", when used herein, refers to interest at a rate determined
by reference to the Adjusted LIBO Rate.

         "Facilities" means the Term Facility, the Revolving Facility, the
Incremental Facility and each Additional Incremental Facility, all as defined in
the Credit Agreement.

         "LIBO Rate" means, with respect to any Eurodollar Rate, the rate
appearing on Page 3750 of the Telerate Service (or on any successor or
substitute page of such Service, or any successor to or substitute for such
Service, providing rate quotations comparable to those currently provided on
such page of such Service, as determined by the Lessor from time to time for
purposes of providing quotations of interest rates applicable to dollar deposits
in the London interbank market) at approximately 11:00 a.m., London time, two
(2) Business Days prior to the first day of each calendar month, as the rate for
dollar deposits with a maturity of thirty (30) days. In the event that such rate
is not available at such time for any reason, then the "LIBO Rate" shall be the
rate (rounded upwards, if necessary, to the next 1/16 of 1%) at which dollar
deposits of $5,000,000 and for a maturity of thirty (30) days are offered by the
principal London office of the CitiBank, N.A., in immediately available funds in
the London interbank market at approximately 11:00 a.m., London time, two (2)
Business Days prior to the first day of each calendar month. In either case, the
applicable LIBO Rate shall be effective for the calendar month next succeeding
the date of such determination.

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

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



                                      118
<PAGE>

At Lessee's option, ABR plus Applicable Margin or LIBO Rate plus Applicable
Margin (the "Rate") as determined from time to time by S&P or by Moody's based
on Guarantor's Facilities Rating in accordance with the grid below:


<Table>
<Caption>
                                   FACILITIES RATING OF                  ABR            Eurodollar        LEVERAGE
                                        GUARANTOR                       SPREAD            Spread          PREMIUM
                                   --------------------                 ------          ----------        --------
<S>                          <C>                                        <C>             <C>               <C>
       LEVEL I                   BBB- AND BAA3 OR HIGHER                 0.50%            1. 50%           .25%
       Level II                        BB+ and Ba1                       0.875%           1.875%           .25%
      Level III                         BB and Ba2                       1.25%             2.25%           .25%
       Level IV                        BB- and Ba3                       1.50%             2.50%           .25%
       Level V               Lower than BB- or lower than Ba3            1.75%             2.75%           .25%
</Table>

         For purposes of the foregoing (i) if neither S&P nor Moody's or any
replacement or successor facility of similar size shall have in effect a rating
for the Facilities, then the Applicable Margin shall be the rate set forth in
Level V, (ii) if either S&P or Moody's, but not both S&P and Moody's, shall have
in effect a rating for the Facilities, then the Applicable Margin shall be based
on such rating, (iii) if the ratings established by S&P and Moody's for the
Facilities shall fall within different Levels, then the Applicable Margin shall
be based on the lower of the two ratings, (iv) if the ratings established by S&P
and Moody's for the Facilities shall fall within the same Level, then the
Applicable Margin shall be based on that Level and (v) if the ratings
established by S&P and Moody's for the Facilities shall be changed (other than
as a result of a change in the rating system of S&P or Moody's), such change
shall be effective as of the date on which it is first announced by the
applicable rating agency. Each change in the Applicable Margin shall apply
during the period commencing on the effective date of such change and ending on
the date immediately preceding the effective date of the next such change.



                                      119
<PAGE>

                                    EXHIBIT J

                          Realty Base Rent Computation


Monthly Realty Base Rent to be an amount as would be necessary to amortize
$168,892,596 (the "Realty Base Rent Principal") on a straight-line basis over a
period of four hundred and eighty (480) months plus interest (the "Realty Base
Rent Interest") calculated at the Rate for the first thirty-six (36) months
after the Commencement Date and on a straight-line basis over a period of two
hundred and four (204) months plus interest calculated at the Rate for the
remaining balance thereafter, subject however to the adjustments made with
respect to levels two (2) and three (3) of the Center as set forth in Section
3.1. On the Realty Expiration Date, a final payment of Realty Base Rent in the
amount computed by taking what would be the remaining Realty Base Rent Principal
as amortized pursuant to this EXHIBIT J, as of the Realty Expiration Date.



                                      120
<PAGE>

                                    EXHIBIT K

             Category 1 FF&E Tangible Personal Property Description

<Table>
<Caption>
                                                     AFE                AMOUNT
                                             --------------------    -----------
<S>                                          <C>                     <C>
Furniture                                               #10001052    $17,878,000
Design Fees & Expenses                                  #10001285    $ 2,345,477
Voice Systems                                          IT-VS-2001    $ 5,465,827
Flooring (initial order)                     #10000723 & 10001038    $ 1,677,487
Contingent Costs                                                     $ 1,189,689
                                                                     -----------
SUBTOTAL                                                             $28,556,480
</Table>


The Lessor and Lessee agree to reconcile the exact Category 1 FF&E within
forty-five (45) days of the Substantial Completion Date as defined in the
Construction Completion Agreement.



                                      121
<PAGE>

                                    EXHIBIT L

                      Category 1 FF&E Base Rent Computation


CATEGORY 1 FF&E BASE RENT. Monthly Category 1 FF&E Base Rent to be an amount as
would be necessary to amortize $28,556,480 on a straight-line basis over a
period of sixty (60) months plus interest calculated at the Rate.



                                      122
<PAGE>

                                    EXHIBIT M

             Category 2 FF&E Tangible Personal Property Description

<Table>
<Caption>
                                                        AFE             AMOUNT
                                                     ----------      -----------
<S>                                                  <C>             <C>
Desktop                                              IT-DT-2001      $ 7,608,570
Audio Visual                                          #10001221      $19,996,330
Data Network                                         IT-DN-2001      $13,800,779
Servers                                              IT-SA-2001      $ 5,867,282
Contingent Costs                                                     $   277,963
                                                                     -----------
SUBTOTAL                                                             $47,550,924
</Table>

The Lessor and Lessee agree to reconcile the exact Category 2 FF&E within
forty-five (45) days of the Substantial Completion Date as defined in the
Construction Completion Agreement.



                                      123
<PAGE>

                                    EXHIBIT N

                      Category 2 FF&E Base Rent Computation


CATEGORY 2 FF&E BASE RENT. Monthly Category 2 FF&E Base Rent to be an amount as
would be necessary to amortize $47,550,924 on a straight-line basis over a
period of thirty-six (36) months plus interest calculated at the Rate.



                                      124
<PAGE>

                                    EXHIBIT O


         1. OPTION TO PURCHASE/ PUT OPTION TERMS

                  1.1 SALE AGREEMENT. Upon the exercise by Lessee of its option
         to purchase or by Lessor of its option to require the Lessee to
         purchase (either being described herein as an "Exercise of Option"),
         both as set forth in Article XLII, the Lessor agrees to sell to the
         Lessee and the Lessee agrees to purchase from the Lessor the Realty for
         the Repurchase Price, on the terms hereinafter stated.

                  1.2 TITLE. Lessor shall transfer title to the Realty subject
         only to outstanding mineral interests of record, if any, the Permitted
         Exceptions and such other easements, restrictions of record.

                  1.3 LESSOR'S DELIVERIES BEFORE CLOSING. Within twenty (20)
         days after the Exercise Date, Lessor will deliver to Lessee the
         following:

                           1.3.1 Leases and Contracts. Access to all leases and
                  contracts affecting the ownership, operation or maintenance of
                  the Realty.

                           1.3.2 Survey. Any existing surveys of the Realty, in
                  Lessor's possession or control.

                  1.4 SELLER'S DELIVERIES AT CLOSING. At Closing, Lessor shall
         deliver to Lessee the following:

                           1.4.1 Deed. A duly-executed and acknowledged Special
                  Warranty Deed the form of which is attached hereto as Exhibit
                  I conveying to the Lessee marketable fee simple title to all
                  of the Realty free of all liens and Encumbrances and defects
                  in title except as set forth in to Paragraph 1.2 hereinabove.

                           1.4.2 Evidence of Authority. Reasonable evidence of
                  the Lessor's authority to consummate the transactions
                  contemplated hereby.

                           1.4.3 Leases and Contracts. The originals of the
                  items listed in Paragraph 1.3.1 hereinabove.

                           1.4.4 Lien Affidavit. Affidavit executed by Lessor in
                  form acceptable to the title company to the effect that the
                  Realty is free from claims for mechanics', materialmen's and
                  laborers' liens except as arising from the acts of Lessee.

                           1.4.6 Bill of Sale. If the Closing Date occurs on or
                  prior to either the Category 1 FF&E Expiration Date at the
                  Category 2 FF&E Expiration Date, a Special Warranty Bill of
                  Sale covering the Category 1 FF&E and/or the Category 2 FF&E,
                  as applicable.



                                      125
<PAGE>

                  1.5 LESSEE'S DELIVERIES AT CLOSING. At Closing, Lessee shall
         deliver to Lessor the following:

                           1.5.1 Consideration. The Repurchase Price.

                  1.6 CLOSING COSTS. All of the closing costs of or related to
         this transaction of whatever character or nature, and regardless of
         which party may have incurred the same shall be payable in full, by the
         Lessee.

                  1.7 CLOSING DATE. In the event of the Exercise Option, the
         closing (the "Closing Date") of the purchase and sale of the Realty
         shall be the earlier to occur of (i) the Realty Expiration Date, or
         (ii) ninety (90) days after the Exercise Date, with the exact date of
         Closing Date to be set by Lessor upon at least ten (10) days prior
         written notice to Lessee.

         2. PURCHASE AND SALE TERMS FOR LEASED PERSONAL PROPERTY.

         TRANSFER UPON PAYMENT. Upon the payment in full in each case of (i) the
         Category 1 FF&E Base Rent and (ii) the Category 2 FF&E Base Rent, the
         Lessor agrees to sell to Lessee and Lessee agrees to purchase from
         Lessor for no additional consideration, the Category 1 FF&E and
         Category 2 FF&E respectively. In the event of either of the foregoing,
         (i) within twenty (20) days after the Category 2 FF&E Expiration Date
         the Lessor shall provide to Lessee a Special Warranty Bill of Sale
         covering $47,550,924 of original cost of Category 2 FF&E, and (ii)
         within twenty (20) days after the Category 1 FF&E Expiration Date shall
         provide to Lessee a Special Warranty Bill of Sale covering $28,556,481
         of original cost of Category 1 FF&E.

         3. DEFAULT AND REMEDIES. In the event either party defaults in the
performance of any obligations under this EXHIBIT O, the non-defaulting party
shall give written notice of such default to the defaulting party. The
defaulting party (i) shall have thirty (30) days from receipt of such notice in
which to cure such default, or (ii) in the event such default involves
performance other than the payment of money, and cannot be reasonably cured
within such thirty (30) day period notwithstanding the diligent efforts of the
defaulting party, shall have such additional period as may be necessary to cure
such default so long as the defaulting party has commenced such cure within such
thirty (30) day period and thereafter diligently and continuously pursues a cure
of such default. In the event any such default is not cured within such period,
the non-defaulting party shall be entitled either (i) to waive such default in
writing, or (ii) to pursue any and all of its rights and remedies under
applicable law, including, without limitation, specific performance.



                                      126
<PAGE>

                                    EXHIBIT P

                                 UCC INFORMATION


AS TO LESSEE:

Jurisdiction of Organization: Delaware

Type of Organization: Limited Liability Company

Federal Employer Identification Number: Applied For

State Organization Number: Delaware 3352656

Principal Place of Business and Mailing Address: One Technology Center
                                                 Tulsa, Oklahoma 74103



AS TO GUARANTOR:

Jurisdiction of Organization: Delaware

Type of Organization: Limited Liability Company

Federal Employer Identification Number: 73-1349451

State Organization Number: Delaware 2206783

Principal Place of Business and Mailing Address: One Technology Center
                                                 Tulsa, Oklahoma 74103



                                      127
<PAGE>

                                  SCHEDULE 22.2

                                Sublease Parties

                                      None



                                      128
<PAGE>

                                    EXHIBIT A

                                  CENTER PARCEL


The Easterly Half (E/2) of Block Eighty-eight (88), ORIGINAL TOWN OF TULSA,
located in the City of Tulsa, Tulsa County, State of Oklahoma, according to the
Official Plat thereof, more particularly described as follows:

BEGINNING at the Southeasterly corner of Block 88; thence Northerly 300 feet
along the Easterly line of Block 88 to the Northeasterly corner of said Block;
thence Westerly along the Northerly line of said Block a distance of 150 feet to
a point; thence Southerly a distance of 300 feet to a point on the Southerly
line of said Block; thence Easterly along the Southerly line 150 feet to the
Point of Beginning.

AND, the following described property:

A portion of East First Street adjacent to Blocks 73 and 88 of the Original
Townsite of Tulsa, Tulsa County, State of Oklahoma, a portion of South
Cincinnati Avenue adjacent to Blocks 88 and 87, Original Townsite, Tulsa County,
State of Oklahoma and said portion of East Second Street adjacent to Blocks 88
and 106, Original Townsite of Tulsa, Tulsa County, State of Oklahoma, that is
below an elevation of Three (3) feet lower than the driving lanes of said
roadway. Said potion of streets being more fully described as follows to wit:

Commencing at the point of beginning, said point being the northeast corner of
Block 88; thence westerly along the northerly line of said Block 88 a distance
of 160.00 feet; thence northerly and perpendicular to the northerly line of said
Block 88 a distance of 3.50 feet; thence easterly and parallel the northerly
line of said Block 88 a distance of 166.75 feet; thence southerly and parallel
the easterly line of said Block 88 a distance of 311. 50 feet; thence westerly
and parallel the southerly line of Block 88 a distance of 166.75 feet; thence
northerly a distance of 8.00 feet to a point on the southerly line of said Block
88, said point being 10.00 feet westerly from the southwest corner of Lot 6,
Block 88; thence easterly along the southerly line of Block 88 a distance of
160.00 feet to the southeast corner of Lot 6 Block 88; thence northerly along
the easterly line of Block 88 a distance of 300.00 feet to the point of
beginning.

Skywalk No. 1

The following described property:

         A portion of South Cincinnati Avenue adjacent to Blocks 73 and 74,
         Original Townsite of Tulsa, Tulsa County, State of Oklahoma, that is
         above an elevation of Twenty Seven (27) feet higher than the driving
         lanes of the said roadway. Said portion of South Cincinnati Avenue
         being more fully described as follows to wit:

         Commencing at the point of beginning, said point being the southwest
         corner of Lot 3 Block 74, Original Townsite; thence northerly along the
         westerly line a distance of 32.00



                                      129
<PAGE>

         feet of said Lot 3, Block 74; thence westerly and perpendicular a
         distance of 80.00 feet to a point on the easterly line of Lot 1, Block
         73, Original Townsite; thence southerly along the easterly line a
         distance of 32.0 feet of said Lot 1, Block 73; thence easterly and
         perpendicular a distance of 80.00 feet to the point of beginning.

Skywalk No. 2

The following described property:

         A portion of East First Street adjacent to Blocks 73 and 88 of the
         Original Townsite of Tulsa, Tulsa County, State of Oklahoma, that is
         above an elevation of Twenty Seven (27) feet higher than the driving
         lanes of the said roadway. Said portion of East First Street being more
         fully described as follows to wit:

         Commencing at the point of beginning, said point being the southeast
         corner of Lot 1, Block 73, Original Townsite; thence westerly along the
         southerly line of Lot 1 Block 73 a distance of 26.00 feet; thence
         southerly and perpendicular a distance of 80.00 feet to a point on the
         northerly line of Lot 3, Block 88, Original Townsite; thence easterly
         along the northerly line of Lot 3 Block 88 a distance of 26.00 feet to
         the northeast corner of Lot 3, Block 88; thence northerly and
         perpendicular a distance of 80.00 feet to the point of beginning.



                                      130
<PAGE>

                                    EXHIBIT B

                               CENTER PLANT SPACE



                                    [DRAWING]



                                      131
<PAGE>

                                    EXHIBIT C

                              LITIGATION AND CLAIMS


         1. Potential claims arising out of the General Contractor's Agreement
         for Williams Center Expansion Project between Manhattan Construction
         Company and Purchaser dated August 27, 1999, and the General
         Contractor's Agreement for the Williams Technology Center Design
         Project between Manhattan Construction Company and Guarantor (formerly
         Williams Communications, Inc.), as assigned to Purchaser effective
         February 26, 2001.



                                      132
<PAGE>

                                    EXHIBIT D

                              PARKING GARAGE PARCEL


TRACT A:

Lots One (1), Two (2), Three (3) and Four (4), Block Seventy-four (74), ORIGINAL
TOWNSITE OF TULSA, now City of Tulsa, Tulsa County, State of Oklahoma, according
to the Official Plat thereof;

TRACT B:

All that part of the Original Tulsa Station and Depot Grounds of the Burlington
Northern Railroad Company's Right of Way located in Sections 1 and 2, Township
19 North, Range 12 East of the Indian Base and Meridian, more particularly
described as follows, to-wit:

         BEGINNING at a point that is the Northwest corner of Block 74, Original
         Town of Tulsa, now City of Tulsa, Tulsa County, Oklahoma, according to
         the Official Plat thereof; thence Westerly along the Westerly
         production of the North line of Block 74, a distance of 80.00 feet to a
         point, also being the Northeast corner of Block 73, said point also
         being the Southeast corner of that certain sale to the Tulsa Urban
         Renewal Authority, dated December 30, 1970, recorded December 30, 1970,
         in Book 3951 at Pages 1235, 1236, 1237 and 1238, and correction deed
         dated August 28, 1973; thence Northerly along the Northerly production
         of the East line of said Block 73 a distance of 200.00 feet; thence
         Easterly parallel 200.00 feet Northerly of the North line of said Block
         74 a distance of 80.00 feet to a point on the Northerly production of
         the West line of Block 74; thence Southerly along the Northerly
         production of the West line of Block 74 a distance of 20.00 feet;
         thence Easterly parallel 180.00 feet Northerly of the North line of
         said Block 74 a distance of 60.91 feet to a point of intersection with
         an existing concrete retaining wall; thence Northeasterly along a
         deflection angle to the left of 5(degree)42'01" a distance of 240.27
         feet to a point on the Northerly production of the East line of Block
         74; thence Southerly along said Northerly production of the East line
         of Block 74 a distance of 203.86 feet to the Northeast corner of Block
         74; thence Westerly along the Northerly line of Block 74 a distance of
         300.00 feet to the Point of Beginning of said tract of land.

AND, the following described property:

         A portion of East First Street adjacent to Block 74 and Block 87 of the
         Original Townsite of Tulsa, Tulsa County, State of Oklahoma, that is
         below an elevation of One (1) foot lower than the driving lanes of said
         roadway. Said portion of street being more fully described as follows
         to wit:

         Commencing at a point of beginning, said point being the southwest
         corner of Block 74; thence southerly and perpendicular to the south
         line of Block 74 a distance of 2.75 feet; thence easterly and parallel
         to the southerly line of said Block 74 a distance of 302.75 feet;
         thence northerly and parallel to the easterly line of Block 74 a
         distance of 191.00 feet; thence westerly and perpendicular a distance
         of 2.75 feet to the east line of Block 74; thence southerly along the
         east line of Block 74 a distance of 188.25 feet, thence westerly along
         the southerly line of Block 74 a distance of 300.00 feet, to the point
         of beginning.



                                      133
<PAGE>

                                    EXHIBIT E

                    LEGAL DESCRIPTION OF COOLING TOWER PARCEL


Lots Eight (8) and Nine (9), Block Eighty-Seven (87), Original Town, now City of
Tulsa, Tulsa County, State of Oklahoma, according to the plat thereof.



                                      134
<PAGE>

                                    EXHIBIT F


                        [COMMITMENT FOR TITLE INSURANCE]



                                      135
<PAGE>

                                    EXHIBIT G

                                AGREED ALLOCATION


<Table>
<Caption>
ITEM                                                               ALLOCATION
<S>                                                               <C>
Center                                                           $ 79,200,000
Center Parcel                                                       1,450,000
Parking Garage                                                      9,000,000
Parking Garage Parcel                                                 670,000
Fixtures                                                           78,572,595
Furniture and Equipment                                            76,107,405
TOTAL                                                            $245,000,000
</Table>



                                      136
<PAGE>

                                    EXHIBIT H

                               ANCILLARY CONTRACTS


1.       Management Services Agreement dated April 23, 2001, executed by
         Purchaser, as Manager, and Seller, as Owner, covering the Acquired
         Assets (exclusive of the Parking Garage and the Parking Garage Parcel)
         (the "Management Agreement").

2.       Lease Agreement dated April 23, 2001, executed by Seller, as Landlord,
         and Purchaser, as Tenant, pertaining to the Central Plant (the "Central
         Plant Lease").

3.       Utility Services Agreement dated April 23, 2001, executed by Purchaser,
         as Owner, and Seller, as Customer (the "Utility Services Agreement").



                                      137

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(Y)
<SEQUENCE>16
<FILENAME>d93687ex10-y.txt
<DESCRIPTION>MASTER LEASE DATED 9/13/01
<TEXT>
<PAGE>
                                                                   EXHIBIT 10(y)


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


                             MASTER LEASE AGREEMENT

                                     BETWEEN


                     WILLIAMS HEADQUARTERS BUILDING COMPANY,


                        WILLIAMS TECHNOLOGY CENTER, LLC,


                          WILLIAMS COMMUNICATIONS, LLC,

                                       AND

                       WILLIAMS COMMUNICATIONS GROUP, INC.



                              DATED EFFECTIVE AS OF
                               SEPTEMBER 13, 2001

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

<PAGE>


                                TABLE OF CONTENTS


<Table>
<S>      <C>                                                                                            <C>
                                                     ARTICLE I
                                                 LEASEHOLD ESTATE

1.1      LEASE .......................................................................................    1
1.2      INDIVISIBILITY ..............................................................................    1
1.3      TERMS .......................................................................................    2

                                                    ARTICLE II
                                                    DEFINITIONS

2.1      DEFINITIONS .................................................................................    2

                                                    ARTICLE III
                                                       RENT

3.1      BASE RENT; MONTHLY INSTALLMENTS .............................................................   17
3.2      ADDITIONAL CHARGES ..........................................................................   17
3.3      LATE CHARGE; INTEREST .......................................................................   17
3.4      NET LEASE ...................................................................................   17
         3.4.1      Absolute Obligation ..............................................................   18
         3.4.2      No Counterclaim or Cross Complaint ...............................................   18

                                                    ARTICLE IV
                                                    IMPOSITIONS

4.1      PAYMENT OF IMPOSITIONS ......................................................................   18
4.2      ADJUSTMENT OF IMPOSITIONS ...................................................................   18
4.3      UTILITY CHARGES .............................................................................   18
4.4      INSURANCE PREMIUMS ..........................................................................   18
4.5      TAX RETURNS AND REFUNDS .....................................................................   18

                                                     ARTICLE V
                                             NO TERMINATION AND WAIVER

5.1      NO TERMINATION, ABATEMENT, ETC. .............................................................   19
</Table>

                                       i
<PAGE>

<Table>
<S>      <C>                                                                                            <C>
                                                    ARTICLE VI
                                              LEASE CHARACTERIZATION

6.1      STATUS OF OWNERSHIP OF THE LEASED PROPERTIES ................................................   19
6.2      LEASED PERSONAL PROPERTY ....................................................................   20
6.3      LESSEE'S PERSONAL PROPERTY ..................................................................   20

                                                    ARTICLE VII
                                     CONDITION, USE AND ENVIRONMENTAL MATTERS

7.1      CONDITION OF THE LEASED PROPERTIES ..........................................................   21
7.2      USE OF THE LEASED PROPERTIES ................................................................   21
7.3      CERTAIN ENVIRONMENTAL MATTERS  ..............................................................   21
         7.3.1      Prohibition Against Use of Hazardous Substances ..................................   21
         7.3.2      Notice of Environmental Claims, Actions or Contaminations ........................   22
         7.3.3      Costs of Remedial Actions with Respect to Environmental Matters ..................   22
         7.3.4      Delivery of Environmental Documents ..............................................   22
         7.3.5      Environmental Audit ..............................................................   22
         7.3.6      Entry onto Leased Properties for Environmental Matters ...........................   23
         7.3.7      Environmental Matters Upon Termination of the Lease or Expiration of Term ........   23
         7.3.8      Compliance with Environmental Laws ...............................................   23
         7.3.9      Environmental Related Remedies ...................................................   24
         7.3.10     Environmental Indemnification ....................................................   25
         7.3.11     Rights Cumulative and Survival ...................................................   26

                                                   ARTICLE VIII
                                         LEGAL AND INSURANCE REQUIREMENTS

8.1      COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS ............................................   26
8.2      CERTAIN COVENANTS ...........................................................................   26
         8.2.1      Existence; Conduct of Business ...................................................   26
         8.2.2      Payment of Obligations ...........................................................   27
         8.2.3      Maintenance of Properties ........................................................   27
         8.2.4      Insurance ........................................................................   27
         8.2.5      Casualty and Condemnation ........................................................   27
         8.2.6      Books and Records; Inspection and Audit Rights ...................................   27
         8.2.7      Compliance with Laws .............................................................   27
         8.2.8      Further Assurances ...............................................................   28
8.3      CERTAIN NEGATIVE COVENANTS ..................................................................   28
         8.3.1      No Other Debt ....................................................................   28
         8.3.2      Limitation of Distributions ......................................................   28
         8.3.3      Pledge or Encumber Assets ........................................................   28
         8.3.4      Guarantees Prohibited ............................................................   28
         8.3.5      Encumbrances .....................................................................   28
         8.3.6      Fundamental Changes ..............................................................   28
         8.3.7      Other Material Agreements ........................................................   29
8.4      ADDITIONAL FINANCIAL COVENANTS ..............................................................   29
</Table>

                                       ii
<PAGE>

<Table>
<S>      <C>                                                                                            <C>
         8.4.1      Certain Definitions ..............................................................   29
         8.4.2      Total Net Debt to Contributed Capital Ratio ......................................   29
         8.4.3      Minimum EBITDA ...................................................................   29
         8.4.4      Total Leverage Ratio .............................................................   29
         8.4.5      Senior Leverage Ratio ............................................................   30
         8.4.6      Interest Coverage Ratio ..........................................................   30

                                                    ARTICLE IX
                                                    MAINTENANCE

9.1      MAINTENANCE AND REPAIR ......................................................................   30
         9.1.1      Status and Quality ...............................................................   30
         9.1.2      No Liability of Lessor ...........................................................   31
         9.1.3      Contracting with Third Parties ...................................................   31
         9.1.4      Replacements .....................................................................   31
         9.1.5      Vacation and Surrender ...........................................................   31
9.2      ENCROACHMENTS; RESTRICTIONS. ETC. ...........................................................   32

                                                     ARTICLE X
                                             ALTERATIONS AND ADDITIONS

10.1     Construction of Alterations and Additions to the Leased Properties ..........................   32
         10.1.1      Lessor's Approval Not Required ..................................................   32
         10.1.2      Quality of Work .................................................................   33
         10.1.3      No Claim Against Lessor .........................................................   33
         10.1.4      Asbestos - Containing Material ..................................................   33

                                                    ARTICLE XI
                                                       LIENS

11.1     LIENS .......................................................................................   33

                                                    ARTICLE XII
                                          PERMITTED CONTESTS AND DEPOSITS

12.1     PERMITTED CONTESTS ..........................................................................   33

                                                   ARTICLE XIII
                                                     INSURANCE

13.1     GENERAL INSURANCE REQUIREMENTS ..............................................................   34
         13.1.1      Worker's Compensation Insurance .................................................   34
         13.1.2      Commercial General Liability Insurance ..........................................   34
         13.1.3      Automobile Liability ............................................................   35
         13.1.4      Excess Liability Insurance ......................................................   35
</Table>

                                       iii
<PAGE>

<Table>
<S>      <C>                                                                                            <C>
         13.1.5      Property Insurance ..............................................................   35
         13.1.6      Status of Insurance Company .....................................................   35
         13.1.7      Waiver of Subrogation ...........................................................   35
         13.1.8      Additional Insureds .............................................................   35
         13.1.9      Non-Renewal .....................................................................   36
         13.1.10     Original or Certified Copies ....................................................   36
13.2     PREMIUM DEPOSITS ............................................................................   36
13.3     INCREASE IN LIMITS ..........................................................................   36
13.4     BLANKET POLICY ..............................................................................   36
13.5     COPIES OF POLICIES; CERTIFICATES ............................................................   36

                                                    ARTICLE XIV
                                        DISBURSEMENT OF INSURANCE PROCEEDS

14.1     INSURANCE PROCEEDS ..........................................................................   36
         14.1.1      Proceeds of All-Risk Property Insurance .........................................   36
14.2     RESTORATION IN THE EVENT OF DAMAGE OR DESTRUCTION ...........................................   37
14.3     RESTORATION OF LESSEE'S PROPERTY ............................................................   37
14.4     NO ABATEMENT OF RENT ........................................................................   37
14.5     WAIVER ......................................................................................   37
14.6     DISBURSEMENT OF INSURANCE PROCEEDS EQUAL TO OR GREATER THAN THE APPROVAL THRESHOLD ..........   37
         14.6.1      Plans and Specifications ........................................................   37
         14.6.2      Construction Funds ..............................................................   38
         14.6.3      Lien Waivers ....................................................................   38
         14.6.4      Progress of Work  ...............................................................   38
         14.6.5      Inadequacy of Construction Funds ................................................   38
         14.6.6      Disbursement ....................................................................   38
         14.6.7      Lessee Default ..................................................................   38
         14.6.8      Lessor Reimbursement ............................................................   39
14.7     NET PROCEEDS PAID TO FACILITY MORTGAGEE .....................................................   39
14.8     TERMINATION OF LEASE ........................................................................   39

                                                    ARTICLE XV
                                                   CONDEMNATION

15.1     TOTAL TAKING OR OTHER TAKING WITH EITHER LEASED PROPERTY RENDERED UNSUITABLE FOR
         ITS PRIMARY INTENDED USE ....................................................................   39
15.2     ALLOCATION OF AWARD .........................................................................   39
15.3     PARTIAL TAKING ..............................................................................   40
15.4     TEMPORARY TAKING ............................................................................   40
15.5     AWARDS PAID TO FACILITY MORTGAGEE ...........................................................   40
</Table>

                                       iv
<PAGE>

<Table>
<S>      <C>                                                                                            <C>
                                                    ARTICLE XVI
                                        LESSOR'S RIGHTS ON EVENT OF DEFAULT

16.1     LESSOR'S RIGHTS UPON AN EVENT OF DEFAULT ....................................................   41
16.2     CERTAIN REMEDIES ............................................................................   41
16.3     DAMAGES .....................................................................................   41
16.4     LESSEE'S OBLIGATION TO PURCHASE..............................................................   42
16.5     WAIVER .....................................................................................    42
16.6     APPLICATION OF FUNDS ........................................................................   42
16.7     BANKRUPTCY ..................................................................................   42
         16.7.1      No Transfer .....................................................................   42
         16.7.2      Rights and Obligations Under the Bankruptcy Code ................................   42
16.8     LESSOR'S RIGHT TO CURE LESSEE'S DEFAULT .....................................................   43

                                                   ARTICLE XVII
                               ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS

17.1     ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS ........................................   43
         17.1.1      Organization; Powers ............................................................   43
         17.1.2      Authorization; Enforceability ...................................................   43
         17.1.3      Governmental Approvals; No Conflicts ............................................   44
         17.1.4      Financial Condition; No Material Adverse Change .................................   44
         17.1.5      Properties ......................................................................   45
         17.1.6      Litigation and Environmental Matters ............................................   45
         17.1.7      Compliance with Laws and Agreements .............................................   45
         17.1.8      Investment and Holding Company Status ...........................................   45
         17.1.9      Taxes ...........................................................................   46
         17.1.10     ERISA ...........................................................................   46
         17.1.11     Disclosure ......................................................................   46
         17.1.12     Insurance .......................................................................   46
         17.1.13     Labor Matters ...................................................................   46
         17.1.14     Solvency ........................................................................   47
         17.1.15     No Burdensome Restrictions ......................................................   47
         17.1.16     Representations True and Correct ................................................   47

                                                   ARTICLE XVIII
                                        OCCUPANCY AFTER EXPIRATION OF TERM

18.1     HOLDING OVER ................................................................................   47
18.2     INDEMNITY ...................................................................................   48
</Table>

                                        v
<PAGE>

<Table>
<S>      <C>                                                                                            <C>
                                                    ARTICLE XIX
                                           SUBORDINATION AND ATTORNMENT

19.1     SUBORDINATION ...............................................................................   48
19.2     ATTORNMENT ..................................................................................   48
19.3     LESSEE'S CERTIFICATE ........................................................................   48

                                                    ARTICLE XX
                                                   RISK OF LOSS

20.1     RISK OF LOSS ................................................................................   49

                                                    ARTICLE XXI
                                                  INDEMNIFICATION

21.1     INDEMNIFICATION .............................................................................   49

                                                   ARTICLE XXII
                                             RESTRICTIONS ON TRANSFERS

22.1     GENERAL PROHIBITION AGAINST TRANSFERS .......................................................   50
22.2     CONSENT TO CERTAIN TRANSFERS ................................................................   50
22.3     SUBORDINATION AND ATTORNMENT ................................................................   50

                                                   ARTICLE XXIII
                                         LESSEE AND GUARANTORS INFORMATION

23.1     OFFICER'S CERTIFICATES AND FINANCIAL STATEMENTS .............................................   51
         23.1.1      Fiscal Year Information .........................................................   51
         23.1.2      Quarterly Information ...........................................................   51
         23.1.3      Officers Certificate ............................................................   52
         23.1.4      Accounting Firm Certificate .....................................................   52
         23.1.5      Budget ..........................................................................   52
         23.1.6      SEC Filings .....................................................................   52
         23.1.7      Other Information ...............................................................   52
         23.1.8      Credit Agreement Information ....................................................   53
23.2     PUBLIC OFFERING INFORMATION .................................................................   53
23.3     NOTICES OF MATERIAL EVENTS ..................................................................   53
         23.3.1      Event of Default ................................................................   53
         23.3.2      Action, Suit or Proceeding ......................................................   53
         23.3.3      ERISA Event .....................................................................   53
         23.3.4      Other Matters ...................................................................   53

                                                   ARTICLE XXIV
                                                    INSPECTION

24.1     LESSOR'S RIGHT TO INSPECT ...................................................................   53
</Table>

                                       vi
<PAGE>

<Table>
<S>      <C>                                                                                            <C>
                                                    ARTICLE XXV
                                                     NO WAIVER

25.1     NO WAIVER  ..................................................................................   54

                                                   ARTICLE XXVI
                                                REMEDIES CUMULATIVE

26.1     REMEDIES CUMULATIVE .........................................................................   54

                                                   ARTICLE XXVII
                                                     SURRENDER

27.1     ACCEPTANCE OF SURRENDER .....................................................................   54

                                                   ARTICLE XXIII
                                                   RELATIONSHIP

28.1     NO MERGER OF TITLE ..........................................................................   55
28.2     NO PARTNERSHIP ..............................................................................   55

                                                   ARTICLE XXIX
                                               CONVEYANCE BY LESSOR

29.1     CONVEYANCE BY LESSOR ........................................................................   55

                                                    ARTICLE XXX
                                                  QUIET ENJOYMENT

30.1     QUIET ENJOYMENT .............................................................................   55

                                                   ARTICLE XXXI
                                                      NOTICES

31.1     NOTICES .....................................................................................   56

                                                   ARTICLE XXXII
                                               INTENTIONALLY OMITTED


                                                  ARTICLE XXXIII
                                               INTENTIONALLY OMITTED
</Table>

                                       vii
<PAGE>

<Table>
<S>      <C>                                                                                            <C>
                                                   ARTICLE XXXIV
                                            LESSOR'S OPTION TO PURCHASE

34.1     LESSOR'S OPTION TO PURCHASE LESSEE'S PERSONAL PROPERTY ......................................   57
34.2     LEASED PROPERTIES TRADE NAME ................................................................   58
34.3     TRANSFER OF OPERATIONAL CONTROL OF THE FACILITIES ...........................................   58
         34.3.1      Employees .......................................................................   58
         34.3.2      Change in Control ...............................................................   58
         34.3.3      Business and Organization .......................................................   58
         34.3.4      Operations in Ordinary Course ...................................................   58
         34.3.5      Employee Benefits ...............................................................   59
         34.3.6      Third Party Consents ............................................................   59
         34.3.7      Lessor as Attorney-in-Fact ......................................................   59
34.4     INTANGIBLES AND PERSONAL PROPERTY ...........................................................   60

                                                   ARTICLE XXXV
                                               INTENTIONALLY OMITTED

                                                   ARTICLE XXXVI
                                                   MISCELLANEOUS

36.1     COMPLIANCE WITH FACILITY MORTGAGE ...........................................................   60
36.2     SURVIVAL, CHOICE OF LAW .....................................................................   60
36.3     LIMITATION ON RECOVERY ......................................................................   61
36.4     WAIVERS .....................................................................................   61
36.5     CONSENTS ....................................................................................   61
36.6     COUNTERPARTS ................................................................................   61
36.7     RIGHTS CUMULATIVE ...........................................................................   61
36.8     ENTIRE AGREEMENT ............................................................................   61
36.9     AMENDMENTS IN WRITING .......................................................................   61
36.10    SEVERABILITY ................................................................................   61
36.11    ESTOPPEL CERTIFICATE ........................................................................   61
36.12    TIME OF THE ESSENCE .........................................................................   62
36.13    LESSOR'S FEES AND EXPENSES ..................................................................   62

                                                  ARTICLE XXXVII
                                                      BROKERS

37.1     COMMISSIONS .................................................................................   62

                                                   ARTICLE XVIII
                                                MEMORANDUM OF LEASE

38.1     MEMORANDUM OR SHORT FORM OF LEASE ...........................................................   62
</Table>

                                      viii
<PAGE>

<Table>
<S>      <C>                                                                                            <C>
                                                   ARTICLE XXXIX
                                                RECHARACTERIZATION

39.1     RECHARACTERIZATION AS A SECURITY DOCUMENT ...................................................   62

                                                    ARTICLE XL
                                                   GRANT OF LIEN

40.1     GRANT OF LIEN AND SECURITY INTEREST; ASSIGNMENT OF RENTS ....................................   63
         40.1.1      Mortgage ........................................................................   63
         40.1.2      Security Interest ...............................................................   63
         40.1.3      Assignment of Leases and Rents ..................................................   63
40.2     REMEDIES ....................................................................................   64
         40.2.1      Power of Sale Foreclosure .......................................................   64
         40.2.2      Judicial Foreclosure ............................................................   64
         40.2.3      Appointment of Receiver .........................................................   64
         40.2.4      Waiver of Appraisement ..........................................................   65
         40.2.5      Additional Remedies .............................................................   65
         40.2.6      Cure by Purchase of Leased Properties ...........................................   65

                                                    ARTICLE XLI
                                            GRANT OF SECURITY INTEREST

41.1     GRANT OF SECURITY INTEREST ..................................................................   65
41.2     UCC REPRESENTATIONS AND WARRANTIES ..........................................................   65
         41.2.1      Authorization, Validity and Enforceability ......................................   65
         41.2.2      Conflicting Laws and Contracts ..................................................   66
         41.2.3      Type and Jurisdiction of Organization ...........................................   66
         41.2.4      Principal Location ..............................................................   66
         41.2.5      Property Locations ..............................................................   66
         41.2.6      No Other Names ..................................................................   66
         41.2.7      No Financing Statements .........................................................   66
         41.2.8      Federal Employer Identification Number ..........................................   66
41.3     UCC COVENANTS ...............................................................................   66
         41.3.1      Inspection ......................................................................   66
         41.3.2      Taxes ...........................................................................   67
         41.3.3      Records and Reports; Notification of Default ....................................   67
         41.3.4      Financing Statements and Other Actions; Defense of Title ........................   67
         41.3.5      Disposition of Collateral .......................................................   67
         41.3.6      Encumbrances ....................................................................   67
         41.3.7      Change of Name or Mailing Address ...............................................   67
         41.3.8      Other Financing Statements ......................................................   68
         41.3.9      Maintenance of Goods ............................................................   68
41.4     ACCELERATION AND REMEDIES ...................................................................   68
         41.4.1      UCC Remedies ....................................................................   68
         41.4.2      Disposal ........................................................................   68
</Table>

                                       ix
<PAGE>

<Table>
<S>      <C>                                                                                            <C>
         41.4.3      Compliance with Law .............................................................   68
41.5     OBLIGATIONS UPON DEFAULT ....................................................................   68
         41.5.1      Assembly of Collateral  .........................................................   68
         41.5.2      Lessor Access ...................................................................   68
41.6     ADDITIONAL UCC PROVISIONS....................................................................   68
         41.6.1      Notice of Disposition of Collateral; Condition of Collateral ....................   68
         41.6.2      Lessor Performance of Lessee Obligations  .......................................   69
         41.6.3      Authorization for Lessor to Take Certain Action .................................   69
         41.6.4      Dispositions Not Authorized .....................................................   69


                                                   ARTICLE XLII
                                                 PURCHASE OPTIONS

42.1     OPTION TO PURCHASE ..........................................................................   69
42.2.    PUT OPTION OF LESSOR ........................................................................   70
42.3.    TERMINATION OF LEASE ........................................................................   70
</Table>


                                       x
<PAGE>


                                  MASTER LEASE

         THIS MASTER LEASE ("Lease") is executed and delivered effective as of
this 13th day of September, 2001 (the "Effective Date"), and is entered into by
and among WILLIAMS HEADQUARTERS BUILDING COMPANY, a Delaware corporation
("Lessor"), WILLIAMS TECHNOLOGY CENTER, LLC, a Delaware limited liability
company ("Lessee"), and WILLIAMS COMMUNICATIONS, LLC, a Delaware limited
liability company ("Guarantor").

                                    RECITALS

         The circumstances underlying the execution and delivery of this Lease
are as follows:

         A. Capitalized terms used and not otherwise defined herein have the
respective meanings given them in Article II, below.

         B. On even date herewith, Lessor has purchased from Lessee One
Technology Center also known as Williams Technology Center, and other related
assets all located in Tulsa, Oklahoma (all of which comprise the Leased
Properties as defined hereinbelow).

         C. Lessor now wishes to lease the Leased Properties to Lessee, and
Lessee wishes to lease the Leased Properties from Lessor, on the terms and
conditions set forth in this Lease.

         D. As a material inducement to Lessor to enter into this Lease,
Guarantor desires to unconditionally guaranty the performance of all of Lessee's
duties and obligations hereunder.

         IN CONSIDERATION of the foregoing, the covenants and agreements
contained herein, and other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, Lessor, Lessee and Guarantor agree as
follows:

                                    ARTICLE I

                                LEASEHOLD ESTATE

         1.1 LEASE. Upon and subject to the terms and conditions hereinafter set
forth, Lessor leases to Lessee, and Lessee leases from Lessor, the Leased
Properties. Each Facility is leased subject to all covenants, conditions,
restrictions, easements and other matters affecting such Facility, whether or
not of record, including the Permitted Encumbrances and other matters which
would be disclosed by an inspection of the Facility or by an accurate survey
thereof.

         1.2 INDIVISIBILITY. This Lease constitutes one indivisible lease of the
Leased Properties, and not separate leases governed by similar terms. The Leased
Properties constitute one economic unit, and the Base Rent and all other
provisions have been negotiated and agreed to based on a demise of all of the
Leased Properties as a single, composite, inseparable transaction and would have
been substantially different had separate leases or a divisible lease


<PAGE>

been intended. Except as expressly provided herein for specific, isolated
purposes (and then only to the extent expressly otherwise stated), all
provisions of this Lease apply equally and uniformly to all the Leased
Properties as one unit. An Event of Default with respect to any Leased Property
is an Event of Default as to all of the Leased Properties. The parties intend
that the provisions of this Lease shall at all times be construed, interpreted
and applied so as to carry out their mutual objective to create an indivisible
lease of all the Leased Properties and, in particular but without limitation,
that for purposes of any assumption, rejection or assignment of this Lease under
11 U.S.C. Section 365 of the Bankruptcy Code, this is one indivisible and
non-severable lease and executory contract dealing with one legal and economic
unit which must be assumed, rejected or assigned as a whole with respect to all
(and only all) the Leased Properties covered hereby.

         1.3 TERMS. This Lease shall have the Category 1 FF&E Term for the
Category 1 FF&E, the Category 2 FF&E Term for the Category 2 FF&E, and the
Realty Term for the Land and Leased Improvements (collectively the "Term" or
"Terms").

                                   ARTICLE II

                                   DEFINITIONS

         2.1 DEFINITIONS. For all purposes of this Lease, except as otherwise
expressly provided or unless the context otherwise requires, (i) the terms
defined in this Article have the meanings assigned to them in this Article and
include the plural as well as the singular, (ii) all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
GAAP as at the time applicable, (iii) unless otherwise specifically designated,
all references in this Lease to designated "Articles," Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Lease, and (iv) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Lease as a whole and not to any particular
Article, Section or other subdivision.

                  Additional Charges: All Impositions and other amounts,
liabilities and obligations which Lessee assumes or agrees to pay under this
Lease, including without limitation, any and all costs, expenses and charges
relating to the upkeep and operation of the Leased Properties.

                  Affiliate: Any Person which, directly or indirectly, Controls
or is Controlled by or is under common Control with another Person.

                  Approval Threshold: Five Hundred Thousand Dollars
($500,000.00).

                  Assessment: Any governmental assessment on the Leased
Properties or any part thereof for public or private improvements or benefits,
whether or not commenced or completed prior to the date hereof and whether or
not to be completed within the Term.

                  Assumed Indebtedness: Any indebtedness or other obligations
expressly assumed in writing by Lessor and secured by a mortgage, deed of trust
or other security agreement to which Lessor's title to the Leased Properties is
subject.


                                       2
<PAGE>


                  Award: All compensation, sums or anything of value awarded,
paid or received in connection with a total or partial Taking.

                  Base Rent: Collectively the Category 1 FF&E Base Rent, the
Category 2 FF&E Base Rent and the Realty Base Rent.

                  Business Day: Any day that is not a Saturday, Sunday or other
day on which commercial banks in New York, New York or Dallas, Texas are
authorized or required by law to remain closed; provided that, when used in
connection with a Eurodollar Loan (as defined in the Credit Agreement), the term
"Business Day" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.

                  Capital Lease Obligations: With respect to any Person means
the obligations of such Person to pay rent or other amounts under any lease of
(or other arrangement conveying the right to use) real or personal property, or
a combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.

                  Category 1 FF&E: All of the tangible personal property as set
forth on EXHIBIT K.

                  Category 1 FF&E Base Rent: During the Category 1 FF&E Term,
the Category 1 FF&E Base Rent shall be the sum computed as set forth on
EXHIBIT L.

                  Category 1 FF&E Expiration Date: September 12, 2006.

                  Category 1 FF&E Term: Five (5) Lease Years commencing on the
Commencement Date and ending on the Category 1 FF&E Expiration Date.

                  Category 2 FF&E: All of the tangible personal property as set
forth on EXHIBIT M.

                  Category 2 FF&E Base Rent: During the Category 2 FF&E Term,
the Category 2 FF&E Base Rent shall be the sum computed as set forth on
EXHIBIT N.

                  Category 2 FF&E Expiration Date: September 12, 2004.

                  Category 2 FF&E Term: Three (3) Lease Years commencing on the
Commencement Date and ending on the Category 2 FF&E Expiration Date.

                  Center: The multi-story office building located on the Center
Parcel, commonly known as the One Technology Center and Williams Technology
Center.


                                       3
<PAGE>


                  Center Parcel: The real property more particularly described
on EXHIBIT A attached hereto and made a part hereof on which the Center is
located.

                  Central Plant: As defined in the Construction Completion
Agreement.

                  Change in Control: means

         (a) the acquisition of ownership, directly or indirectly, beneficially
or of record, by any Person other than Guarantor or WCG, of any ownership
interest in the Lessee;

         (b) the acquisition of ownership, directly or indirectly, beneficially
or of record, by any Person or group (within the meaning of Section 13(d) or
14(d) of the Exchange Act and the rules of the SEC thereunder as in effect on
the date hereof) other than Guarantor, of interests representing more than
thirty-five percent (35%) of either (i) the aggregate ordinary voting power
represented by the issued and outstanding ownership interests of Lessee,
Guarantor or WCG, or (ii) the issued and outstanding ownership interests of
Lessee, Guarantor or WCG;

         (c) occupation of a majority of the seats (other than vacant seats) on
the board of directors of Lessee, Guarantor or WCG, by Persons who were neither
(i) nominated by the respective board of directors of Lessee, Guarantor, or WCG
nor (ii) appointed by directors so nominated; or

         (d) the acquisition of direct or indirect Control of Lessee, Guarantor
or WCG, by any Person or group.

                  Clean-Up: The investigation, removal, restoration, remediation
and/or elimination of, or other response to, Contamination, in each case to the
satisfaction of all governmental agencies having jurisdiction, in compliance
with or as may be required by Environmental Laws.

                  Code: The Internal Revenue Code of 1986, as amended.

                  Collateral: Whether now in existence or hereinafter created
and/or acquired, collectively all Leased Personal Property and Fixtures, and
insurance proceeds and products thereof, together with all books and records,
computer files, programs, printouts and other computer materials and records
related thereto.

                  Commencement Date: The Effective Date.

                  Condemnor: Any public or quasi-public authority, or private
corporation or individual, having the power of condemnation.

                  Construction Completion Agreement. The Agreement of Purchase
and Sale and Construction Completion dated effective as of February 26, 2001, as
amended, between Lessor as Seller, and Lessee as Purchaser, covering a portion
of the Leased Properties.


                                       4
<PAGE>


                  Construction Funds: The Net Proceeds and such additional funds
as may be deposited with Lessor by Lessee pursuant to Section 14.6 for
restoration or repair work pursuant to this Lease.

                  Contamination: The presence, Release or threatened Release of
any Hazardous Materials at the Leased Properties in violation of any
Environmental Law, or in a quantity that would give rise to any affirmative
Clean-Up obligations under an Environmental Law, including, but not limited to,
the existence of any injury or potential injury to public health, safety,
natural resources or the environment associated therewith, or any other
environmental condition at, in, about, under or migrating from or to the Leased
Properties.

                  Control: The possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have correlative meanings.

                  Credit Agreement: The Amended and Restated Credit Agreement
dated as of September 8, 1999, among Guarantor, WCG, Bank of America, N.A., The
Chase Manhattan Bank, and other parties, as may be amended or waived from time
to time with respect to the financial covenants therein, a copy of which
constituted as of the Effective Date is attached hereto as EXHIBIT C.

                  Date of Taking: The date on which the Condemnor has the right
to possession of the Leased Property that is the subject of the Taking or
Partial Taking.

                  Debt: This includes, without duplication, (a) all obligations
of such Person for borrowed money or with respect to deposits or advances of any
kind, (b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person under conditional
sale or other title retention agreements relating to property acquired by such
Person, (d) all obligations of such Person in respect of the deferred purchase
price of property or services (excluding (i) current accounts payable incurred
in the ordinary course of business and (ii) payment obligations of such Person
to the owner of assets used in a Telecommunications Business (as defined in the
Credit Agreement) for the use thereof pursuant to a lease or other similar
arrangement with respect to such assets or a portion thereof entered into in the
ordinary course of business), (e) all Debt of others secured by (or for which
the holder of such Debt has an existing right, contingent or otherwise, to be
secured by) any Lien on property owned or acquired by such Person, whether or
not the Debt secured thereby has been assumed, (f) all guarantees by such Person
of the Debt of others, (g) all Capital Lease Obligations of such Person
(provided that Capital Lease Obligations in respect of fiber optic cable
capacity arising in connection with exchanges of such capacity shall constitute
Debt only to the extent of the amount of such Person's liability in respect
thereof net (but not less than zero) of such Person's right to receive payments
obtained in exchange therefor), (h) all obligations, contingent or otherwise, of
such Person as an account party in respect of letters of credit and letters of
guaranty, and (i) all obligations, contingent or otherwise, of such Person in
respect of bankers' acceptances. The Debt of any Person shall include the Debt
of any other entity (including any


                                       5
<PAGE>


partnership in which such Person is a general partner) to the extent such Person
is liable therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such Debt
provide that such Person is not liable therefor.

                  Encumbrance: With respect to any asset, (a) any mortgage, deed
of trust, lien, pledge, hypothecation, encumbrance, charge or security interest
in, on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.

                  Environmental Audit: A written certificate, in form and
substance satisfactory to Lessor, from an environmental consulting or
engineering firm acceptable to Lessor, which states that there is no
Contamination on the Leased Properties and that the Leased Properties are
otherwise in strict compliance with Environmental Laws.

                  Environmental Documents: Each and every (i) document received
by Lessee or any Affiliate from, or submitted by Lessee or any Affiliate to, the
United States Environmental Protection Agency and/or any other federal, state,
county or municipal agency responsible for enforcing or implementing
Environmental Laws with respect to the condition of the Leased Properties, or
Lessee's operations at the Leased Properties; and (ii) review, audit, report, or
other analysis data pertaining to environmental conditions, including, but not
limited to, the presence or absence of Contamination, at, in, or under or with
respect to the Leased Properties that have been prepared by, for or on behalf of
Lessee.

                  Environmental Laws: All federal, state and local laws
(including, without limitation, common law), statutes, codes, ordinances,
regulations, rules, orders, permits or decrees relating to the introduction,
emission, discharge or release of Hazardous Materials into the indoor or outdoor
environment (including without limitation, air, surface water, groundwater,
(land or soil) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, transportation or disposal of Hazardous
Materials; or the Clean-Up of Contamination, all as are now or may hereinafter
be in effect.

                  Equipment: Collectively, all the items of machinery and
equipment as defined in Article 9 of the UCC comprising part of the Leased
Personal Property.

                  ERISA: The Employee Retirement Income Security Act of 1974, as
amended from time to time.

                  ERISA Event: (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the


                                       6
<PAGE>


incurrence by Lessee or Guarantor of any liability under Title IV of ERISA with
respect to the termination of any Plan; (e) the receipt by Lessee or Guarantor
from the Pension Benefit Guaranty Corporation as defined in ERISA (and any
successor entity) or a plan administrator of any notice relating to an intention
to terminate any Plan or Plans or to appoint a trustee to administer any Plan;
(f) the incurrence by Lessee or Guarantor of any liability with respect to the
withdrawal or partial withdrawal from any Plan or multiemployer plan (as defined
in Section 4001(a)(3) of ERISA); or (g) the receipt by Lessee or Guarantor of
any notice, or the receipt by any multiemployer plan from Lessee or Guarantor of
any notice, concerning the imposition of Withdrawal Liability or a determination
that a multiemployer plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA.

                  Event of Default: The occurrence of any of the following:

                  (a) Lessee fails to pay or cause to be paid the Rent when due
and payable;

                  (b) Any of Lessee, Guarantor or WCG, has a petition in
bankruptcy filed against it, is adjudicated a bankrupt or has an order for
relief thereunder entered against it, or a court of competent jurisdiction
enters an order or decree appointing a receiver of Lessee, Guarantor or WCG or
of the whole or substantially all of its property, or approving a petition filed
against Lessee seeking reorganization or arrangement of Lessee under the federal
bankruptcy laws or any other applicable law or statute of the United States of
America or any state thereof, and such judgment, order or decree is not vacated
or set aside or stayed within sixty (60) days from the date of the entry
thereof, subject to the applicable provisions of the Bankruptcy Code (11 U.S.C.
Section 101, et seq.) and to the provisions of Section 16.7;

                  (c) Lessee, Guarantor or WCG: (i) admits in writing its
inability to pay its debts generally as they become due, (ii) files a petition
in bankruptcy or a petition to take advantage of any insolvency law, (iii) makes
a general assignment for the benefit of its creditors, (iv) consents to the
appointment of a receiver of itself or of the whole or any substantial part of
its property, or (v) files a petition or answer seeking reorganization or
arrangement under the Federal bankruptcy laws or any other applicable law or
statute of the United States of America or any state thereof, subject to the
applicable provisions of the Bankruptcy Code (11 U.S.C. Section 101, et seq.)
and to the provisions of Section 16.7;

                  (d) Lessee, Guarantor or WCG, is liquidated or dissolved, or
begins a Proceeding toward liquidation or dissolution, or has filed against it a
petition or other Proceeding to cause it to be liquidated or dissolved and the
Proceeding is not dismissed within thirty (30) days thereafter, or Lessee or
Guarantor in any manner permits the sale or divestiture of substantially all of
its assets;

                  (e) The estate or interest of Lessee in the Leased Properties
or any part thereof is levied upon or attached in any Proceeding and the same is
not vacated or discharged within thirty (30) days thereafter (unless Lessee is
in the process of contesting such lien or attachment in good faith in accordance
with Article XII);


                                       7
<PAGE>


                  (f) Any representation or warranty made by Lessee or Guarantor
in the Purchase Agreement or in the certificates delivered in connection
therewith shall prove to be incorrect in any material respect when made or
deemed made, Lessor is materially and adversely affected thereby and Lessee or
Guarantor as the case may be, fails within twenty (20) days after Notice from
Lessor thereof to cure such condition by terminating such adverse effect and
making Lessor whole for any damage suffered therefrom, or, if with due diligence
such cure cannot be effected within twenty (20) days, if Lessee has failed to
commence to cure the same within the twenty (20) days or failed thereafter to
proceed promptly and with due diligence to cure such condition and complete such
cure prior to the time that such condition causes a default in any Facility
Mortgage or any other lease to which Lessee is subject and prior to the time
that the same results in civil or criminal penalties to Lessor, Lessee,
Guarantor or any Affiliates of any of such parties or the Leased Properties;

                  (g) Lessee defaults, or permits a default, under any Facility
Mortgage, related documents or obligations thereunder which default is not cured
within any applicable grace period provided for therein;

                  (h) A default occurs under the Guaranty;

                  (i) A Transfer occurs without the prior written consent of
Lessor;

                  (j) Except as otherwise provided in subsection (o) below, a
default occurs under any Material Debt when and as the same become due and
payable (subject to any applicable grace period);

                  (k) Lessee fails to purchase the Leased Properties if and as
required under this Lease;

                  (l) Lessee, Guarantor or WCG breaches any of the financial
covenants set forth in Article VIII hereof and the breach is not cured within a
period of thirty (30) days after the earlier to occur of (i) the Notice thereof
from Lessor, or (ii) knowledge thereof by Lessee, Guarantor or WCG;

                  (m) Lessee or Guarantor fails to observe or perform any other
term, covenant or condition of this Lease and the failure is not cured by Lessee
within a period of thirty (30) days after Notice thereof from Lessor;

                  (n) Lessee or Guarantor breaches any representation or
warranty made by it in this Lease;

                  (o) An Event of Default (as defined in the Credit Agreement),
occurs and an acceleration = = of any of the Loans as defined in the Credit
Agreement results;

                  (p) One or more judgments for the payment of money in an
aggregate amount in excess of $25,000,000 shall be rendered against Lessee,
Guarantor or WCG, or any


                                       8
<PAGE>


combination thereof and the same shall remain undischarged for a period of
thirty (30) consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to attach or
levy upon any assets of Lessee, Guarantor or WCG to enforce any such judgment;
(q) An ERISA Event shall have occurred that, in the opinion of the Lessor, when
taken together with all other ERISA Events that have occurred, could reasonably
be expected to result in liability of Lessee, Guarantor or WCG in an aggregate
amount exceeding $25,000,000 for all periods; (r) The Guaranty shall cease for
any reason (other than the merger out of existence of the Guarantor pursuant to
a transaction permitted hereunder or pursuant to the express terms of the
Guaranty) to be in full force and effect, or Guarantor shall so assert in
writing; (s) A Change in Control shall occur;

                  (t) Lessee or Guarantor fails to observe or perform any
provisions of Article XIII regarding insurance; or

                  (u) This Lease together with the Purchase Agreement are
determined not to be a Qualifying Issuance as defined in the Credit Agreement.

                  Facility: Each of the Center and the Parking Structure.

                  Facility Mortgage: Any mortgage, deed of trust or other
security agreement which with the express, prior, written consent of Lessor is a
lien upon any or all of the Leased Properties, whether such lien secures an
Assumed Indebtedness or another obligation or obligations.

                  Facility Mortgagee: The secured party to a Facility Mortgage.

                  Financial Statement: As to WCG, for any period, a statement of
earnings and retained earnings and of changes in financial position and profit
and loss for such period, and for the period from the beginning of the fiscal
year to the end of such period, and the related balance sheet as at the end of
such period, together with the notes thereto, all in reasonable detail and
setting forth in comparative form the corresponding figures for the
corresponding period in the preceding fiscal year, and prepared in accordance
with GAAP, certified to be accurate and complete by the chief financial officer
of WCG. WCG's fiscal year-end Financial Statement shall be an audited financial
report prepared by Ernst & Young LLP or other independent certified public
accountants of recognized national standing and otherwise reasonably
satisfactory to Lessor, containing WCG's balance sheet as of the end of that
year, its related profits and losses, a statement of shareholder's equity for
that year, a statement of cash flows for that year, any management letter
prepared by those certified public accountants and such comments and financial
details as are customarily included in reports of like character and the
unqualified opinion of the certified public accountants as to the fairness of
the statements therein.

                  Fixtures: Collectively, all permanently affixed Equipment,
machinery, and fixtures, all as defined in Article 9 of the UCC, and other items
of real and/or personal property


                                       9
<PAGE>


(excluding Leased Personal Property and any portion of the Central Plant),
including all components thereof, now and hereafter located in, on or used in
connection with, and permanently affixed to or incorporated into the Leased
Improvements, including, without limitation, all furnaces, boilers, heaters,
electrical equipment, heating, plumbing, lighting, ventilating, refrigerating,
incineration, air and water pollution control, waste disposal, air-cooling and
air-conditioning systems and apparatus (other than individual units), sprinkler
systems and fire and theft protection equipment, towers and other devices for
the transmission of radio, television and other signals, all of which, to the
greatest extent permitted by law, are hereby deemed by the parties hereto to
constitute real estate, together with all replacements, modifications,
alterations and additions thereto.

                  GAAP: Generally accepted accounting principles in the United
States of America, in effect at the time in question.

                  Governmental Authority: The government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.

                  Guaranty: The Guaranty of even date herewith in the form
attached hereto as EXHIBIT H executed by Guarantor.

                  Hazardous Materials: All explosive or radioactive substances
or wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law as hazardous, toxic, a pollutant or a contaminant.

                  Impositions: Collectively, all taxes (including, without
limitation, all capital stock and franchise taxes of Lessor and all ad valorem,
sales and use, single business, gross receipts, transaction privilege, rent or
similar taxes to the extent the same are assessed against Lessor on the basis of
its gross or net income from this Lease or the value of the Leased Properties),
assessments (including Assessments), ground rents, water, sewer or other rents
and charges, excises, tax levies, fees (including, without limitation, license,
permit, inspection, authorization and similar fees), and all other governmental
charges, in each case whether general or special, ordinary or extraordinary, or
foreseen or unforeseen, of every character in respect of the Leased Properties
or the businesses conducted thereon by Lessee and/or the Rent (including all
interest and penalties thereon), which at any time prior to, during or in
respect of the Term may be assessed or imposed on or in respect of or be a lien
upon (i) Lessor or Lessor's interest in the Leased Properties, (ii) the Leased
Properties or any part thereof or any rent therefrom or any estate, right, title
or interest therein, or (iii) any occupancy, operation, use or possession of, or
sales from, or activity conducted on, or in connection with the Leased
Properties or the leasing or use of the Leased Properties or any part thereof or
(iv) the Rent; notwithstanding the foregoing, Imposition shall not include: (i)
except as provided above, any tax imposed on Lessor's gross or


                                       10
<PAGE>


net income generally and not specifically arising in connection with the Leased
Properties (unless such a tax is levied, assessed or imposed in lieu of a
portion or all of a tax which was included within the definition of
"Imposition,") or (ii) any transfer or other tax imposed with respect to any
subsequent sale, exchange or other disposition by Lessor of the Leased
Properties or any part thereof or the proceeds thereof.

                  Insurance Requirements: All terms of any insurance policy
required by this Lease and all requirements of the issuer of any such policy.

                  Interest Rate: The rate as set forth on EXHIBIT I.

                  Inventory: Collectively, all of the inventory as defined in
Article 9 of the UCC comprising part of the Leased Personal Property.

                  Investigation: Soil and chemical tests or any other
environmental investigations, examinations or analyses.

                  Judgment Date: The date on which a judgment is entered against
Lessee which establishes, without the possibility of appeal, the amount of
liquidated damages to which Lessor is entitled hereunder.

                  Land: The Center Parcel and the Parking Structure Parcel.

                  La Petite Lease. The term "La Petite Lease" shall mean that
certain Ground Lease with Construction by Lessee between Williams Realty Corp.
(now Williams Headquarters Building Company), as Landlord and La Petite Academy,
Inc., as Lessee, dated July 22, 1987, as amended by that certain First Amendment
to Lease Agreement dated February 28, 1989.

                  La Petite Parcel. The term "La Petite Parcel" shall mean the
real property covered by the La Petite Lease.

                  Lease: As defined in the Preamble.

                  Lease Year: Each period of twelve (12) calendar months
commencing with the Commencement Date, and any succeeding twelve (12) month
period during the Term.

                  Leased Improvements: Collectively, all buildings, structures,
Fixtures and other improvements of every kind on the Land including, but not
limited to the Center, the Parking Structure and the Skywalk, and all alleyways,
sidewalks, utility pipes, conduits and lines (on-site and off-site), parking
areas and roadways appurtenant to such buildings and structures.


                                       11
<PAGE>


                  Leased Personal Property: The Category 1 FF&E, the Category 2
FF&E, and all Personal Property leased to Lessee on the Commencement Date, and
all Personal Property that pursuant to the terms of the Lease becomes the
property of Lessor during the Term.

                  Leased Property: The Land on which a Facility is located, the
Leased Improvements on such portion of the Land, the Related Rights with respect
to such portion of the Land.

                  Leased Properties: All Leased Property and Leased Personal
Property, SPECIFICALLY EXCLUDING, however, the Central Plant.

                  Leased Properties Trade Name: The name under which the Leased
Properties do business during the Term. The current Leased Properties Trade Name
is both "One Technology Center" and "Williams Technology Center".

                  Legal Requirements: All federal, state, county, municipal and
other governmental statutes, laws, rules, orders, waivers, regulations,
ordinances, judgments, decrees and injunctions affecting the Leased Properties
or any portion thereof, Lessee's Personal Property or the construction, use or
alteration thereof, including but not limited to the Americans with Disabilities
Act, whether enacted and in force before, after or on the Commencement Date, and
including any which may (i) require repairs, modifications, alterations or
additions in or to any portion or all of the Facilities, or (ii) in any way
adversely affect the use and enjoyment thereof, and all permits, licenses and
authorizations and regulations relating thereto, and all covenants, agreements,
restrictions and Encumbrances contained in any instruments, either of record or
known to Lessee (other than Encumbrances created by Lessor without the consent
of Lessee), in force at any time during the Term.

                  Lessee's Certificate: A statement in writing in substantially
the form of EXHIBIT D (with such changes thereto as may reasonably be requested
by the person relying on such certificate).

                  Lessee's Personal Property: Personal Property owned or leased
by Lessee that is not included within the definition of Leased Personal Property
but is used by Lessee in the operation of the Facilities, including Personal
Property provided by Lessee in compliance with Section 6.3.

                  Manager: The Person to which management of the operation of a
Facility is delegated.

                  Material Adverse Change: Any event, development or
circumstance that has had or could reasonably expect to have a Material Adverse
Effect.

                  Material Adverse Effect: A material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
Lessee, Guarantor, or WCG, taken


                                       12
<PAGE>


as a whole, (b) the ability of Lessee, Guarantor, or WCG to perform any of its
duties or obligations under this Lease or the Credit Agreement, or (c) the
rights of or benefits available to the Lessor under this Lease.

                  Material Debt: Any Debt (other than the financial obligations
under this Lease), of the Lessee, Guarantor, or WCG, in an aggregate principal
amount exceeding $25,000,000.00.

                  Net Proceeds: All proceeds, net of any costs incurred by
Lessor in obtaining such proceeds, payable under any policy of insurance
required by Article XIII of this Lease (including any proceeds with respect to
Lessee's Personal Property that Lessee is required or elects to restore or
replace pursuant to Section 14.3) or paid by a Condemnor for the Taking of any
of all or any portion of a Leased Property.

                  Notice: A notice given in accordance with Article XXXI.

                  Notice of Termination: A Notice from Lessor that it is
terminating this Lease by reason of an Event of Default or otherwise as
specifically set forth in this Lease.

                  Officer: The chairman of the board of directors, the
president, any vice president and the secretary of any corporation, a general
partner of any partnership, and a manager or managing member of any limited
liability company.

                  Officer's Certificate: If for a corporation, a certificate
signed by one or more officers of the corporation authorized to do so by the
bylaws of such corporation or a resolution of the Board of Directors thereof; if
for a partnership, limited liability company or any other kind of entity, a
certificate signed by a Person having the authority to so act on behalf of such
entity.

                  Overdue Rate: On any date, the interest rate per annum, that
is equal to two percent (2%) (two hundred (200) basis points) above the Prime
Rate, but in no event greater than the maximum rate then permitted under
applicable law.

                  Parking Structure. The multi-story parking facility located on
the Parking Structure Parcel.

                  Parking Structure Parcel. The real property more particularly
described on EXHIBIT B on which the Parking Structure is located, which includes
without limitation, the La Petite Parcel.

                  Partial Taking: A taking of less than the entire fee of a
Leased Property that either (i) does not render the Leased Property Unsuitable
for its Primary Use, or (ii) renders a Leased Property Unsuitable for its
Primary Intended Use, but neither Lessor nor Lessee elects pursuant to Section
15.1 hereof to terminate this Lease.


                                       13
<PAGE>


                  Payment Date: Any due date for the payment of the installments
of Base Rent or for the payment of Additional Charges or any other amount
required to be paid by Lessee hereunder.

                  Permitted Encumbrances: Encumbrances listed on attached
EXHIBIT E.

                  Person: Any natural person, trust, partnership, corporation,
joint venture, limited liability company or other legal entity.

                  Personal Property: All tangible and intangible personal
property including but not limited to machinery, equipment, furniture,
furnishings, movable walls or partitions, computers (and all associated
software), trade fixtures and other personal property (but excluding consumable
inventory and supplies owned by Lessee) used in connection with the Leased
Properties, together with all replacements, substitutions, and alterations
thereof and additions thereto including all tangible personal property acquired
hereafter used in connection with the Leased Properties, except items, if any,
(i) included within the definition of Fixtures or Leased Improvements, and (ii)
any and all components of the Central Plant.

                  Plan: Any employee pension benefit plan (other than a
multiemployer plan as defined in Section 4001(a)(3) of ERISA) subject to the
provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of
ERISA, and in respect of which Lessee or Guarantor is (or, if such plan were
terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.

                  Primary Intended Use: Multi-use office and technology
facility.

                  Prime Rate: On any date, an interest rate equal to the prime
rate published by the Wall Street Journal, but in no event greater than the
maximum rate then permitted under applicable law. If the Wall Street Journal
ceases to be in existence, or for any reason no longer publishes such prime
rate, the Prime Rate shall be the rate announced as its prime rate by Citibank,
N.A., and if such bank no longer exists or does not announce a prime rate at
such time, the Prime Rate shall be the rate of interest announced as its prime
rate by Bank of America, N.A.

                  Proceeding: Any litigation, action, proposal or investigation
by or against any agency or entity, including without limitation Lessee and
Guarantor.

                  Purchase Agreement: The Purchase and Sale Agreement of even
date herewith, among Lessor, as Purchaser, Lessee, as Seller, and Guarantor,
covering the Leased Properties.

                  Rate: As defined on EXHIBIT I.

                  Realty: Collectively, the Land and Leased Improvements.

                  Realty Base Rent: During the Realty Term, the Realty Base Rent
shall be the sum computed as set forth on EXHIBIT J.


                                       14
<PAGE>


                  Realty Base Rent Interest: As defined on EXHIBIT J.

                  Realty Base Rent Principal: As defined on EXHIBIT J.

                  Realty Expiration Date: September 1, 2011.

                  Realty Term: Ten (10) Lease Years commencing on the
Commencement Date and ending on the Realty Expiration Date.

                  Regulatory Actions: Any claim, demand, notice, action or
Proceeding brought, threatened or initiated by any governmental authority in
connection with any Environmental Law, including, without limitation, any civil,
criminal and administrative Proceeding whether or not the remedy sought is
costs, damages, equitable remedies, penalties or expenses.

                  Related Rights: All easements, rights-of-way and appurtenances
relating to the Land and the Leased Improvements.

                  Release: The intentional or unintentional spilling, leaking,
dumping, pouring, emptying, seeping, disposing, discharging, emitting,
depositing, injecting, leaching, escaping, abandoning, or any other release or
threatened release, however defined, of any Hazardous Materials.

                  Rent: Collectively, Base Rent and Additional Charges.

                  Replacement Cost: The actual replacement cost of a Leased
Property. Replacement Cost shall be an amount sufficient that neither Lessor nor
Lessee is deemed to be a co-insurer of the Leased Property in question. Lessor
shall have the right from time to time, but no more frequently than once in any
period of three (3) consecutive Lease Years, to have Replacement Cost reasonably
redetermined by the all-risk property insurance company or another reputable
appraisal service, which determination shall be final and binding on the parties
hereto, and upon such determination Lessee shall forthwith increase, but not
decrease, the amount of the insurance carried pursuant to Section 13.2.1 to the
amount so determined, subject to the approval of any Facility Mortgagee. Lessee
shall pay the fee, if any, of the insurer making such determination.

                  Repurchase Price: The total Base Rent remaining unpaid at the
time of repurchase of the Realty (and the Leased Personal Property, if
applicable), by the Lessee together with all accrued, unpaid Additional Charges.

                  SEC: Securities and Exchange Commission.

                  Skywalk: The elevated pedestrian bridge and support structure,
connecting the Parking Structure to the Center over a portion of South
Cincinnati Avenue and a portion of East First Street, Tulsa, Oklahoma, that is
approximately twenty-seven (27) feet above the driving

                                       15
<PAGE>


lanes of such streets, together with the air rights for the three (3)
dimensional space within which it is suspended.

                  State: The State of Oklahoma.

                  Taken: Conveyed pursuant to a Taking.

                  Taking: A taking or voluntary conveyance during the Term of
all or part of a Leased Property, or any interest therein or right accruing
thereto or use thereof, as the result of, or in settlement of any condemnation
or other eminent domain Proceeding affecting the Leased Property whether or not
the same shall have actually been commenced.

                  Terms: As defined in Section 1.3.

                  Termination Date: The date on which this Lease terminates
pursuant to a Notice of Termination.

                  Third Party Claims: Any claim, action, demand or Proceeding
(other than Regulatory Actions) howsoever based (including without limitation
those based on negligence, trespass, strict liability, nuisance, toxic tort or
detriment to health welfare or property) due to Contamination, whether or not
the remedy sought is costs, damages, penalties or expenses, brought by any
person or entity other than a governmental agency.

                  Transfer: The (a) assignment, mortgaging or other encumbering
of all or any part of Lessee's interest in this Lease or in the Leased
Properties, (b) Change in Control of Lessee, Guarantor or WCG, or (c) sale,
issuance or transfer, cumulatively or in one transaction, of any interest, or
the termination of any interest, in Lessee, Guarantor or WCG, if Lessee,
Guarantor or WCG is a joint venture, partnership, limited liability company or
other association, which results in a Change of Control of such joint venture,
partnership, limited liability company or other association.

                  Transferee: An assignee, subtenant or other occupant of a
Leased Property pursuant to a Transfer.

                  TWC: The Williams Companies, Inc., a Delaware corporation.

                  UCC: The Uniform Commercial Code as in effect in the State.

                  Unsuitable for Its Primary Intended Use: A state or condition
of a Facility such that by reason of a Partial Taking, the Facility cannot be
operated on a commercially practicable basis for its Primary Intended Use,
taking into account, among other relevant factors, the number of usable square
footage permitted by applicable law and regulation in the Facility after the
Partial Taking, the square footage Taken and the estimated revenue impact of
such Partial Taking.


                                       16
<PAGE>


                  WCG: Williams Communications Group, Inc., a Delaware
corporation.

                  Withdrawal Liability: The liability to a multiemployer plan as
a result of a complete or partial withdrawal from such multiemployer plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.

                                   ARTICLE III

                                      RENT

         3.1 BASE RENT; MONTHLY INSTALLMENTS. In addition to all other payments
to be made by Lessee under this Lease, Lessee shall pay Lessor the Base Rent in
lawful money of the United States of America which is legal tender for the
payment of public and private debts, in arrears, in monthly installments. The
first installment of Base Rent shall be payable on October 1, 2001, provided
however, with respect to levels two (2) and three (3) of the Center, no Realty
Base Rent shall be payable (provided however, such Realty Base Rent shall
accrue) until both such levels are completed and ready for occupancy, which
prorated amount of Realty Base Rent (2/15ths of each monthly installment of
Realty Base Rent) shall be deducted from the total Base Rent otherwise payable
under this Lease. The Realty Base Rent Interest accruing up to and including the
date upon which such levels are completed and ready for occupancy, shall be
converted to Realty Base Rent Principal on a monthly basis. Thereafter,
installments of Base Rent shall be payable on the first (1st) day of each
calendar month. Base Rent shall be paid to Lessor, or to such other Person as
Lessor from time to time may designate by Notice to Lessee, by check or wire
transfer of immediately available federal funds to the bank account designated
in writing by Lessor. If Lessor directs Lessee to pay any Base Rent or
Additional Charges to any Person other than Lessor, Lessee shall send to Lessor
simultaneously with such payment a copy of the transmittal letter or invoice and
check whereby such payment is made, or such other evidence of such payment as
Lessor may require.

         3.2 ADDITIONAL CHARGES. In addition to the Base Rent, Lessee will also
pay as and when due, all Additional Charges.

         3.3 LATE CHARGE; INTEREST. If any Rent payable to Lessor is not paid
when due, Lessee shall pay Lessor on demand, as an Additional Charge, (a) a late
charge equal to the greater of (i) two percent (2%) of the amount not paid
within five (5) days of the date when due and (ii) any and all charges,
expenses, fees or penalties imposed on Lessor by a Facility Mortgagee for late
payment, plus (b) if such Rent (including the late charge) is not paid within
ten (10) days of the date due, interest thereon at the Overdue Rate from such
tenth (10th) day until such Rent (including the late charge and interest) is
paid in full.

         3.4 NET LEASE.


                                       17
<PAGE>


                  3.4.1 Absolute Obligation. The Rent shall be paid absolutely
         net to Lessor, so that this Lease shall yield to Lessor the full amount
         of the Rent payable to Lessor hereunder throughout the Term, subject
         only to any provisions of the Lease which expressly provide for
         adjustment or abatement of Rent or other charges.

                  3.4.2 No Counterclaim or Cross Complaint. If Lessor commences
         any Proceeding for non-payment of Rent, Lessee will not interpose any
         counterclaim or cross complaint or similar pleading of any nature or
         description in such Proceeding unless Lessee would lose or waive such
         claim by the failure to assert it, but Lessee does not waive any rights
         to assert such claim in a separate action brought by Lessee. The
         covenants to pay Rent are independent covenants, and Lessee shall have
         no right to hold back, offset or fail to pay any Rent because of any
         alleged default by Lessor or for any other reason whatsoever.

                                   ARTICLE IV

                                   IMPOSITIONS

         4.1 PAYMENT OF IMPOSITIONS. Subject to Article XII relating to
permitted contests, Lessee will pay all Impositions at least twenty (20) days
before any fine, penalty, interest or cost is added for non-payment, and will
promptly, upon request, furnish to Lessor copies of official receipts or other
satisfactory proof evidencing such payments. If at the option of the taxpayer
any Imposition may lawfully be paid in installments, Lessee may pay the same in
the required installments provided it also pays any and all interest due thereon
as and when due.

         4.2 ADJUSTMENT OF IMPOSITIONS. Impositions imposed in respect of the
tax-fiscal period during which the Term ends shall be adjusted and prorated
between Lessor and Lessee, whether or not imposed before or after the expiration
of the Term or the earlier termination thereof, and Lessee's obligation to pay
its prorated share thereof shall survive such expiration or earlier termination.

         4.3 UTILITY CHARGES. Lessee will pay or cause to be paid when due all
charges for electricity, power, gas, oil, water and other utilities imposed upon
the Leased Properties or upon Lessor or Lessee with respect to the Leased
Properties.

         4.4 INSURANCE PREMIUMS. Lessee shall pay or cause to be paid when due
all premiums for the insurance coverage required to be maintained pursuant to
Article XIII during the Term.

         4.5 TAX RETURNS AND REFUNDS Lessee shall prepare and file as and when
required all tax returns and reports required by governmental authorities with
respect to all Impositions. Lessor and Lessee shall each, upon request, provide
the other with such data, including without limitation cost and depreciation
records, as is maintained by the party to whom


                                       18
<PAGE>


the request is made as is necessary to prepare any required returns and reports.
If any provision of any Facility Mortgage requires deposits for payment of
Impositions, Lessee shall either pay the required deposits to Lessor monthly and
Lessor shall make the required deposits, or, if directed in writing to do so by
Lessor, Lessee shall make such deposits directly. Lessee shall be entitled to
receive and retain any refund from a taxing authority in respect of an
Imposition paid by Lessee if at the time of the refund no Event of Default has
occurred and is continuing, but if an Event of Default has occurred and is
continuing at the time of the refund, Lessee shall not be entitled to receive or
retain such refund and if and when received by Lessor such refund shall be
applied as provided in Article XVI.

                                    ARTICLE V

                            NO TERMINATION AND WAIVER

         5.1 NO TERMINATION, ABATEMENT, ETC. Lessee shall not take any action
without the consent of Lessor to modify, surrender or terminate this Lease, and
shall not seek or be entitled to any abatement, deduction, deferment or
reduction of Rent, or setoff against Rent. The respective obligations of Lessor
and Lessee shall not be affected by reason of (i) any damage to, or destruction
of, the Leased Properties or any portion thereof from whatever cause or any
Taking of the Leased Properties or any portion thereof, except as expressly set
forth herein; (ii) the lawful or unlawful prohibition of, or restriction upon,
Lessee's use of the Leased Properties, or any portion thereof, or the
interference with such use by any Person or by reason of eviction by paramount
title; (iii) any claim which Lessee has or might have against Lessor or by
reason of any default or breach of any warranty by Lessor under this Lease or
any other agreement between Lessor and Lessee, or to which Lessor and Lessee are
parties, (iv) any bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution, winding up or other Proceeding affecting
Lessor or any assignee or transferee of Lessor, or (v) any other cause whether
similar or dissimilar to any of the foregoing other than a discharge of Lessee
from any such obligations as a matter of law. Lessee hereby specifically waives
all rights, arising from any occurrence whatsoever, which may now or hereafter
be conferred upon it by law to (a) modify, surrender or terminate this Lease or
quit or surrender the Leased Properties or any portion thereof, or (b) entitle
Lessee to any abatement, reduction, suspension or deferment of the Rent or other
sums payable by Lessee hereunder except as otherwise specifically provided in
this Lease.

                                   ARTICLE VI

                             LEASE CHARACTERIZATION

         6.1 STATUS OF OWNERSHIP OF THE LEASED PROPERTIES. Lessor and Lessee
agree that to the full extent permitted by applicable tax law and GAAP, for
Lessee, this Lease shall be treated (i) as an operating lease for tax purposes,
and (ii) as a capital lease for financial purposes. Notwithstanding anything
contained in this Section 6.1 or anywhere else in this Lease to the contrary,
Lessor, Lessee and Guarantor agree that it is their intention that this Lease be
treated as a true lease for purposes of the UCC and other applicable laws of the
State.


                                       19
<PAGE>


         6.2 LEASED PERSONAL PROPERTY. Lessee shall, during the Term, maintain
all of the Leased Personal Property in good order, condition and repair as shall
be necessary in order to operate the Facilities for the Primary Intended Use in
compliance with all applicable licensure and certification requirements, all
applicable Legal Requirements and Insurance Requirements, and customary industry
practice for the Primary Intended Use. If any of the Leased Personal Property
requires replacement in order to comply with the foregoing, Lessee shall replace
it with similar property of the same or better quality at Lessee's sole cost and
expense, and when such replacement property is placed in service with respect to
the Leased Properties it shall become Leased Personal Property. Lessee shall not
permit or suffer Leased Personal Property to be subject to any lien, charge,
Encumbrance, financing statement, contract of sale, equipment Lessor's interest
or the like, except for any purchase money security interest or equipment
Lessor's interest expressly approved in advance, in writing, by Lessor. Unless
Lessee purchases the Leased Properties as provided in this Lease, upon the
expiration or earlier termination of this Lease, all of Leased Personal Property
shall be surrendered to Lessor with the Leased Properties at or before the time
of the surrender of the Leased Properties in at least as good a condition as at
the Commencement Date (or, as to replacements, in at least as good a condition
as when placed in service at the Facilities) except for ordinary wear and tear.

         6.3 LESSEE'S PERSONAL PROPERTY. Lessee shall provide and maintain
during the Term such Personal Property, in addition to the Leased Personal
Property, as shall be necessary and appropriate in order to operate the
Facilities for the Primary Intended Use in compliance with all licensure and
certification requirements, in compliance with all applicable Legal Requirements
and Insurance Requirements and otherwise in accordance with customary practice
in the industry for the Primary Intended Use. Without the prior written consent
of Lessor, Lessee shall not permit or suffer Lessee's Personal Property to be
subject to any lien, charge, Encumbrance, financing statement or contract of
sale or the like. Unless Lessee purchases the Leased Properties as provided in
this Lease, upon the expiration of the Term or the earlier termination of this
Lease, without the payment of any additional consideration by Lessor, Lessee
shall be deemed to have sold, assigned, transferred and conveyed to Lessor all
of Lessee's right, title and interest in and to any of Lessee's Personal
Property that, in Lessor's reasonable judgment, is integral to the Primary
Intended Use of the Facilities (or if some other use thereof has been approved
by Lessor as required herein, such other use as is then being made by Lessee)
and, as provided in Section 34.1, Lessor shall have the option to purchase any
of Lessee's Personal Property that is not then integral to such use. Without
Lessor's prior written consent, Lessee shall not remove Lessee's Personal
Property that is in use at the expiration or earlier termination of the Term
from the Leased Properties until such option to purchase has expired or been
waived in writing by Lessor. Any of Lessee's Personal Property that is not
integral to the use of the Facilities being made by Lessee and is not purchased
by Lessor pursuant to Section 34.1 may be removed by Lessee upon the expiration
or earlier termination of this Lease, and, if not removed within twenty (20)
days following the expiration or earlier termination of this Lease, shall be
considered abandoned by Lessee and may be appropriated, sold, destroyed or
otherwise disposed of by Lessor without giving notice thereof to Lessee and
without any payment to Lessee or any obligation to account therefor. Lessee
shall reimburse Lessor for any and all expense incurred by Lessor in disposing
of any of Lessee's Personal Property that Lessee may remove but within such
twenty (20) day period fails to remove, and shall either at its own expense
restore the


                                       20
<PAGE>


Leased Properties to the condition required by Section 9.1.5, including repair
of all damage to the Leased Properties caused by the removal of any of Lessee's
Personal Property, or reimburse Lessor for any and all expense incurred by
Lessor for such restoration and repair.

                                   ARTICLE VII

                    CONDITION, USE AND ENVIRONMENTAL MATTERS

         7.1 CONDITION OF THE LEASED PROPERTIES. Lessee acknowledges that it has
inspected and otherwise has knowledge of the condition of the Leased Properties
prior to the execution and delivery of this Lease and has found the same to be
in good order and repair and satisfactory for its purposes hereunder. Lessee is
leasing the Leased Properties "as is" in their condition on the Commencement
Date. Lessee waives any claim or action against Lessor in respect of the
condition of the Leased Properties. LESSOR MAKES NO WARRANTY OR REPRESENTATION
EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED PROPERTIES OR ANY PART THEREOF,
EITHER AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR
PURPOSE OR OTHERWISE AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN,
LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY LESSEE.
Lessee further acknowledges that throughout the Term Lessee is solely
responsible for the condition of the Leased Properties. Subject in all cases to
the provisions of Section 3.4.2, nothing contained in this Agreement including
without limitation, this Section 7, shall be deemed to inhibit, restrict or
waive any independent rights Lessee may have under the Construction Completion
Agreement.

         7.2 USE OF THE LEASED PROPERTIES. Throughout the Term, Lessee shall
continuously use the Leased Properties for the Primary Intended Use and uses
incidental thereto. Lessee shall not use the Leased Properties or any portion
thereof for any other use without the prior written consent of Lessor. No use
shall be made or permitted to be made of, or allowed in, the Leased Properties,
and no acts shall be done, which will cause the cancellation of, or be
prohibited by, any insurance policy covering the Leased Properties or any part
thereof, nor shall the Leased Properties or Lessee's Personal Property be used
for any unlawful purpose. Lessee shall not commit or suffer to be committed any
waste on the Leased Properties, or cause or permit any nuisance thereon, or
suffer or permit the Leased Properties or any portion thereof, or Lessee's
Personal Property, to be used in such a manner as (i) might reasonably tend to
impair Lessor's (or Lessee's, as the case may be) title thereto or to any
portion thereof, or (ii) may reasonably make possible a claim or claims of
adverse usage or adverse possession by the public, as such, or of implied
dedication of the Leased Properties or any portion thereof.

         7.3 CERTAIN ENVIRONMENTAL MATTERS.

                  7.3.1 Prohibition Against Use of Hazardous Materials. Lessee
         shall not permit, conduct or allow on the Leased Properties, the
         generation, introduction, presence, maintenance, use, receipt,
         acceptance, treatment, manufacture, production, installation,
         management, storage, disposal or release of any Hazardous Materials
         except for those

                                       21
<PAGE>


         types and quantities of Hazardous Materials necessary for and
         ordinarily associated with the conduct of Lessee's business which are
         used in full compliance with all Environmental Laws.

                  7.3.2 Notice of Environmental Claims, Actions or
         Contaminations. Lessee shall notify Lessor, in writing, immediately
         upon learning of any existing, pending or threatened: (a)
         investigation, inquiry, claim or action by any governmental authority
         in connection with any Environmental Laws, (b) Third Party Claims, (c)
         Regulatory Actions, and/or (d) Contamination of any portion of the
         Leased Properties.

                  7.3.3 Costs of Remedial Actions with Respect to Environmental
         Matters. If any investigation and/or Clean-Up of any Hazardous
         Materials or other environmental condition on, under, about or with
         respect to a Leased Property is required by any Environmental Law,
         Lessee shall complete, at its own expense, such investigation and/or
         Clean-Up or cause any other Person that may be legally responsible
         therefore to complete such investigation and/or Clean-Up.

                  7.3.4 Delivery of Environmental Documents. Lessee shall
         deliver to Lessor complete copies of any and all Environmental
         Documents that may now be in or at any time hereafter come into the
         possession of Lessee.

                  7.3.5 Environmental Audit. At Lessee's expense, Lessee shall
         deliver to Lessor, an Environmental Audit from time to time, upon and
         within thirty (30) days of Lessor's request therefor, but no more than
         once every two (2) calendar years, except in the event of (i) any
         construction or excavation of, or material alteration to any portion of
         the Leased Properties, or (ii) Lessor reasonably suspects that
         Contamination of any portion of the Leased Properties has occurred or
         been discovered, in either case Lessor may thereafter request an
         Environmental Audit. All tests and samplings shall be conducted using
         generally accepted and scientifically valid technology and
         methodologies. Lessee shall give the engineer or environmental
         consultant conducting the Environmental Audit reasonable and complete
         access to the Leased Properties and to all records in the possession of
         Lessee that may indicate the presence (whether current or past) of a
         Release or threatened Release of any Hazardous Materials on, in, under,
         about and adjacent to any Leased Property. Lessee shall also provide
         the engineer or environmental consultant full access to and the
         opportunity to interview such persons as may be employed in connection
         with the Leased Properties as the engineer or consultant deems
         appropriate. However, Lessor shall not be entitled to request an
         Environmental Audit from Lessee unless (a) after the Commencement Date
         there have been changes, modifications or additions to Environmental
         Laws as applied to or affecting any of the Leased Properties; (b) a
         significant change in the condition of any of the Leased Properties has
         occurred; (c) there are fewer than six (6) months remaining in the
         Term; or (d) Lessor has another good reason for requesting such
         certificate or certificates. If the Environmental Audit discloses the
         presence of Contamination or any noncompliance with Environmental Laws,
         Lessee shall immediately perform all of Lessee's obligations hereunder
         with respect to such Hazardous Materials or noncompliance.


                                       22
<PAGE>


                  7.3.6 Entry onto Leased Properties for Environmental Matters.
         If Lessee fails to provide an Environmental Audit as and when required
         by Section 7.3.5, in addition to Lessor's other remedies Lessee shall
         permit Lessor from time to time, by its employees, agents, contractors
         or representatives, to enter upon the Leased Properties for the purpose
         of conducting such Investigations as Lessor may desire, the expense of
         which shall promptly be paid or reimbursed by Lessee as an Additional
         Charge. Lessor, and its employees, agents, contractors, consultants
         and/or representatives, shall conduct any such Investigation in a
         manner which does not unreasonably interfere with Lessee's use of and
         operations on the Leased Properties (however, reasonable temporary
         interference with such use and operations is permissible if the
         investigation cannot otherwise be reasonably and inexpensively
         conducted). Other than in an emergency, Lessor shall provide Lessee
         with prior notice before entering any of the Leased Properties to
         conduct such Investigation, and shall provide copies of any reports or
         results to Lessee, and Lessee shall cooperate fully in such
         Investigation.

                  7.3.7 Environmental Matters Upon Termination of the Lease or
         Expiration of Term. Upon the expiration or earlier termination of the
         Term of this Lease, Lessee shall cause the Leased Properties to be
         delivered free of any and all Regulatory Actions and Third Party Claims
         and otherwise in compliance with all Environmental Laws with respect
         thereto, and in a manner and condition that is reasonably required to
         ensure that the then present use, operation, leasing, development,
         construction, alteration, refinancing or sale of the Leased Property
         shall not be restricted by any environmental condition existing as of
         the date of such expiration or earlier termination of the Term.

                  7.3.8 Compliance with Environmental Laws. Lessee shall comply
         with, and cause its agents, servants and employees, to comply with, and
         shall use reasonable efforts to cause each occupant and user of any of
         the Leased Properties, and the agents, servants and employees of such
         occupants and users, to comply with each and every Environmental Law
         applicable to Lessee, the Leased Properties and each such occupant or
         user with respect to the Leased Properties. Specifically, but without
         limitation:

                           7.3.8.1 Maintenance of Licenses and Permits. Lessee
                  shall obtain and maintain (and Lessee shall use reasonable
                  efforts to cause each tenant, occupant and user to obtain and
                  maintain) all permits, certificates, licenses and other
                  consents and approvals required by any applicable
                  Environmental Law from time to time with respect to Lessee,
                  each and every part of the Leased Properties and/or the
                  conduct of any business at a Facility or related thereto;

                           7.3.8.2 Contamination. Lessee shall not cause, suffer
                  or permit any Contamination;

                           7.3.8.3 Clean-Up. If a Contamination occurs, the
                  Lessee promptly shall Clean-Up and remove any Hazardous
                  Materials or cause the Clean-Up and the removal of any
                  Hazardous Materials and in any such case such Clean-Up and


                                       23
<PAGE>


                  removal of the Hazardous Materials shall be effected to
                  Lessor's reasonable satisfaction and in any event in strict
                  compliance with and in accordance with the provisions of the
                  applicable Environmental Laws;

                           7.3.8.4 Discharge of Lien. Within twenty (20) days of
                  the date any lien is imposed against the Leased Properties or
                  any part thereof under any Environmental Law, Lessee shall
                  cause such lien to be discharged (by payment, by bond or
                  otherwise to Lessor's absolute satisfaction);

                           7.3.8.5 Notification of Lessor. Within five (5)
                  Business Days after receipt by Lessee of notice or discovery
                  by Lessee of any fact or circumstance which might result in a
                  breach or violation of any covenant or agreement, Lessee shall
                  notify Lessor in writing of such fact or circumstance; and

                           7.3.8.6 Requests, Orders and Notices. Within five (5)
                  Business Days after receipt of any request, order or other
                  notice relating to the Leased Properties under any
                  Environmental Law, Lessee shall forward a copy thereof to
                  Lessor.

                  7.3.9 Environmental Related Remedies. In the event of a breach
         by Lessee beyond any applicable notice and/or grace period of its
         covenants with respect to environmental matters, Lessor may, in its
         sole discretion, do any one or more of the following (the exercise of
         one right or remedy hereunder not precluding the simultaneous or
         subsequent exercise of any other right or remedy hereunder):

                           7.3.9.1 Cause a Clean-Up. Cause the Clean-Up of any
                  Hazardous Materials or other environmental condition on or
                  under the Leased Properties, or both, at Lessee's cost and
                  expense; or

                           7.3.9.2 Payment of Regulatory Damages. Pay on behalf
                  of Lessee any damages, costs, fines or penalties imposed on
                  Lessee or Lessor as a result of any Regulatory Actions; or

                           7.3.9.3 Payments to Discharge Liens. On behalf of
                  Lessee, make any payment or perform any other act or cause any
                  act to be performed which will prevent a lien in favor of any
                  federal, state or local governmental authority from attaching
                  to the Leased Properties or which will cause the discharge of
                  any lien then attached to the Leased Properties; or

                           7.3.9.4 Payment of Third Party Damages. Pay, on
                  behalf of Lessee, any damages, cost, fines or penalties
                  imposed on Lessee as a result of any Third Party Claims; or

                           7.3.9.5 Demand of Payment. Demand that Lessee make
                  immediate payment of all of the costs of such Clean-Up and/or
                  exercise of the remedies set


                                       24
<PAGE>


                  forth in this Section 7.3 incurred by Lessor and not
                  theretofore paid by Lessee as of the date of such demand.

                  7.3.10 Environmental Indemnification. Lessee and Guarantor
         shall and do hereby indemnify, and shall defend and hold harmless
         Lessor, its principals, Officers, directors, agents, employees,
         parents, and Affiliates from each and every incurred and potential
         claim, cause of action, damage, demand, obligation, fine, laboratory
         fee, liability, loss, penalty, imposition settlement, levy, lien
         removal, litigation, judgment, Proceeding, disbursement, expense and/or
         cost (including without limitation the cost of each and every
         Clean-Up), however defined and of whatever kind or nature, known or
         unknown, foreseeable or unforeseeable, contingent, incidental,
         consequential or otherwise (including, but not limited to, attorneys'
         fees, consultants' fees, experts' fees and related expenses, capital,
         operating and maintenance costs, incurred in connection with (i) any
         Investigation or monitoring of site conditions, (ii) any amounts paid
         or advanced by Lessor on behalf of Lessee as set forth in this Article
         7, and (iii) any Clean-Up required or performed by any federal, state
         or local governmental entity or performed by any other entity or person
         because of the presence of any Hazardous Materials, Release, threatened
         Release or any Contamination on, in, under or about any of the Leased
         Properties) which may be asserted against, imposed on, suffered or
         incurred by, each and every indemnitee arising out of or in any way
         related to, or allegedly arising out of or due to any environmental
         matter including, but not limited to, any one or more of the following:

                           7.3.10.1 Release Damage or Liability. The presence of
                  Contamination in, on, at, under, or near a Leased Property or
                  migrating to a Leased Property from another location;

                           7.3.10.2 Injuries. All injuries to health or safety
                  (including wrongful death), or to the environment, by reason
                  of environmental matters relating to the condition of or
                  activities past or present on, at, in, under a Leased
                  Property;

                           7.3.10.3 Violations of Law. All violations, and
                  alleged violations, of any Environmental Law relating to a
                  Leased Property or any activity on, in, at, under or near a
                  Leased Property;

                           7.3.10.4 Misrepresentation. All material
                  misrepresentations relating to environmental matters in any
                  documents or materials furnished by Lessee to Lessor and/or
                  its representatives in connection with the Lease;

                           7.3.10.5 Event of Default. Each and every Event of
                  Default relating to environmental matters;

                           7.3.10.6 Lawsuits. Any and all lawsuits brought or
                  threatened, settlements reached and governmental orders
                  relating to any Hazardous Materials at, on, in, under or near
                  a Leased Property, and all demands of governmental
                  authorities, and


                                       25
<PAGE>


                  all policies and requirements of Lessor's, based upon or in
                  any way related to any Hazardous Materials at, on, in, under a
                  Leased Property; and

                           7.3.10.7 Presence of Liens. All liens imposed upon
                  any of the Leased Properties in favor of any governmental
                  entity or any person as a result of the presence, disposal,
                  release or threat of release of Hazardous Materials at, on,
                  in, from, or under a Leased Property.

                  7.3.11 Rights Cumulative and Survival. The rights granted
         Lessor under this Section 7.3 are in addition to and not in limitation
         of any other rights or remedies available to Lessor hereunder or
         allowed at law or in equity or rights of indemnification provided to
         Lessor in any agreement pursuant to which Lessor purchased any of the
         Leased Properties. The payment and indemnification obligations set
         forth in this Section 7.3 shall survive the expiration or earlier
         termination of the Term of this Lease.


                                  ARTICLE VIII

             LEGAL AND INSURANCE REQUIREMENTS; ADDITIONAL COVENANTS

         8.1 COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS. In its use,
maintenance, operation and any alteration of the Leased Properties, Lessee, at
its expense, will promptly (i) comply with all Legal Requirements and Insurance
Requirements, whether or not compliance therewith requires structural changes in
any of the Leased Improvements (which structural changes shall be subject to
Lessor's prior written approval, which approval shall not be unreasonably
withheld or delayed) or interferes with or prevents the use and enjoyment of the
Leased Properties, and (ii) procure, maintain and comply with all licenses, and
other authorizations required for the use of the Leased Properties and Lessee's
Personal Property then being made, and for the proper erection, installation,
operation and maintenance of the Leased Properties or any part thereof. The
judgment of any court of competent jurisdiction, or the admission of Lessee in
any action or Proceeding against Lessee, whether or not Lessor is a party
thereto, that Lessee has violated any such Legal Requirements or Insurance
Requirements shall be conclusive of that fact as between Lessor and Lessee.

         8.2 CERTAIN COVENANTS.

                  8.2.1 Existence; Conduct of Business. Lessee, Guarantor, and
         WCG each will (i) continue to engage in business of the same general
         type as now conducted and (ii) do or cause to be done all things
         necessary to preserve, renew and keep in full force and effect its
         legal existence and the rights, licenses, permits, privileges,
         franchises, patents, copyrights, trademarks and trade names material to
         the conduct of its business.


                                       26
<PAGE>


                  8.2.2 Payment of Obligations. Lessee, Guarantor and WCG each
         (i) will pay its Debt and other material obligations, including tax
         liabilities, before the same shall become delinquent or in default,
         except where (a) the validity or amount thereof is being contested in
         good faith by appropriate legal process, (b) has set aside on its books
         adequate reserves with respect thereto in accordance with GAAP, (c)
         such contest effectively suspends collection of the contested
         obligation and the enforcement of any Encumbrance securing such
         obligation and (d) the failure to make payment pending such contest
         could not reasonably be expected to result in a Material Adverse Effect
         and (ii) shall not breach, in any material respect, or permit to exist
         any material default under, the terms of any material lease,
         commitment, contract, instrument or obligation to which it is a party,
         or by which its properties or assets are bound, except where the
         failure to do the foregoing would not in the aggregate have a Material
         Adverse Effect.

                  8.2.3 Maintenance of Properties. Lessee, Guarantor, and WCG
         each will keep and maintain all property material to the conduct of its
         business in good working order and condition, ordinary wear and tear
         excepted.

                  8.2.4 Insurance. Lessee, Guarantor, and WCG each will
         maintain, with financially sound and reputable insurance companies,
         insurance in such amounts and against such risks as are customarily
         maintained by companies engaged in the same or similar businesses
         operating in the same or similar locations.

                  8.2.5 Casualty and Condemnation. The Lessee will furnish to
         Lessor prompt written notice of any casualty or other insured damage to
         any portion of any of Guarantor's property or assets or the
         commencement of any action or Proceeding for the taking of any of
         Guarantor's property or assets or any part thereof or interest therein
         under power of eminent domain or by condemnation or similar Proceeding
         (in each case with a value in excess of $10,000,000).

                  8.2.6 Books and Records; Inspection and Audit Rights. Lessee,
         Guarantor, and WCG each will keep proper books of record and account in
         which materially full, true and correct entries are made of all
         dealings and transactions in relation to its business and activities.
         Lessee, Guarantor, and WCG each will permit any representatives
         designated by the Lessor at the expense of Lessor, or, if an Event of
         Default shall have occurred and be continuing, at the expense of the
         Lessee, upon reasonable prior notice, to visit and inspect its
         properties, to examine and make extracts from its books and records,
         and to discuss its affairs, finances and condition with its officers
         and independent accountants, all at such reasonable times and as often
         as reasonably requested.

                  8.2.7 Compliance with Laws. Lessee, Guarantor, and WCG each
         will comply with all laws, rules, regulations and orders of any
         Governmental Authority applicable to it or its property (including,
         without limitation, Environmental Laws and ERISA and the rules and
         regulations thereunder), except where the necessity of compliance
         therewith is contested in good faith by appropriate action and such
         failure to comply, individually or in the aggregate, could not
         reasonably be expected to result in a Material Adverse Effect.


                                       27
<PAGE>


                  8.2.8 Further Assurances. At any time and from time to time,
         Lessee and Guarantor each will execute any and all further documents,
         financing statements, agreements and instruments, and take all such
         further actions (including the filing and recording of financing
         statements, fixture filings, mortgages, deeds of trust and other
         documents), which may be required under any applicable law, or which
         the Lessor may reasonably request, to effectuate the transactions
         contemplated by this Lease or to grant, preserve, protect or perfect
         the Encumbrances created or intended to be created in connection with
         this Lease or any of the other documents contemplated herein, required
         to be in effect or the validity or priority of any such Encumbrance,
         all at the expense of Lessee and Guarantor. Lessee and Guarantor also
         agree to provide to Lessor, from time to time upon request, evidence
         reasonably satisfactory to Lessor as to the perfection and priority of
         the Encumbrance created or intended to be created in connection with
         this Lease or any of the other documents contemplated herein.

         8.3 CERTAIN NEGATIVE COVENANTS.

                  8.3.1 No Other Debt. Lessee shall not, directly or indirectly,
         incur or otherwise become liable for any Debt or obligation to pay
         money to any Person other than to (i) Lessor pursuant to this Lease and
         (ii) lessors of leased equipment used in the operation of the
         Facilities.

                  8.3.2 Limitation of Distributions. In or with respect to any
         Lease Year, Lessee shall not pay or distribute to its shareholders or
         any Affiliate in the form of dividends, fees for any services or
         reimbursements for shareholder expenditures or overhead on behalf of
         Lessee or to its Affiliates.

                  8.3.3 Pledge or Encumber Assets. Lessee shall not pledge or
         otherwise encumber any of its assets, other than leased equipment used
         in the operation of the Facilities and liens on assets permitted under
         Section 11.1.

                  8.3.4 Guarantees Prohibited. Lessee shall not guarantee any
         indebtedness of any Person (other than the guarantee of the
         indebtedness under the Credit Agreement).

                  8.3.5 Encumbrances. Neither Lessee nor Guarantor will create,
         incur, assume or permit to exist any Encumbrance on any property or
         asset now owned or hereafter acquired by it, or assign or sell any
         income or revenues or rights in respect of any thereof, except for any
         Permitted Encumbrances or Encumbrances created in connection with or
         specifically contemplated by this Lease or permitted by the Credit
         Agreement.

                  8.3.6 Fundamental Changes. Neither Lessee, Guarantor nor WCG
         will merge into or consolidate with any other Person, or permit any
         other Person to merge into or consolidate with it, or liquidate or
         dissolve, except that, if at the time thereof and immediately after
         giving effect thereto no Event of Default shall have occurred and be
         continuing (i) any Person may merge into the Lessee in a transaction in
         which the Lessee is the surviving entity, provided that any such merger
         involving a Person that is not


                                       28
<PAGE>


         wholly owned by either Guarantor or WCG immediately prior to such
         merger shall not be permitted, and (ii) any person may merge into the
         Guarantor or WCG in a transaction in which the Guarantor or WCG,
         respectively, is the surviving corporation.

                  8.3.7 Other Material Agreements. Lessee shall not (i) enter
         into any other material agreement relating to any portion of the Leased
         Properties, or (ii) if entered into with Lessor's consent, thereafter,
         amend, modify, renew, replace or otherwise change the terms of any such
         material agreement without the prior written consent of Lessor. For
         purposes of this Section 8.3.7, a "material agreement" shall mean any
         agreement or commitment which requires total payments by Lessee in
         excess of $1,500,000.00, or accumulated annual payments in excess of
         $500,000.00.

         8.4 ADDITIONAL FINANCIAL COVENANTS.

                  8.4.1 Certain Definitions. For purposes of this Section 8.4.1,
         capitalized terms not otherwise specifically defined in this Lease,
         shall have the meanings described for such capitalized terms as
         contained in the Credit Agreement (and capitalized terms contained
         within such definitions as set forth in the Credit Agreement shall
         similarly have the meanings described for such capitalized terms
         therein). Lessee shall provide copies of any amendments or restatements
         or waivers to the Credit Agreement to Lessor within five (5) days of
         execution thereof. Such amendments or restatements or waivers shall
         automatically become a part hereof.

                  8.4.2 Total Net Debt to Contributed Capital Ratio. The Total
         Net Debt to Contributed Capital ratio shall at no time prior to January
         1, 2002 exceed .65 to 1.00.

                  8.4.3 Minimum EBITDA. The amount equal to (i) EBITDA for the
         period of four (4) fiscal quarters ending during any period set forth
         below plus (ii) ADP Interest Expense for such period minus (iii) gains
         for such period attributable to Dark Fiber and Capacity Dispositions
         plus (iv) Dark Fiber and Capacity Proceeds for such period shall not be
         less than the amount set forth below opposite such period:

<Table>
<Caption>
PERIOD                                        AMOUNT
- ------                                        ------
<S>                                       <C>
January 1, 2001 - March 31, 2001          $200,000,000
April 1, 2001 - June 30, 2001             $300,000,000
July 1, 2001 - September 30, 2001         $350,000,000
October 1, 2001 - December 31, 2001       $350,000,000
</Table>

                  8.4.4 Total Leverage Ratio. (a) The Total Leverage Ratio
         during any period set forth below shall not exceed the ratio set forth
         below opposite such period:


<Table>
<Caption>
                                               TOTAL
PERIOD                                    LEVERAGE RATIO
- ------                                    --------------
<S>                                       <C>
March 31, 2002 - December 30, 2002          12.50:1.00
December 31, 2002 - December 30, 2003        9.50:1.00
December 31, 2003 and thereafter             4.00:1.00
</Table>


                                       29
<PAGE>

                  8.4.5 Senior Leverage Ratio. The Senior Leverage Ratio during
         any period set forth below shall not exceed the ratio set forth below
         opposite such period:

<Table>
<Caption>
                                              SENIOR
PERIOD                                    LEVERAGE RATIO
- ------                                    --------------
<S>                                       <C>
March 31, 2002 - December 30, 2002          5.25:1.00
December 31, 2002 - December 30, 2003       3.25:1.00
December 31, 2003 and thereafter            2.50:1.00
</Table>

                  8.4.6 Interest Coverage Ratio. The Interest Coverage Ratio
         for any period of four (4) consecutive fiscal quarters ending during
         any period set forth below shall not be less than the ratio set forth
         below opposite such period:

<Table>
<Caption>
                                             INTEREST
PERIOD                                    COVERAGE RATIO
- ------                                    --------------
<S>                                       <C>
June 30, 2002 - June 29, 2003                1.00:1.00
June 30, 2003 - December 30, 2003            1.50:1.00
December 31, 2003 and thereafter             2.00:1.00
</Table>

                                   ARTICLE IX

                                   MAINTENANCE

         9.1 MAINTENANCE AND REPAIR.

                  9.1.1 Status and Quality. Lessee, at its expense, will keep or
         cause to be kept, the Leased Properties, and all landscaping, private
         roadways, sidewalks and curbs appurtenant thereto which are under
         Lessee's control and Lessee's Personal Property in good order and
         repair, whether or not the need for such repairs arises out of Lessee's
         use, any prior use, the elements or the age of the Leased Properties or
         any portion thereof, or any cause whatsoever except the act or
         negligence of Lessor, and with reasonable promptness shall make all
         necessary and appropriate repairs thereto of every kind and nature,
         whether interior or exterior, structural or non-structural, ordinary or
         extraordinary, foreseen or unforeseen or arising by reason of a
         condition existing prior to the Commencement Date (concealed or
         otherwise). Lessee shall at all times maintain, operate and otherwise
         manage the Leased Properties on a basis and in a manner consistent with
         the higher of that (i) customarily applied to Class A commercial office
         buildings in the vicinity of the City of Tulsa, Oklahoma, or (ii)
         utilized by Lessor in the management of Lessor's facilities adjacent to
         the Center. All repairs shall, to the extent reasonably


                                       30
<PAGE>


         achievable, be at least equivalent in quality to the original work or
         the property to be repaired shall be replaced. Lessee will not take or
         omit to take any action the taking or omission of which might
         materially impair the value or the usefulness of the Leased Properties
         or any parts thereof for the Primary Intended Use.

                  9.1.2 No Liability of Lessor. Lessor shall not under any
         circumstances be required to maintain, build or rebuild any
         improvements on the Leased Properties (or any private roadways,
         sidewalks or curbs appurtenant thereto), or to make any repairs,
         replacements, alterations, restorations or renewals of any nature or
         description to the Leased Properties, whether ordinary or
         extraordinary, structural or non-structural, foreseen or unforeseen, or
         upon any adjoining property, whether to provide lateral or other
         support or abate a nuisance, or otherwise, or to make any expenditure
         whatsoever with respect thereto, in connection with this Lease. Lessee
         hereby waives, to the extent permitted by law, the right to make
         repairs at the expense of Lessor pursuant to any law in effect at the
         time of the execution of this Lease or hereafter enacted.

                  9.1.3 Contracting with Third Parties. Nothing contained in
         this Lease shall be construed as (i) constituting the consent or
         request of Lessor, expressed or implied, to any contractor,
         subcontractor, laborer, materialmen or vendor to or for the performance
         of any labor or services or the furnishing of any materials or other
         property for the construction, alteration, addition, repair or
         demolition of or to any Leased Property or any part thereof, or (ii)
         giving Lessee any right, power or permission to contract for or permit
         the performance of any labor or services or the furnishing of any
         materials or other property in such fashion as would permit the making
         of any claim against Lessor in respect thereof or to make any agreement
         that may create, or in any way be the basis for any right, title,
         interest, lien, claim or other Encumbrance upon the estate of Lessor in
         the Leased Properties, or any portion thereof. Lessor shall have the
         right to give, record and post, as appropriate, notices of
         non-responsibility under any mechanics' and construction lien laws now
         or hereafter existing.

                  9.1.4 Replacements. Lessee (i) shall promptly replace any of
         the Leased Improvements or Leased Personal Property which become worn
         out, obsolete or unusable or unavailable for the purpose for which
         intended, and (ii) in Lessee's reasonable judgment, may acquire a
         substitute for any item or items of Leased Personal Property which is
         of higher or better quality, performance or function than the item for
         which it is substituted. All replacements shall have a value and
         utility at least equal to that of the items replaced and shall become
         part of the Leased Properties immediately upon their acquisition by
         Lessee. Upon Lessor's request, Lessee shall promptly execute and
         deliver to Lessor a bill of sale or other instrument establishing
         Lessor's lien-free ownership of such replacements. Lessee shall
         promptly repair all damage to the Leased Properties incurred in the
         course of such replacement.

                  9.1.5 Vacation and Surrender. Lessee will, upon the expiration
         or prior termination of the Term, vacate and surrender the Leased
         Properties to Lessor in the condition in which they were originally
         received from Lessor, in good operating


                                       31
<PAGE>


         condition, ordinary wear and tear excepted, except as repaired,
         rebuilt, restored, altered or added to as permitted or required by the
         provisions of this Lease.

         9.2 ENCROACHMENTS; RESTRICTIONS. ETC. If, at any time, any of the
Leased Improvements are alleged to encroach upon any property, street or right
of way adjacent to a Leased Property, or to violate any restrictive covenant, or
to impair the rights of others under any easement or right of way, Lessee shall
promptly settle such allegations or take such other lawful action as may be
necessary in order to be able to continue the use of a Leased Property for the
Primary Intended Use substantially in the manner and to the extent such Leased
Property was being used at the time of the assertion of such violation,
impairment or encroachment, provided, however, that no such action shall violate
any other provision of this Lease and any alteration of a Leased Property must
be made in conformity with the applicable requirements of Article X. Lessee
shall not have any claim against Lessor or offset against any of Lessee's
obligations under this lease with respect to any such violation, impairment or
encroachment.

                                    ARTICLE X

                            ALTERATIONS AND ADDITIONS

         10.1 Construction of Alterations and Additions to the Leased
Properties. Lessee shall not (a) make or permit to be made any structural
alterations, improvements or additions of or to the Leased Properties or any
part thereof, or (b) materially alter the plumbing, HVAC or electrical systems
thereon or (c) make any other alterations, improvements or additions the cost of
which exceeds (i) Two Hundred Thousand Dollars ($200,000.00), per alteration,
improvement or addition, or (ii) One Million Dollars ($1,000,000.00), in any
Lease Year, unless and until Lessee has (d) caused complete plans and
specifications therefor to have been prepared by a licensed architect and
submitted to Lessor at least ninety (90) Business Days before the planned start
of construction thereof, (e) obtained Lessor's written approval thereof and if
required, the approval of any Facility Mortgagee, and (f) if required to do so
by Lessor, provided Lessor with reasonable assurance of the payment of the cost
of any such alterations, improvements or additions, in the form of a bond,
letter of credit or cash deposit. If Lessor requires a deposit, Lessor shall
retain and disburse the amount deposited in the same manner as is provided for
insurance proceeds in Section 14.6. If the deposit is reasonably determined by
Lessor at any time to be insufficient for the completion of the alteration,
improvement or addition, Lessee shall immediately increase the deposit to the
amount reasonably required by Lessor. Lessee shall be responsible for the
completion of such improvements in accordance with the plans and specifications
approved by Lessor, and shall promptly correct any failure with respect thereto.

                  10.1.1 Lessor's Approval Not Required. Alterations and
         improvements not falling within the categories described in Section
         10.1 may be made by Lessee without the prior approval of Lessor, (i)
         but only in the event any such alternatives or improvements do not
         result in a material reduction in Lessor's opinion, in the value of the
         Leased Properties, and (ii) Lessee shall give Lessor at least thirty
         (30) days prior written Notice of any such alterations and improvements
         in each and every case.


                                       32
<PAGE>


                  10.1.2 Quality of Work. All alterations, improvements and
         additions shall be constructed in a first class, workmanlike manner, in
         compliance with all Insurance Requirements and Legal Requirements, be
         in keeping with the character of the Leased Properties and the area in
         which the Leased Properties are located and be designed and constructed
         so that the value of the Leased Properties will not be diminished or
         and that the Primary Intended Use of the Leased Properties will not be
         changed. All improvements, alterations and additions shall immediately
         become a part of the Leased Properties.

                  10.1.3 No Claim Against Lessor. Lessee shall have no claim
         against Lessor at any time in respect of the cost or value of any such
         improvement, alteration or addition. There shall be no adjustment in
         the Rent by reason of any such improvement, alteration or addition.
         With Lessor's consent, expenditures made by Lessee pursuant to this
         Article X may be included as capital expenditures for purposes of
         inclusion in the capital expenditures budget for the Facilities and for
         measuring compliance with the obligations of Lessee set forth in
         Section 8.2.

                  10.1.4 Asbestos - Containing Material. In connection with any
         alteration which involves the removal, demolition or disturbance of any
         asbestos-containing material, Lessee shall cause to be prepared at its
         expense a full asbestos assessment applicable to such alteration, and
         shall carry out such asbestos monitoring and maintenance program as
         shall reasonably be required thereafter in light of the results of such
         a assessment.

                                   ARTICLE XI

                                      LIENS

         11.1 LIENS. Without the consent of Lessor or as expressly permitted
elsewhere herein, Lessee will not directly or indirectly create or allow to
remain and will promptly discharge at its expense any lien, Encumbrance,
attachment, title retention agreement or claim upon the Leased Properties, and
any attachment, levy, claim or Encumbrance in respect of the Rent, except for
(i) Permitted Encumbrances, (ii) liens of mechanics, laborers, materialmen,
suppliers or vendors for sums not yet due, and (iii) liens created by the
wrongful acts or negligence of Lessor.

                                   ARTICLE XII

                         PERMITTED CONTESTS AND DEPOSITS

         12.1 PERMITTED CONTESTS. Lessee, on its own or on Lessor's behalf (or
in Lessor's name), but at Lessee's sole cost and expense, shall have the right
to contest, by an appropriate legal Proceeding conducted in good faith and with
due diligence, the amount or validity of any Imposition, Legal Requirement or
Insurance Requirement or Claim, provided (a) prior Notice of such contest is
given to Lessor, (b) the Leased Properties would not be in any danger of being
sold, uninsured or underinsured, forfeited or attached as a result of such
contest, and there is no risk to Lessor of a loss of or interruption in the
payment of, Rent, (c) in the case of


                                       33
<PAGE>


an unpaid Imposition or Claim, collection thereof is suspended during the
pendency of such contest, (d) in the case of a contest of a Legal Requirement,
compliance may legally be delayed pending such contest. Upon request of Lessor,
Lessee shall deposit funds or assure Lessor in some other manner reasonably
satisfactory to Lessor that a contested Imposition or Claim, together with
interest and penalties, if any, thereon, and any and all costs for which Lessee
is responsible will be paid if and when required upon the conclusion of such
contest. Lessee shall defend, indemnify and save harmless Lessor from all costs
or expenses arising out of or in connection with any such contest, including but
not limited to attorneys' fees. If at any time Lessor reasonably determines that
payment of any Imposition or Claim, or compliance with any Legal or Insurance
Requirement being contested by Lessee is necessary in order to prevent loss of
any of the Leased Properties or Rent or civil or criminal penalties or other
damage, upon such prior Notice to Lessee as is reasonable in the circumstances
Lessor may pay such amount, require Lessee to comply with such Legal or
Insurance Requirement or take such other action as it may deem necessary to
prevent such loss or damage. If reasonably necessary, upon Lessee's written
request Lessor, at Lessee's expense, shall cooperate with Lessee in a permitted
contest, provided Lessee upon demand reimburses Lessor for Lessor's costs
incurred in cooperating with Lessee in such contest.


                                  ARTICLE XIII

                                    INSURANCE

         13.1 GENERAL INSURANCE REQUIREMENTS. Lessee will carry or cause to be
carried and maintained in force throughout the entire Term (except as
specifically noted to the contrary) insurance as described in Sections 13.1.1
through 13.1.5, with insurance companies and deductibles/retentions reasonably
acceptable to Lessor. The limits set forth below are minimum limits and will not
be construed to limit Lessee's liability. All costs and deductible amounts will
be for the sole account of the Lessee.

                  13.1.1 Worker's Compensation Insurance. Workers' compensation
         insurance complying with the laws of the State or States having
         jurisdiction over each employee, whether or not Lessee is required by
         such laws to maintain such insurance, and Employer's Liability with
         limits of $1,000,000 each accident, $1,000,000 disease each employee,
         and $1,000,000 disease policy limit, provided however, in lieu of such
         insurance, Lessee may become a qualified self insured for such
         coverage, in which event such coverage shall not be required unless
         Lessee loses its status as a qualified self insured.

                  13.1.2 Commercial General Liability Insurance. Commercial or
         Comprehensive general liability insurance on an occurrence form with a
         combined single limit of $1,000,000 each occurrence, and annual
         aggregates of $1,000,000, for bodily injury and property damage,
         including coverage for premises-operations, blanket contractual
         liability,


                                       34
<PAGE>


         broad form property damage, personal injury liability, independent
         contractors, products/completed operations, sudden and accidental
         pollution and explosion, collapse and underground.

                  13.1.3 Automobile Liability. Automobile Liability insurance
         with a combined single limit of $1,000,000 each occurrence for bodily
         injury and property damage to include coverage for all owned,
         non-owned, and hired vehicles.

                  13.1.4 Excess Liability Insurance. Excess or Umbrella
         Liability insurance with a combined single limit of $25,000,000 each
         occurrence, and annual aggregates of $25,000,000, for bodily injury and
         property damage covering excess of Employer's Liability and the
         insurance described in 13.1.2 and 13.1.3 above.

                  13.1.5 Property Insurance. From and after the date upon which
         Lessor is no longer responsible to carry such coverage under the
         Construction Completion Agreement, All-Risk Property insurance
         providing for the full replacement cost of all property located in or
         on the Leased Properties, including Leased Personal Property and
         Lessee's Personal Property. This policy shall include coverage for
         earthquake, flood, and windstorm. The policy shall also include
         business interruption insurance, if due to a covered loss, covering the
         Base Rent due Lessor for a period of no less than twelve (12) months.
         Lessor will be the sole loss payee as required by Article XIV. So long
         as no Event of Default is then in existence, Lessor shall make
         available to Lessee, any proceeds of business interruption insurance
         remaining after the payment of all accrued Rent, within thirty (30)
         days of Lessor's actual receipt of such proceeds, in good funds.

                  13.1.6 Status of Insurance Company. Irrespective of the
         insurance requirements above, the insolvency, bankruptcy, or failure of
         any such insurance company providing insurance for Lessee, or the
         failure of any such insurance company to pay claims that occur will not
         be held to waive any of the provisions hereof.

                  13.1.7 Waiver of Subrogation. In each of the above described
         policies, Lessee agrees to waive and will require its insurers to waive
         any rights of subrogation or recovery they may have against Lessor, its
         parent, subsidiary or affiliated companies. Lessor will have no
         liability to Lessee for any damage or destruction of any portion of the
         Leased Properties or any of Lessee's Personal Property.

                  13.1.8 Additional Insureds. Under the insurance policies
         described hereinabove (except in Section 13.1.1), Lessor, its parent,
         subsidiary and Affiliates and will be named as additional insureds with
         respect to the policies listed in Section 13.1.2 through 13.1.4, and as
         sole loss payees with respect to the policy listed in Section 13.1.5 as
         their interests appear. This insurance will be primary over any other
         insurance maintained by Lessor, its parent, subsidiary or Affiliates.
         All policies shall provide a severability of interests clause.


                                       35
<PAGE>


                  13.1.9 Non-Renewal. Non-renewal or cancellation of policies
         described above, will be effective only after written notice is
         received by Lessor from the insurance company sixty (60) days in
         advance of any such non-renewal or cancellation. Prior to commencing
         the Lease hereunder, Lessee will deliver to Lessor certificates of
         insurance evidencing the existence of the insurance and endorsements
         required above.

                  13.1.10 Original or Certified Copies. In the event of a loss
         or claim arising out of or in connection with this contract, Lessee
         agrees, upon request of Lessor, to submit the original or a certified
         copy of its insurance policies for inspection by Lessor.

         13.2 PREMIUM DEPOSITS. If any provision of a Facility Mortgage requires
deposits of premiums for insurance to be made with the Facility Mortgagee,
Lessee shall pay to Lessor monthly the amounts required and Lessor shall
transfer such amounts to the Facility Mortgagee, unless, pursuant to written
direction by Lessor, Lessee makes such deposits directly with the Facility
Mortgagee.

         13.3 INCREASE IN LIMITS. If from time to time Lessor determines, in the
exercise of its reasonable business judgment, that the limits of the personal
injury or property damage - public liability insurance then being carried are
insufficient, upon Notice from Lessor Lessee shall cause such limits to be
increased to the level specified in such Notice until further increase pursuant
to the provisions of this Section.

         13.4 BLANKET POLICY. Any insurance required by this Lease may be
provided by so called blanket policies of insurance carried by Lessee, provided,
however, that the coverage afforded Lessor thereby may not thereby be less than
or materially different from that which would be provided by a separate policies
meeting the requirements of this Lease, and provided further that such policies
meet the requirements of all Facility Mortgages.

         13.5 COPIES OF POLICIES; CERTIFICATES. Copies of the policies of
insurance required by this Lease and certificates thereof shall be delivered to
Lessor not less than thirty (30) days prior to their effective date (and, with
respect to any renewal policy, not less than twenty (20) days prior to the
expiration of the existing policy), and in the event of the failure of Lessee
either to carry the required insurance or pay the premiums therefor, or to
deliver copies of policies or certificates to Lessor as required, Lessor shall
be entitled, but shall have no obligation, to obtain such insurance and pay the
premiums therefor when due, which premiums shall be repayable to Lessor upon
written demand therefor as Additional Charges.

                                   ARTICLE XIV

                       DISBURSEMENT OF INSURANCE PROCEEDS

         14.1 INSURANCE PROCEEDS. Net Proceeds shall be paid to Lessor and held,
disbursed or retained by Lessor as provided herein.

                  14.1.1 Proceeds of All-Risk Property Insurance. If the Net
         Proceeds are less than the Approval Threshold, and no Event of Default
         has occurred and is continuing, Lessor


                                       36
<PAGE>


         shall pay the Net Proceeds to Lessee promptly upon Lessee's completion
         of the restoration of the damaged or destroyed Leased Property. If the
         Net Proceeds equal or exceed the Approval Threshold, and no Event of
         Default has occurred and is continuing, the Net Proceeds shall be made
         available for restoration or repair as provided in Section 14.6. Within
         fifteen (15) days of the receipt of the Net Proceeds of All-Risk
         Insurance, Lessor shall determine in its reasonable judgment, as to the
         portion thereof, if any, attributable to the Lessee's Personal Property
         that Lessee is not required and does not elect to restore or replace,
         and the portion so determined attributable to the Lessee's Personal
         Property that Lessee is not required and does not elect to restore or
         replace shall be paid to Lessee.

         14.2 RESTORATION IN THE EVENT OF DAMAGE OR DESTRUCTION. If all or any
portion of the Leased Properties is damaged by fire or other casualty, Lessee
shall (a) give Lessor Notice of such damage or destruction within five (5)
Business Days of the occurrence thereof, (b) within thirty (30) Business Days of
the occurrence commence the restoration of the Leased Properties and (c)
thereafter diligently proceed to complete such restoration to substantially the
same (or better) condition as the Leased Properties were in immediately prior to
the damage or destruction as quickly as is reasonably possible, but in any event
within one hundred eighty (180) days of the occurrence. Regardless of the
anticipated cost thereof, if the restoration of a Leased Property requires any
modification of structural elements, prior to commencing such modification
Lessee shall obtain Lessor's written approval of the plans and specifications
therefor.

         14.3 RESTORATION OF LESSEE'S PROPERTY. If Lessee is required to restore
the Leased Properties, Lessee shall also concurrently restore any of Lessee's
Personal Property that is integral to the Primary Intended Use of the Leased
Properties at the time of the damage or destruction.

         14.4 NO ABATEMENT OF RENT. Absent termination of this Lease as provided
herein, there shall be no abatement of Rent by reason of any damage to or the
partial or total destruction of any portion of the Leased Properties.

         14.5 WAIVER. Except as provided elsewhere in this Lease, Lessee hereby
waives any statutory or common law rights of termination which may arise by
reason of any damage to or destruction of the Leased Properties.

         14.6 DISBURSEMENT OF INSURANCE PROCEEDS EQUAL TO OR GREATER THAN THE
APPROVAL THRESHOLD. If Lessee restores or repairs the Leased Properties pursuant
to this Article XIV, and if the Net Proceeds equal or exceed the Approval
Threshold, the restoration or repair and disbursement of funds to Lessee shall
be in accordance with the following procedures:

                  14.6.1 Plans and Specifications. The restoration or repair
         work shall be done pursuant to plans and specifications approved by
         Lessor and a certified construction cost statement, to be obtained by
         Lessee from a contractor reasonably acceptable to Lessor, showing the
         total cost of the restoration or repair; to the extent the cost exceeds
         the Net


                                       37
<PAGE>


         Proceeds, Lessee shall deposit with Lessor the amount of the excess
         cost, and Lessor shall disburse the funds so deposited in payment of
         the costs of restoration or repair before any disbursement of Net
         Proceeds.

                  14.6.2 Construction Funds. Construction Funds shall be made
         available to Lessee upon request, no more frequently than monthly, as
         the restoration and repair work progresses, subject to a ten (10%)
         percent holdback, pursuant to certificates of an architect selected by
         Lessee that, in the judgment of Lessor, reasonably exercised, is highly
         qualified in the design and construction of the type of Facility being
         repaired and is otherwise reasonably acceptable to Lessor, which
         certificates must be in form and substance reasonably acceptable to
         Lessor.

                  14.6.3 Lien Waivers. After the first disbursement to Lessee,
         sworn statements and lien waivers in an amount at least equal to the
         amount of Construction Funds previously paid to Lessee shall be
         delivered to Lessor from all contractors, subcontractors and material
         suppliers covering all labor and materials furnished through the date
         of the previous disbursement.

                  14.6.4 Progress of Work. Lessee shall deliver to Lessor such
         other evidence as Lessor may reasonably request from time to time
         during the course of the restoration and repair, as to the progress of
         the work, compliance with the approved plans and specifications, the
         cost of restoration and repair and the total amount needed to complete
         the restoration and repair, and showing that there are no liens against
         the Leased Properties arising in connection with the restoration and
         repair and that the cost of the restoration and repair at least equals
         the total amount of Construction Funds then disbursed to Lessee
         hereunder.

                  14.6.5 Inadequacy of Construction Funds. If the Construction
         Funds are at any time determined by Lessor to be inadequate for payment
         in full of all labor and materials for the restoration and repair,
         Lessee shall immediately pay the amount of the deficiency to Lessor to
         be held and disbursed as Construction Funds prior to the disbursement
         of any other Construction Funds then held by Lessor.

                  14.6.6 Disbursement. The Construction Funds may be disbursed
         by Lessor to Lessee or to the persons entitled to receive payment
         thereof from Lessee, and such disbursement in either case may be made
         directly or through a third party escrow agent, such as, but not
         limited to, a title insurance company, or its agent, all as Lessor may
         determine in its sole discretion. Provided Lessee is not in default
         hereunder, any excess Construction Funds shall be paid to Lessee upon
         completion of the restoration or repair.

                  14.6.7 Lessee Default. If Lessee at any time fails to promptly
         and fully perform the conditions and covenants set out hereinabove in
         this Section 14.6, and the failure is not corrected within ten (10)
         days of written Notice thereof, or if during the restoration or repair
         an Event of Default occurs hereunder, Lessor may, at its option,
         immediately cease making any further payments to Lessee for the
         restoration and repair.


                                       38
<PAGE>


                  14.6.8 Lessor Reimbursement. Lessor may reimburse itself out
         of the Construction Funds for its reasonable expenses incurred in
         administering the Construction Funds and inspecting the restoration and
         repair work, including without limitation attorneys' and other
         professional fees and escrow fees and expenses.

         14.7 NET PROCEEDS PAID TO FACILITY MORTGAGEE. Notwithstanding anything
herein to the contrary, if any Facility Mortgagee is entitled to any Net
Proceeds, or any portion thereof, under the terms of any Facility Mortgage, the
Net Proceeds shall be applied, held and/or disbursed in accordance with the
terms of the Facility Mortgage. Lessor shall make commercially reasonable
efforts to cause the Net Proceeds to be applied to the restoration of the Leased
Properties.

         14.8 TERMINATION OF LEASE. Notwithstanding anything herein to the
contrary, in the event the amount of the Net Proceeds from any one (1)
occurrence, (i) exceeds $80,000,000.00, or (ii) exceeds $20,000,000.00 during
the final two (2) years of the Realty Term, Lessor may exercise its option to
require Lessee to purchase the Leased Properties as set forth in Section 42.2.

                                   ARTICLE XV

                                  CONDEMNATION

         15.1 TOTAL TAKING OR OTHER TAKING WITH EITHER LEASED PROPERTY RENDERED
UNSUITABLE FOR ITS PRIMARY INTENDED USE. If title to the fee of the whole of a
Leased Property is Taken, this Lease shall cease and terminate as to the Leased
Property Taken as of the Date of Taking by the Condemnor and Rent shall be
apportioned as of the termination date, provided, however, that if the Award to
Lessor is less than the Repurchase Price for such Leased Property at the time of
such Award, it shall be a condition precedent to the termination of this Lease
as to such Leased Property that Lessee pay the amount of the deficiency to
Lessor. If title to the fee of less than the whole of a Leased Property is
Taken, but such Leased Property is thereby rendered Unsuitable for Its Primary
Intended Use, Lessee and Lessor shall each have the option by written Notice to
the other, at any time prior to the taking of possession by, or the date of
vesting of title in, the Condemnor, whichever first occurs, to terminate this
Lease with respect to such Leased Property as of the date so determined, in
which event this Lease shall thereupon so cease and terminate as of the earlier
of the date specified in such Notice or the date on which possession is taken by
the Condemnor. If this Lease is so terminated as to a Leased Property, Rent
shall be apportioned as of the termination date, and Lessee shall be deemed to
have elected to purchase such Leased Property for the Repurchase Price therefor.
Lessee shall complete the purchase within forty-five (45) days of the Taking,
and Lessee shall receive credit against such Repurchase Price for any portion of
the Award received by Lessor.

         15.2 ALLOCATION OF AWARD. The total Award made with respect to all or
any portion of a Leased Property or for loss of Rent, or for loss of business,
shall be solely the property of and payable to Lessor. Nothing contained in this
Lease will be deemed to create any


                                       39
<PAGE>


additional interest in Lessee, or entitle Lessee to any payment based on the
value of the unexpired term or so-called "bonus value" to Lessee of this Lease.
Any Award made for the taking of Lessee's Personal Property that is not integral
to the Primary Intended Use of the Facilities, or for removal and relocation
expenses of Lessee in any such Proceeding shall be payable to Lessee. Any Award
made for the taking of Lessee's Personal Property that is integral to the
Primary Intended Use of the Facilities shall be payable to Lessor. In any
Proceeding with respect to an Award, Lessor and Lessee shall each seek its own
Award in conformity herewith, at its own expense. Notwithstanding the foregoing,
Lessee may pursue a claim for loss of its business, provided that under the laws
of the State, such claim will not diminish the Award to Lessor.

         15.3 PARTIAL TAKING. In the event of a Partial Taking, and Lessee, at
its own cost and expense, shall within sixty (60) days of the taking of
possession by, or the date of vesting of title in, the Condemnor, whichever
first occurs/date on which such Notice is given commence the restoration of the
Leased Premises to a complete architectural unit of the same general character
and condition (as nearly as may be possible under the circumstances) as existed
immediately prior to the Partial Taking, and complete such restoration with all
reasonable dispatch, but in any event within one hundred eighty (180) days of
the date on which such Notice is given. Lessor shall contribute to the cost of
restoration only such portion of the Award as is made therefor. As long as no
Event of Default has occurred and is continuing, if such portion of the Award is
in an amount less than the Approval Threshold, Lessor shall pay the same to
Lessee upon completion of such restoration. As long as no Event of Default has
occurred and is continuing, if such portion of the Award is in an amount equal
to or greater than the Approval Threshold, Lessor shall make such portion of the
Award available to Lessee in the manner provided in Section 14.6 with respect to
Net Proceeds in excess of the Approval Threshold.

         15.4 TEMPORARY TAKING. If there is a Taking of possession or the use of
all or part of a Leased Property, but the fee of such Leased Property is not
Taken in whole or in part, until such Taking of possession or use continues for
more than six (6) months, all the provisions of this Lease shall remain in full
force and effect and the entire amount of any Award made for such Taking shall
be paid to Lessee provided there is then no Event of Default. Upon the
termination of any such period of temporary use or occupancy, Lessee at its sole
cost and expense shall restore the affected Leased Property, as nearly as may be
reasonably possible, to the condition existing immediately prior to such Taking.
If any temporary Taking continues for longer than six (6) months, and fifty
percent (50%) or more of any Leased Property is thereby rendered Unsuitable for
Its Primary Use, this Lease shall cease and terminate as to the affected Leased
Property as of the last day of the sixth (6th) month, but if less than fifty
percent (50%) of such Facility is thereby rendered Unsuitable for Its Primary
Use, Lessee and Lessor shall each have the option by at least sixty (60) day's
prior written Notice to the other, at any time prior to the end of the temporary
taking, to terminate this Lease as to the affected Leased Property of the date
set forth in such Notice, and Lessor shall be entitled to any Award made for the
period of such temporary Taking prior to the date of termination of the Lease.
In no event shall Rent or any Additional Charges abate during the period of any
temporary Taking.

         15.5 AWARDS PAID TO FACILITY MORTGAGEE. Notwithstanding anything herein
to the contrary, if any Facility Mortgagee is entitled to any Award or any
portion thereof,


                                       40
<PAGE>


under the terms of any Facility Mortgage such Award shall be applied, held
and/or disbursed in accordance with the terms of the Facility Mortgage. If the
Facility Mortgagee elects to apply the Award to the indebtedness secured by the
Facility Mortgage: (i) if the Award represents an Award for Partial Taking as
described in Section 15.3 above, Lessee shall restore the affected Facility (as
nearly as possible under the circumstances) to a complete architectural unit of
the same general character and condition as that of the Facility existing
immediately prior to such Taking; or (ii) if the Award represents an Award for a
Total Taking as described in Section 15.1 above, Lessee shall pay to Lessor an
amount equal to the Repurchase Price and Lessor shall transfer its portion of
the award and its interest in the affected Leased Property to Lessee. In any
such restoration or purchase, Lessee shall receive full credit for any portion
of any award retained by Lessor and the Facility Mortgagee.

                                   ARTICLE XVI

                       LESSOR'S RIGHTS ON EVENT OF DEFAULT

         16.1 LESSOR'S RIGHTS UPON AN EVENT OF DEFAULT. If an Event of Default
shall occur Lessor may terminate this Lease by giving Lessee a Notice of
Termination, and in such event, the Term shall end and all rights of Lessee
under this Lease shall cease on the Termination Date. The Notice of Termination
shall be in lieu of and not in addition to any notice required by the laws of
any State as a condition to bringing an action for possession of the Leased
Premises or to recover damages under this Lease. In addition to Lessor's right
to terminate this Lease, Lessor shall have all other rights set forth in this
Lease and all remedies available at law and in equity. Lessee shall, to the
extent permitted by law, pay as Additional Charges all costs and expenses
incurred by or on behalf of Lessor, including, without limitation, reasonable
attorneys' fees and expenses (whether or not litigation is commenced, and if
litigation is commenced, including fees and expenses incurred in any appeals and
post judgment Proceeding) as a result of any default of Lessee hereunder.

         16.2 CERTAIN REMEDIES. If an Event of Default shall occur, whether or
not this Lease has been terminated pursuant to Section 16.1, if required to do
so by Lessor, Lessee shall immediately surrender to Lessor the Leased Properties
to Lessor in the condition required by Section 9.1.5 and quit the same, and
Lessor may enter upon and repossess the Leased Properties by reasonable force,
any summary Proceeding, ejectment or otherwise, and may remove Lessee and all
other persons and any and all personal properties from the Leased Properties,
subject to any Legal Requirements. In addition to all other remedies set forth
or referred to in this Article XVI.

         16.3 DAMAGES. Neither (i) the termination of this Lease pursuant to
Section 16.1, (ii) the repossession of the Leased Properties, (iii) the failure
of Lessor to relet the Leased Properties, (iv) the reletting of all or any
portion thereof, nor (v) the failure of Lessor to collect or receive any rentals
due upon such any reletting, shall relieve Lessee of its liability and
obligations hereunder, all of which shall survive any such termination,
repossession or reletting. In the event this Lease is terminated by Lessor,
Lessee shall forthwith pay to Lessor all accrued and future Rent due and payable
with respect to the Leased Properties to and including the Realty


                                       41
<PAGE>


Expiration Date all of which shall become immediately due and payable, including
without limitation all interest and late charges payable under Section 3.3 with
respect to any late payment of such Rent, and all Additional Charges.

         16.4 LESSEE'S OBLIGATION TO PURCHASE. If an Event of Default occurs,
Lessor may require Lessee to purchase the Leased Properties on the first Rent
payment date occurring after the date of receipt of, or such later date as may
be specified in, a Notice from Lessor requiring such purchase. The purchase
price of the Leased Properties shall be an amount equal to the then Repurchase
Price of the Leased Properties, plus all Rent then due and payable (excluding
the installment of Base Rent due on the purchase date) as of the date of
purchase. If Lessor exercises such right, Lessor shall convey the Leased
Properties to Lessee on the date fixed therefor upon receipt of such purchase
price and this Lease shall thereupon terminate. Any purchase by Lessee of the
Leased Properties pursuant to this Section shall be credited against the damages
specified in Section 16.3.

         16.5 WAIVER. If this Lease is terminated pursuant to Section 16.1,
Lessee waives, to the extent permitted by applicable law, (i) any right of
reentry, repossession or redesignation, (ii) any right to a trial by jury in the
event of any summary Proceeding to enforce the remedies set forth in this
Article XVI, and (iii) the benefit of any laws now or hereafter in force
exempting property from liability for rent or for debt. Acceptance of Rent at
any time does not prejudice or remove any right of Lessor as to any right or
remedy. No course of conduct shall be held to bar Lessor from literal
enforcement of the terms of this Lease.

         16.6 APPLICATION OF FUNDS. Any payments received by Lessor under any of
the provisions of this Lease during the existence or continuance of any Event of
Default shall be applied to Lessee's obligations in the order which Lessor may
determine or as may be prescribed by law.

         16.7 BANKRUPTCY.

                  16.7.1 No Transfer. Neither Lessee's interest in this Lease,
         nor any estate hereby created in Lessee's interest nor any interest
         herein or therein, shall pass to any trustee or receiver or assignee
         for the benefit of creditors or otherwise by operation of law, except
         as may specifically be provided pursuant to the Bankruptcy Code (11
         U.S.C. Section 101 et. seq.), as the same may be amended from time to
         time.

                  16.7.2 Rights and Obligations Under the Bankruptcy Code.

                           Payment of Rent. Upon filing of a petition by or
                           against Lessee under the Bankruptcy Code, Lessee, as
                           debtor and as debtor-in-possession, and any trustee
                           who may be appointed with respect to the assets of or
                           estate in bankruptcy of Lessee, agree to pay monthly
                           in advance on the first day of each month, as
                           reasonable compensation for the use and occupancy of
                           the Leased Properties, an amount equal to all Rent
                           due pursuant to this Lease.


                                       42
<PAGE>


                           Other Conditions and Obligations. Included within and
                           in addition to any other conditions or obligations
                           imposed upon Lessee or its successor in the event of
                           the assumption and/or assignment of the Lease are the
                           following: (i) the cure of any monetary defaults and
                           reimbursement of pecuniary loss within not more than
                           thirty (30) days of assumption and/or assignment;
                           (ii) the deposit of an additional amount equal to not
                           less than three (3) months' Base Rent, which amount
                           is agreed to be a necessary and appropriate deposit
                           to secure the future performance under the Lease of
                           Lessee or its assignee; (iii) the continued use of
                           the Leased Properties for the Primary Intended Use;
                           and (iv) the prior written consent of any Facility
                           Mortgagee.

         16.8 LESSOR'S RIGHT TO CURE LESSEE'S DEFAULT. If Lessee fails to make
any payment or perform any act required to be made or performed under this
Lease, and fails to cure the same within any grace or cure period applicable
thereto, upon such Notice as may be expressly required herein (or, if Lessor
reasonably determines that the giving of such Notice would risk loss to the
Leased Properties or cause damage to Lessor, upon such Notice as is practical
under the circumstances), and without waiving or releasing any obligation of
Lessee, Lessor may make such payment or perform such act for the account and at
the expense of Lessee, and may, to the extent permitted by law, enter upon the
Leased Properties for such purpose and take all such action thereon as, in
Lessor's sole opinion, may be necessary or appropriate. No such entry shall be
deemed an eviction of Lessee. All amounts so paid by Lessor and all costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses) so incurred, together with the late charge and interest provided for
in Section 3.3 thereon, shall be paid by Lessee to Lessor on demand. The
obligations of Lessee and rights of Lessor contained in this Article shall
survive the expiration or earlier termination of this Lease.

                                  ARTICLE XVII

              ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS

         17.1 ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS. Lessee,
Guarantor, and WCG each jointly and severally represent, warrant and covenant
that:

                  17.1.1 Organization; Powers. Both Lessee and Guarantor are
         duly organized, validly existing and in good standing under the laws of
         the jurisdiction of its organization, has all requisite power and
         authority to carry on its business as now conducted and, except where
         the failure to do so, individually or in the aggregate, could not
         reasonably be expected to result in a Material Adverse Effect, is
         qualified to do business in, and is in good standing in, every
         jurisdiction where such qualification is required.

                  17.1.2 Authorization; Enforceability. The execution of and
         performance under this Lease is within each of the Lessee's and
         Guarantor' entity powers and has been duly authorized by all necessary
         member, corporate and, if required, stockholder action as the case may
         be. This Lease has been duly executed and delivered by each of the
         Lessee and Guarantor and constitutes a legal, valid and binding
         obligation of the Lessee and


                                       43
<PAGE>


         Guarantor (as the case may be), enforceable in accordance with its
         terms, subject to applicable bankruptcy, insolvency, reorganization,
         moratorium or other laws affecting creditors' rights generally and
         subject to general principles of equity, regardless of whether
         considered in a Proceeding in equity or at law.

                  17.1.3 Governmental Approvals; No Conflicts. The Lease or any
         of the other documents contemplated herein, (a) does not require any
         consent or approval of, registration or filing with, or any other
         action by, any Governmental Authority, except such as have been
         obtained or made and are in full force and effect and except filings
         necessary to perfect Lessor's rights under this Lease, (b) will not
         violate any applicable law or regulation or the charter, by-laws or
         other organizational documents of Lessee or Guarantor or any order of
         any Governmental Authority, (c) will not violate or result in a default
         under any indenture, agreement or other instrument binding upon Lessee
         or Guarantor or any of their respective assets, or give rise to a right
         thereunder to require any payment to be made by Lessee or Guarantor,
         and (d) will not result in the creation or imposition of any
         Encumbrance on any asset of Lessee or Guarantor, except any Encumbrance
         created by or in accordance with the Lease.

                  17.1.4 Financial Condition; No Material Adverse Change.
         Guarantor has heretofore furnished to Lessor consolidated balance sheet
         and statements of operations, stockholders equity and cash flows as of
         and for the fiscal years ended December 31, 1998, December 31, 1999 and
         December 31, 2000, audited by Ernst & Young LLP, independent public
         accountants. Such financial statements present fairly, in all material
         respects, the financial position and results of operations and cash
         flow of Guarantor as of such dates and for such periods in accordance
         with GAAP.

                           17.1.4.1 Pro Formas. Guarantor has heretofore
                  furnished to the Lessor its pro forma consolidated balance
                  sheet as of December 31, 2000 and projected pro forma
                  statements of operations and cash flows for the fiscal year
                  ended December 31, 2001. Such projected pro forma consolidated
                  balance sheets and statements of operations and cash flows (i)
                  have been prepared in good faith based on the same assumptions
                  used to prepare the pro forma financial statements (which
                  assumptions are believed by Lessee and Guarantor to be
                  reasonable), (ii) are based on the best information available
                  to Lessee and Guarantor after due inquiry, (iii) present
                  fairly, in all material respects, the pro forma financial
                  position of Lessee and Guarantor as of such date and for such
                  periods.

                           17.1.4.2 Material Contingent Liabilities. Except as
                  disclosed in the financial statements referred to above,
                  neither the Lessee or Guarantor has, as of the Effective Date,
                  any material contingent liabilities, unusual material
                  long-term commitments or unrealized material losses.

                           17.1.4.3 Material Adverse Change. Since December 31,
                  2000, there has been no Material Adverse Change.


                                       44
<PAGE>


                  17.1.5 Properties. Lessee and Guarantor each has good title
         to, or valid leasehold interests in, all its real and personal property
         material to its business (including the Leased Properties), except for
         minor defects in title that do not interfere with its ability to
         conduct its business as currently conducted or to utilize such
         properties for their intended purposes. None of the properties and
         assets of Lessee or Guarantor is subject to any Encumbrance other than
         Permitted Encumbrances, and Encumbrances created by or in connection
         with this Lease.

                           17.1.5.1 Intellectual Property. Lessee and Guarantor
                  each owns, or is licensed to use, all trademarks, trade names,
                  copyrights, patents and other intellectual property material
                  to its business, and the use thereof by Lessee and Guarantor
                  does not infringe upon the rights of any other Person, except
                  for any such infringements that, individually or in the
                  aggregate, could not reasonably be expected to result in a
                  Material Adverse Effect.

                  17.1.6 Litigation and Environmental Matters. There is no
         action, suit or Proceeding by or before any arbitrator or Governmental
         Authority pending against or, to the knowledge of Lessee or Guarantor,
         threatened against or affecting Lessee or Guarantor (i) as to which
         there is a reasonable possibility of an adverse determination and that,
         if adversely determined, could reasonably be expected, individually or
         in the aggregate, to result in a Material Adverse Effect or (ii) that
         involve this Lease or any of the other documents contemplated herein.

                           17.1.6.1 Environmental Compliance. Except with
                  respect to other matters that, individually or in the
                  aggregate, could not reasonably be expected to result in a
                  Material Adverse Effect, neither Lessee nor Guarantor (i) has
                  failed to comply with any Environmental Law or to obtain,
                  maintain or comply with any permit, license or other approval
                  required under any Environmental Law, (ii) has become subject
                  to any liability with respect to any Environmental Law, (iii)
                  has received written notice of any claim with respect to any
                  Environmental Law or (iv) knows of any basis for any
                  violations of any Environmental Law or any release, threatened
                  release or exposure to any Hazardous Materials that is likely
                  to form the basis of any liability under any Environmental
                  Law.

                  17.1.7 Compliance with Laws and Agreements. Lessee and
         Guarantor each is in compliance with all laws, regulations and orders
         of any Governmental Authority applicable to it or its property and all
         indentures, agreements and other instruments binding upon it or its
         property, except where the failure to do so, individually or in the
         aggregate, could not reasonably be expected to result in a Material
         Adverse Effect. No Default has occurred and is continuing.

                  17.1.8 Investment and Holding Company Status. Neither Lessee
         or Guarantor is (a) an "investment company" as defined in, or subject
         to regulation under, the Investment Company Act of 1940 or (b) a
         "holding company" as defined in, or subject to regulation under, the
         Public Utility Holding Company Act of 1935.


                                       45
<PAGE>


                  17.1.9 Taxes. Lessee, Guarantor, and WCG each has timely
         filed or caused to be filed all tax returns and reports required to
         have been filed and has paid or caused to be paid all taxes required to
         have been paid by or with respect to it, except (a) taxes that are
         being contested in good faith by an appropriate Proceeding and for
         which Lessee or Guarantor, as applicable, has set aside on its books
         adequate reserves or (b) to the extent that the failure to do so could
         not reasonably be expected to result in a Material Adverse Effect.

                  17.1.10 ERISA. No ERISA Event has occurred or is reasonably
         expected to occur that, when taken together with all other such ERISA
         Events for which liability is reasonably expected to occur, could
         reasonably be expected to result in a Material Adverse Effect. The
         present value of all accumulated benefit obligations under each Plan
         (based on the assumptions used for purposes of Statement of Financial
         Accounting Standards No. 87) did not, as of the date of the most recent
         financial statements reflecting such amounts, exceed by more than
         $25,000,000 the fair market value of the assets of such Plan, and the
         present value of all accumulated benefit obligations of all underfunded
         Plans (based on the assumptions used for purposes of Statement of
         Financial Accounting Standards No. 87) did not, as of the date of the
         most recent financial statements reflecting such amounts, exceed by
         more than $25,000,000 the fair market value of the assets of all such
         underfunded Plans.

                  17.1.11 Disclosure. Lessee and Guarantor have disclosed to
         the Lessor all agreements, instruments and corporate or other
         restrictions to which Lessee or Guarantor is subject, and all other
         matters known to any of them, that, individually or in the aggregate,
         could reasonably be expected to result in a Material Adverse Effect.
         None of the reports, financial statements, certificates or other
         information furnished by or on behalf of Lessee or Guarantor in
         connection with the negotiation of this Lease or delivered hereunder
         (as modified or supplemented by other information so furnished)
         contains any material misstatement of fact or omits to state any
         material fact necessary to make the statements therein, in the light of
         the circumstances under which they were made, not misleading; provided
         that, with respect to projected financial information, Lessee and
         Guarantor represent only that such information was prepared in good
         faith based upon assumptions believed to be reasonable at the time.

                  17.1.12 Insurance. As of the Effective Date, all premiums in
         respect of all insurance described in Article XIII have been paid.

                  17.1.13 Labor Matters. As of the Effective Date, there are no
         strikes, lockouts or slowdowns against Lessee or Guarantor pending or,
         to the knowledge of Lessee or Guarantor, threatened. The hours worked
         by and payments made to employees of Lessee and Guarantor have not been
         in violation of the Fair Labor Standards Act or any other applicable
         Federal, state, local or foreign law dealing with such matters. All
         payments due from Lessee or Guarantor, or for which any claim may be
         made against Lessee or Guarantor, on account of wages and employee
         health and welfare insurance and other benefits, have been paid or
         accrued as a liability on the books of Lessee or Guarantor. The
         execution of this Lease has not and will not give rise to any right of
         termination or


                                       46
<PAGE>


         right of renegotiation on the part of any union under any collective
         bargaining agreement by which Lessee or Guarantor is bound.

                  17.1.14 Solvency. Immediately after the Effective Date and
         immediately following the purchase of the Leased Properties by Lessor
         pursuant to the Purchase Agreement made on the Effective Date and after
         giving effect to the application of the Purchase Price, (a) the fair
         value of the assets of Lessee, Guarantor, and WCG will exceed its debts
         and liabilities, subordinated, contingent or otherwise; (b) the present
         fair saleable value of the property of Lessee, Guarantor and WCG will
         be greater than the amount that will be required to pay the probable
         liability of its debts and other liabilities, subordinated, contingent
         or otherwise, as such debts and other liabilities become absolute and
         matured; (c) Lessee, Guarantor, and WCG each will be able to pay its
         debts and liabilities, subordinated, contingent or otherwise, as such
         debts and liabilities become absolute and matured; and (d) Lessee,
         Guarantor, and WCG each will not have unreasonably small capital with
         which to conduct the business in which it is engaged as such business
         is now conducted and is proposed to be conducted following the
         Effective Date.

                  17.1.15 No Burdensome Restrictions. No contract, lease,
         agreement or other instrument to which Lessee or Guarantor is a party
         or by which any of its property is bound or affected, no charge,
         corporate restriction, judgment, decree or order and no provision of
         applicable law or governmental regulation could reasonably be expected
         to have Material Adverse Effect.

                  17.1.16 Representations True and Correct. As of the dates when
         made and as of the Effective Date, each representation and warranty of
         Lessee or Guarantor thereto contained in the Purchase Agreement, this
         Lease or any other documents executed in connection herewith, is true
         and correct.

                                  ARTICLE XVIII

                       OCCUPANCY AFTER EXPIRATION OF TERM

         18.1 HOLDING OVER. If Lessee remains in possession of all or any of the
Leased Properties after the expiration of the Term or earlier termination of
this Lease, such possession shall be as a month-to-month tenant, and throughout
the period of such possession Lessee shall pay as Rent for each month one
hundred fifty percent (150%) times the sum of: (i) one-twelfth (1/12th) of the
Base Rent payable during the Lease Year in which such expiration or termination
occurs, plus (ii) all Additional Charges accruing during the month, plus (iii)
any and all other sums payable by Lessee pursuant to this Lease. During such
period of month-to-month tenancy, Lessee shall be obligated to perform and
observe all of the terms, covenants and conditions of this Lease, but shall have
no rights hereunder other than the right, to the extent given by applicable law
to month-to-month tenancies, to continue its occupancy and use of the Leased
Properties until the month-to-month tenancy is terminated. Nothing contained
herein shall constitute the consent, express or implied, of Lessor to the
holding over of Lessee after the expiration or earlier termination of this
Lease.


                                       47
<PAGE>


         18.2 INDEMNITY. If Lessee fails to surrender the Leased Properties in a
timely manner and in accordance with the provisions of Section 9.1.5 upon the
expiration or termination of this Lease, in addition to any other liabilities to
Lessor accruing therefrom, Lessee shall defend, indemnify and hold Lessor, its
principals, officers, directors, agents and employees harmless from loss or
liability resulting from such failure, including, without limiting the
generality of the foregoing, loss of rental with respect to any new lease in
which the rental payable thereunder exceeds the Rent paid by Lessee pursuant to
this Lease during Lessee's hold-over and any claims by any proposed new tenant
founded on such failure. The provisions of this Section 18.2 shall survive the
expiration or termination of this Lease.

                                   ARTICLE XIX

                          SUBORDINATION AND ATTORNMENT

         19.1 SUBORDINATION. Upon written request of Lessor, any Facility
Mortgagee, or the beneficiary of any deed of trust of Lessor, Lessee will enter
into a written agreement subordinating its rights pursuant to this Lease (i) to
the lien of any mortgage, deed of trust or the interest of any lease in which
Lessor is the lessee and to all modifications, extensions, substitutions thereof
(or, at Lessor's option, agree to the subordination to this Lease of the lien of
said mortgage, deed of trust or the interest of any lease in which Lessor is the
lessee), and (ii) to all advances made or hereafter to be made thereunder. In
connection with any such request, Lessor shall provide Lessee with a
"Non-Disturbance Agreement" reasonably acceptable to such mortgagee, beneficiary
or lessor providing that if such mortgagee, beneficiary or lessor acquires the
Leased Properties by way of foreclosure or deed in lieu of foreclosure, such
mortgagee, beneficiary or lessor will not disturb Lessee's possession under this
Lease and will recognize Lessee's rights hereunder if and for so long as no
Event of Default has occurred and is continuing. Lessee agrees to consent to
amend this Lease as reasonably required by the Facility Mortgagee, and shall be
deemed to have unreasonably withheld or delayed its consent if the required
changes do not materially (i) alter the economic terms of this Lease, (ii)
diminish the rights of Lessee, or (iii) increase the obligations of Lessee,
provided that Lessee shall also have received the non-disturbance agreement
provided for in this Article.

         19.2 ATTORNMENT. If any Proceeding is brought for foreclosure, or if
the power of sale is exercised under any mortgage or deed of trust made by
Lessor encumbering the Leased Properties, or if a lease in which Lessor is the
lessee is terminated, Lessee shall attorn to the purchaser or lessor under such
lease upon any foreclosure or deed in lieu thereof, sale or lease termination
and recognize the purchaser or lessor as Lessor under this Lease, provided the
purchaser or lessor acquires and accepts the Leased Properties subject to this
Lease.

         19.3 LESSEE'S CERTIFICATE. Lessee shall, upon not less than ten (10)
days prior Notice from Lessor, execute, acknowledge and deliver to Lessor,
Lessee's Certificate containing then-current facts. It is intended that any
Lessee's Certificate delivered pursuant hereto may be relied upon by Lessor, any
prospective tenant or purchaser of the Leased Properties, any mortgagee or
prospective mortgagee, and by any other party who may reasonably rely on such


                                       48
<PAGE>


statement. Lessee's failure to deliver the Lessee's Certificate within such time
shall constitute an Event of Default. In addition, Lessee hereby authorizes
Lessor to execute and deliver a certificate to the effect (if true) that Lessee
represents and warrants that (i) this Lease is in full force and effect without
modification, and (ii) Lessor is not in breach or default of any of its
obligations under this Lease.

                                   ARTICLE XX

                                  RISK OF LOSS

         20.1 RISK OF LOSS. During the Term, the risk of loss or of decrease in
the enjoyment and beneficial use of the Leased Properties in consequence of the
damage or destruction thereof by fire, the elements, casualties, thefts, riots,
wars or otherwise, or in consequence of foreclosures, attachments, levies or
executions is assumed by Lessee, and, in the absence of gross negligence,
willful misconduct or material breach of this Lease by Lessor, Lessor shall in
no event be answerable or accountable therefor nor shall any of the events
mentioned in this Article XX entitle Lessee to any abatement of Rent.

                                   ARTICLE XXI

                                 INDEMNIFICATION

         21.1 INDEMNIFICATION. Notwithstanding the existence of any insurance or
self-insurance provided for in Article XIII, and without regard to the policy
limits of any such insurance or self-insurance, Lessee shall protect, indemnify,
save harmless and defend Lessor, its principals, officers, directors, agents,
employees, parents, and affiliates from and against all liabilities,
obligations, claims, damages, penalties, causes of action, costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses), to the
extent permitted by law, imposed upon or incurred by or asserted against Lessor
by reason of: (i) any accident, injury to or death of persons or loss of or
damage to property occurring on or about the Leased Properties or adjoining
sidewalks, including without limitation any claims of malpractice, (ii) any use,
misuse, non-use, condition, maintenance or repair by Lessee of the Leased
Properties, (iii) the failure to pay any Impositions, (iv) any failure on the
part of Lessee to perform or comply with any of the terms of this Lease, and (v)
the nonperformance of any contractual obligation, express or implied, assumed or
undertaken by Lessee or any party in privity with Lessee with respect to the
Leased Properties or any business or other activity carried on with respect to
the Leased Properties during the Term or thereafter during any time in which
Lessee or any such other party is in possession of the Leased Properties or
thereafter to the extent that any conduct by Lessee or any such person (or
failure of such conduct thereby if the same should have been undertaken during
such time of possession and leads to such damage or loss) causes such loss or
claim. Any amounts which become payable by Lessee under this Section shall be
paid within ten (10) days after liability therefor on the part of Lessee is
determined by litigation or otherwise, and if not timely paid, shall bear
interest (to the extent permitted by law) at the Overdue Rate from the date of
such determination to the date of payment. Nothing herein shall be construed as
indemnifying Lessor against its own grossly negligent acts or omissions or
willful misconduct.


                                       49
<PAGE>


Lessee's liability under this Article shall survive the expiration or any
earlier termination of this Lease.

                                  ARTICLE XXII

                            RESTRICTIONS ON TRANSFERS

         22.1 GENERAL PROHIBITION AGAINST TRANSFERS. Lessee acknowledges that a
significant inducement to Lessor to enter into this Lease with Lessee on the
terms set forth herein is the combination of financial strength, experience,
skill and reputation possessed by the Lessee named herein, the Person or Persons
in Control of Lessee and Guarantor, together with Lessee's assurance that Lessor
shall have the unrestricted right to approve or disapprove any proposed
Transfer. Therefore, there shall be no Transfer except as specifically permitted
by this Lease or consented to in advance by Lessor in writing. Lessee agrees
that Lessor shall have the right to withhold its consent to any proposed
Transfer on the basis of Lessor's judgment as to the effect the proposed
Transfer may have on the Leased Properties and the future performance of the
obligations of the Lessee under this Lease, whether or not Lessee agrees with
such judgment. Any attempted Transfer which is not specifically permitted by
this Lease or consented to by Lessor in advance in writing shall be null and
void and of no force and effect whatsoever. In the event of a Transfer, Lessor
may collect Rent and other charges from the assignee, subtenant or other
occupant or transferee (any and all of which are herein referred to as a
"Transferee") and apply the amounts collected to the Rent and other charges
herein reserved, but no Transfer or collection of Rent and other charges shall
be deemed to be a waiver of Lessor's rights to enforce Lessee's covenants or an
acceptance of the Transferee as Lessee, or a release of the Lessee named herein
from the performance of its covenants. Notwithstanding any Transfer, Lessee and
Guarantor shall remain fully liable for the performance of all terms, covenants
and provisions of this Lease. Any violation of this Lease by any Transferee
shall be deemed to be a violation of this Lease by Lessee.

         22.2 CONSENT TO CERTAIN TRANSFERS. Lessor acknowledges that Lessee, as
sublessor, intends to enter into subleases with the parties identified on
SCHEDULE 22.2, as sublessees, with respect to the Facilities identified on such
Schedule. Lessor consents to such subleases provided that all such sublease
agreements satisfy all of the requirements set forth in this Lease and otherwise
are satisfactory in form and substance to Lessor. The conditions set forth in
the immediately preceding sentence shall be deemed satisfied as to any sublease
with respect to which Lessor has executed and delivered a Consent and
Non-Disturbance Agreement in substantially the form of EXHIBIT F.
Notwithstanding any such sublease, Lessee and Guarantor shall remain fully
liable for the performance of all terms, covenants and provisions of this Lease.

         22.3 SUBORDINATION AND ATTORNMENT. Lessee shall insert in any sublease
permitted by Lessor provisions to the effect that (i) such sublease is subject
and subordinate to all of the terms and provisions of this Lease and to the
rights of Lessor hereunder, (ii) if this Lease terminates before the expiration
of such sublease, the sublessee thereunder will, at Lessor's option, attorn to
Lessor and waive any right the sublessee may have to terminate the sublease or
to surrender possession thereunder, as a result of the termination of this
Lease, and (iii) if the


                                       50
<PAGE>


sublessee receives a written Notice from Lessor or Lessor's assignee, if any,
stating that Lessee is in default under this Lease, the sublessee shall
thereafter be obligated to pay all rentals accruing under the sublease directly
to the party giving such Notice, or as such party may direct, which payments
shall be credited against the amounts owing by Lessee under this Lease.

                                  ARTICLE XXIII

                        LESSEE AND GUARANTOR INFORMATION

         23.1 OFFICER'S CERTIFICATES AND FINANCIAL STATEMENTS. Lessee and
Guarantor shall furnish or cause to be furnished to Lessor:

                  23.1.1 Fiscal Year Information. (i) within ninety (90) days
         after the end of each fiscal year of WCG, its audited consolidated
         balance sheets and related audited consolidated statements of
         operations, stockholders' or members' equity and cash flows as of the
         end of and for such fiscal year (including segment reporting with
         respect to each of WCG's business segments consistent), setting forth
         in each case in comparative form the figures for the previous fiscal
         year, all reported on by Ernst & Young LLP or other independent public
         accountants of recognized national standing, and otherwise reasonably
         satisfactory to Lessor (without a "going concern" or like qualification
         or exception and without any qualification or exception as to the scope
         of such audit) to the effect that such consolidated financial
         statements present fairly in all material respects the financial
         condition and results of operations of WCG on a consolidated basis in
         accordance with GAAP consistently applied, and (ii) within ninety (90)
         days after the end of each fiscal year of WCG, supplemental unaudited
         balance sheets and related unaudited statements of operations,
         stockholders' or members' equity and cash flows as of the end of and
         for such fiscal year, setting forth in tabular form in each case the
         figures for the previous year, for WCG and the consolidating
         adjustments with respect thereto.

                  23.1.2 Quarterly Information. (i) within forty-five (45) days
         after the end of each of the first three (3) fiscal quarters of each
         fiscal year of WCG, unaudited consolidated and consolidating balance
         sheets and related consolidated and consolidating statements of
         operations, stockholders' or members' equity and cash flows of
         Guarantor and WCG as of the end of and for such fiscal quarter and the
         then elapsed portion of the fiscal year, setting forth in each case in
         comparative form the figures for the corresponding period or periods of
         the previous fiscal year (or in the case of the balance sheet, as of
         the end of the previous fiscal year), all certified by an Officer's
         Certificate as presenting fairly in all material respects the financial
         condition and results of operations of Guarantor and WCG on a
         consolidated basis in accordance with GAAP consistently applied,
         subject to normal year-end audit adjustments and the absence of
         footnotes and (ii) within forty-five (45) days after the end of each of
         the first three (3) fiscal quarters of each fiscal year of Guarantor,
         unaudited balance sheets and related statements of operations,
         stockholders' or members' equity and cash flow of Guarantor as of the
         end of and for such fiscal quarter and the then elapsed portion of the
         fiscal year, setting forth in each case in comparative form the figures
         for the corresponding period or periods of the previous


                                       51
<PAGE>


         fiscal year (or, in the case of the balance sheet, as of the end of the
         previous fiscal year) all certified by an Officer's Certificate as
         presenting fairly in all material respects the financial condition and
         results of operations of Guarantor in accordance with GAAP consistently
         applied, subject to normal year-end audit adjustments and the absence
         of footnotes.

                  23.1.3 Officers Certificate. Concurrently with any delivery of
         financial statements under Sections 23.1.1 and 23.1.2, and at any time
         and from time to time, within ten (10) days of Lessor's request, an
         Officer's Certificate of the Lessee (i) certifying as to whether an
         Event of Default has occurred and, if an Event of Default has occurred,
         specifying the details thereof and any action taken or proposed to be
         taken with respect thereto, (ii) setting forth in reasonable detail
         calculations demonstrating compliance with Sections 8.4.2 through 8.4.6
         (iii) stating whether any change in GAAP or in the application thereof
         has occurred since the date of audited financial statements referred to
         in Section 17.1.4 and, if any such change has occurred, specifying the
         effect of such change on the financial statements accompanying such
         Officer's Certificate, and (iv) certifying as to the compliance by
         Lessee and Guarantor, with the provisions of this Lease, and such other
         matters set forth in this Lease or the Credit Agreement, as Lessor may
         specify.

                  23.1.4 Accounting Firm Certificate. Concurrently with any
         delivery of financial statements under Section 23.1.1, a certificate of
         the accounting firm that reported on such financial statements stating
         whether they obtained knowledge during the course of their examination
         of such financial statements of any Event of Default (which certificate
         may be limited to the extent required by accounting rules or
         guidelines).

                  23.1.5 Budget. As soon as practicable after approval by the
         Board of Directors of WCG, and in any event not later than one hundred
         and twenty (120) days after the commencement of each fiscal year of
         WCG, a consolidated and consolidating budget of WCG for such fiscal
         year and a consolidated budget of the Lessee for such fiscal year and,
         promptly when available, any significant revisions of any such budget.

                  23.1.6 SEC Filings. Promptly after the same become publicly
         available, copies of all periodic and other reports, proxy statements
         and other materials filed by WCG or any of its Affiliates with the SEC,
         or any Governmental Authority succeeding to any or all of the functions
         of the SEC, or with any national securities exchange, or distributed by
         WCG to its shareholders generally, as the case may be, except to the
         extent any such report, proxy statement or other material is available
         electronically on a publicly-accessible website.

                  23.1.7 Other Information. Promptly following any request
         therefor, such other information regarding the operations, business
         affairs and financial condition of Lessee, Guarantor or WCG, or
         compliance with the terms of this Lease or any of the documents
         contemplated herein, as Lessor may reasonably request.


                                       52
<PAGE>


                  23.1.8 Credit Agreement Information. To the extent not
         previously covered by the provisions of this Section 23.1, copies of
         all information provided by Guarantor, WCG or any Affiliates of either
         pursuant to the Credit Agreement, contemporaneously with its delivery
         pursuant thereto.

         23.2 PUBLIC OFFERING INFORMATION. Lessee, Guarantor and WCG,
specifically agree that subject to the approval of Lessee, which approval shall
not be unreasonably withheld or delayed, Lessor may include financial
information and information concerning the operation of the Facilities in
offering memoranda or prospectus, or similar publications in connection with
syndications or public offerings of Lessor's securities or interests, and any
other reporting requirements under applicable Federal and State Laws, including
those of any successor to Lessor. Lessee, Guarantor, and WCG, agree to provide
such other reasonable information necessary with respect to Lessee, Guarantor,
and WCG, and the Leased Properties to facilitate a public offering or to satisfy
SEC or regulatory disclosure requirements. Upon request of Lessor, Lessee shall
notify Lessor of any necessary corrections to information Lessor proposes to
publish within a reasonable period of time (not to exceed ten (10) days) after
being informed thereof by Lessor.

         23.3 NOTICES OF MATERIAL EVENTS. Upon its respective knowledge
thereof, Lessee and Guarantor each will furnish to Lessor prompt written notice
of the following. Each notice delivered under this Section shall be accompanied
by a statement of an Officer's Certificate, duly executed, setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.

                  23.3.1 Event of Default. The occurrence of any Event of
         Default.

                  23.3.2 Action, Suit or Proceeding. The filing or commencement
         of any action, suit or Proceeding by or before any arbitrator or
         Governmental Authority against or affecting Lessee, Guarantor or WCG or
         any Affiliate thereof that could reasonably be expected to result in a
         Material Adverse Effect.

                  23.3.3 ERISA Event. The occurrence of any ERISA Event that,
         alone or together with any other ERISA Events that have occurred, could
         reasonably be expected to result in a Material Adverse Effect.

                  23.3.4 Other Matters. Any other development that results in,
         or could reasonably be expected to result in, a Material Adverse
         Effect.

                                  ARTICLE XXIV

                                   INSPECTION

         24.1 LESSOR'S RIGHT TO INSPECT. Lessee shall permit Lessor and its
authorized representatives to inspect the Leased Properties and Lessee's books
and records pertaining thereto during normal business hours at any time upon
reasonable Notice. Notwithstanding the


                                       53
<PAGE>


foregoing, Lessee is and shall be in exclusive control and possession of the
Leased Properties as provided herein, and Lessor shall not in any event
whatsoever be liable for any injury or damage to any property or to any person
happening on or about the Leased Properties nor for any injury or damage to any
property of Lessee, or of any other person, except in the event any such injury
or damage is the direct result of the gross negligence or malfeasance of Lessor.
The right of Lessor to enter and inspect the Leased Properties are for the
purpose of enabling Lessor to be informed as to whether or not Lessee is
complying with the terms, covenants and conditions of this Lease and to do such
acts as Lessee may have failed to do, provided however, in no event shall Lessor
have any obligation whatsoever to so perform such acts.

                                   ARTICLE XXV

                                    NO WAIVER

         25.1 NO WAIVER. No failure by Lessor to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach hereof, and no acceptance of full or partial payment of
Rent during the continuance of any such breach, shall constitute a waiver of any
such breach or of any such term. No waiver of any breach shall affect or alter
this Lease, which shall continue in full force and effect with respect to any
other then existing or subsequent breach.

                                  ARTICLE XXVI

                               REMEDIES CUMULATIVE

         26.1 REMEDIES CUMULATIVE. To the extent permitted by law, each legal,
equitable or contractual right, power and remedy of Lessor now or hereafter
provided either in this Lease or by statute or otherwise shall be cumulative and
concurrent and shall be in addition to every other right, power and remedy and
the exercise or beginning of the exercise by Lessor of any one or more of such
rights, powers and remedies shall not preclude the simultaneous or subsequent
exercise by Lessor of any or all of such other rights, powers and remedies.

                                  ARTICLE XXVII

                                    SURRENDER

         27.1 ACCEPTANCE OF SURRENDER. No surrender to Lessor of this Lease or
of the Leased Properties or any part thereof, or of any interest therein, shall
be valid or effective unless agreed to and accepted in writing by Lessor, and no
act by Lessor or any representative or agent of Lessor, other than such a
written acceptance by Lessor, shall constitute an acceptance of any such
surrender.


                                       54
<PAGE>


                                  ARTICLE XXIII

                                  RELATIONSHIP

         28.1 NO MERGER OF TITLE. There shall be no merger of this Lease or of
the leasehold estate created hereby by reason of the fact that the same person,
firm, corporation or other entity may acquire, own or hold, directly or
indirectly, (i) this Lease or the leasehold estate created hereby or any
interest in this Lease or such leasehold estate, and (ii) the fee estate in the
Leased Properties.

         28.2 NO PARTNERSHIP. Nothing contained in this Lease will be deemed or
construed to create a partnership or joint venture between Lessor and Lessee or
to cause either party to be responsible in any way for the debts or obligations
of the other or any other party, it being the intention of the parties that the
only relationship hereunder is that of Lessor and Lessee.

                                  ARTICLE XXIX

                              CONVEYANCE BY LESSOR

         29.1 CONVEYANCE BY LESSOR. Lessor may at its sole option, transfer the
Leased Properties and in connection with any such transfer, may assign this
Lease. If Lessor or any successor owner of the Leased Properties conveys the
Leased Properties other than as security for a debt, Lessor or such successor
owner, as the case may be, shall thereupon be released from all future
liabilities and obligations of Lessor under this Lease arising or accruing from
and after the date of such conveyance or other transfer and all such future
liabilities and obligations shall thereupon be binding upon the new owner.


                                   ARTICLE XXX

                                 QUIET ENJOYMENT

         30.1 QUIET ENJOYMENT. So long as Lessee pays all Rent as it becomes due
and complies with all of the terms of this Lease and performs its obligations
hereunder, Lessee shall peaceably and quietly have, hold and enjoy the Leased
Properties for the Term, free of any claim or other action by Lessor or anyone
claiming by, through or under Lessor, but subject to all liens and Encumbrances
of record as of the date hereof or hereafter provided for in this Lease or
consented to by Lessee. Except as otherwise provided in this Lease, no failure
by Lessor to comply with the foregoing covenant will give Lessee any right to
cancel or terminate this Lease or abate, reduce or make a deduction from or
offset against the Rent or any other sum payable under this Lease, or to fail to
perform any other obligation of Lessee. Lessee shall, however, have the right,
by separate and independent action, to pursue any claim it may have against
Lessor as a result of a breach by Lessor of the covenant of quiet enjoyment
contained in this Section.


                                       55
<PAGE>


                                  ARTICLE XXXI

                                     NOTICES

         31.1 NOTICES. Any notice, request or other communication to be given by
any party hereunder shall be in writing and shall be sent by registered or
certified mail, postage prepaid, by overnight deliver, hand delivery or
facsimile transmission to the following address:

         To Lessor:              Williams Headquarters Building Company
                                 Attn: George D. Shahadi, Vice President-Corp.
                                       Real Estate
                                 One Williams Center, Suite 2200
                                 Tulsa, Oklahoma  74172
                                 Fax No. 918/573-4049

         With copies to:         The Williams Companies, Inc.
                                 Attn: Real Estate Counsel
                                 One Williams Center, Suite 4100
                                 Tulsa, Oklahoma  74172
                                 Fax No. 918/ 573-4503

                                 The Williams Companies, Inc.
                                 Attn: Treasurer
                                 One Williams Center, Suite 5000
                                 Tulsa, Oklahoma  74172
                                 Fax No. 918/ 573-2065


         To Lessee:              Williams Technology Center, LLC
                                 Attn: Vice President, Real Estate
                                 One Williams Center, MD-OneOK-6
                                 Tulsa, Oklahoma  74172
                                 Fax No. 918/ 573-5614

         With copy to:           Williams Communications, LLC.
                                 Attn: P. David Newsome, Jr., Esq.,
                                 General Counsel
                                 One Williams Center, MD-41-3
                                 Tulsa, Oklahoma  74172
                                 Fax No. 918/ 573-3005

         To Guarantor:           Williams Communications, LLC
                                 Attn: P. David Newsome, Jr., Esq.,
                                 General Counsel
                                 One Williams Center, MD-41-3
                                 Tulsa, Oklahoma  74172
                                 Fax No. 918/ 573-3005


                                       56
<PAGE>


         With copy to:           Williams Communications, LLC
                                 Attn:  Assistant Treasurer
                                 One Technology Center, MD: TC 14X
                                 Tulsa, Oklahoma  74103
                                 Fax No.: 918/547-1108


or to such other address as either party may hereafter designate. Notice shall
be deemed to have been given on the date of delivery if such delivery is made on
a Business Day, or if not, on the first Business Day after delivery. If delivery
is refused, Notice shall be deemed to have been given on the date delivery was
first attempted. Notice sent by facsimile transmission shall be deemed given
upon confirmation that such Notice was received at the number specified above or
in a Notice to the sender. If Lessee has vacated the Leased Properties, Lessor's
Notice may be posted on the door of a Leased Property. No failure of any
addressee designated as "With copy to", to be sent or to receive any Notice
shall invalidate the effectiveness of Notice sent to and received by any party
to this Lease.

                                  ARTICLE XXXII

                             [INTENTIONALLY OMITTED]


                                 ARTICLE XXXIII

                             [INTENTIONALLY OMITTED]


                                  ARTICLE XXXIV

                           LESSOR'S OPTION TO PURCHASE

         34.1 LESSOR'S OPTION TO PURCHASE LESSEE'S PERSONAL PROPERTY. Unless
Lessee purchases the Leased Properties as provided in this Lease, upon the
expiration or termination of this Lease, Lessor shall have the option on the
terms hereinafter set forth to purchase any of Lessee's Personal Property that
is not deemed to have been sold, assigned, transferred and conveyed to Lessor
pursuant to Section 6.3 hereof, for an amount equal to the then book value
thereof (acquisition cost less accumulated depreciation on the books of Lessee
pertaining thereto), subject to, and with appropriate credits for, any
obligations owing from Lessee to Lessor and for the then outstanding balances
owing on all equipment leases, conditional sale contracts and any other
Encumbrances to which such Lessee's Personal Property is subject. Lessor's
option shall be exercised by Notice to Lessee no more than one hundred eighty
(180) days, nor less than ninety (90) days, before the expiration of the Realty
Term, unless this Lease is terminated prior to its expiration date by reason of
an Event of Default, in which event Lessor's option shall be exercised not more
than ninety (90) days after the date of


                                       57
<PAGE>


termination. Lessor's option shall terminate upon Lessee's purchase of the
Leased Properties. If Lessee does not receive Lessor's Notice exercising its
option before the expiration of the relevant time period, Lessee shall give
Lessor Notice thereof and Lessor's option shall continue in full force and
effect for a period of thirty (30) days after such Notice from Lessee. If Lessor
exercises its option, Lessee shall, in exchange for Lessor's payment of the
purchase price, deliver the purchased Lessee's Personal Property to Lessor,
together with a bill of sale and such other documents as Lessor may reasonably
request in order to carry out the purchase, and the purchase shall be closed by
such delivery and such payment on the date set by Lessor in its Notice of
exercise. Lessor shall be responsible for applicable sales, use and other
similar taxes which are assessed on the sale of Lessee's Personal Property to
Lessor.

         34.2 LEASED PROPERTIES TRADE NAME. If this Lease is terminated pursuant
to Section 16.1 or Lessor exercises its option to purchase Lessee's Personal
Property pursuant to Section 34.1, Lessee shall be deemed to have assigned to
Lessor the exclusive right to use Leased Properties Trade Name in perpetuity.

         34.3 TRANSFER OF OPERATIONAL CONTROL OF THE FACILITIES. Lessee shall
cooperate fully in transferring operational control of all of the Facilities
which are then subject to this Lease to Lessor or Lessor's nominee if the Term
expires without renewal or this Lease is terminated upon the occurrence of an
Event of Default or for any other reason, and Lessee shall use its best efforts
to cause the business conducted at all such Facilities to continue without
interruption. To that end, pending completion of the transfer of the operational
control of such Facilities to Lessor or its nominee:

                  34.3.1 Employees. Lessee will not terminate the employment of
         any Leased Properties maintenance and operations employees without just
         cause, or change any salaries, provided, however, that without the
         advance written consent of Lessor, Lessee may grant pre-announced wage
         increases of which Lessor has knowledge, increases required by written
         employment agreements and normal raises to non-officers at regular
         review dates; and Lessee will not hire any additional employees except
         in good faith in the ordinary course of business;

                  34.3.2 Change in Control. Lessee will provide all necessary
         information requested by Lessor or its nominee for the preparation and
         filing of any and all necessary applications or notifications of any
         federal or state governmental authority having jurisdiction over a
         change in the operational control of the Facilities, and any other
         information reasonably required to effect an orderly transfer of the
         Facilities;

                  34.3.3 Business and Organization. Lessee shall use all
         reasonable efforts to keep the business and organization of the
         Facilities intact and to preserve for Lessor or its nominee the
         goodwill of the suppliers, distributors, residents and others having
         business relations with Lessee with respect to the Facilities;

                  34.3.4 Operations in Ordinary Course. Lessee shall engage only
         in transactions or other activities with respect to the Facilities
         which are in the ordinary course of its


                                       58
<PAGE>


         business and shall perform all maintenance and repairs reasonably
         necessary to keep the Facilities in satisfactory operating condition
         and repair;

                  34.3.5 Employee Benefits. Lessee shall provide Lessor or its
         nominee with full and complete information regarding the employees of
         the Facilities and shall reimburse Lessor or its nominee for all
         outstanding accrued employee benefits, including accrued vacation, sick
         and holiday pay calculated on a true accrual basis, including all
         earned and a prorated portion of all unearned benefits;

                  34.3.6 Third Party Consents. Lessee shall use all reasonable
         efforts to obtain the acknowledgment and the consent of any creditor,
         lessor or sublessor, mortgagee, beneficiary of a deed of trust or
         security agreement affecting the real and personal properties of Lessee
         or any other party whose acknowledgment and/or consent would be
         required because of a change in the operational control of the
         Facilities and transfer of personal property. The consent must be in
         form, scope and substance satisfactory to Lessor or its nominee,
         including, without limitation, an acknowledgment in respect to all such
         contracts, leases, deeds of trust, mortgage, security agreements, or
         other agreements that Lessee and all predecessors or
         successors-in-interest thereto are not in default in respect thereto,
         that no condition known to the consenting party exists which with the
         giving of notice or lapse of time would result in such a default, and,
         if requested, affirmatively consenting to the change in the operational
         control of the Facilities;

                  34.3.7 Lessor as Attorney-in-Fact. To more fully preserve and
         protect Lessor's rights under this Section, Lessee does hereby make,
         constitute and appoint Lessor its true and lawful attorney-in-fact, for
         it and in its name, place and stead to execute and deliver all such
         instruments and documents, and to do all such other acts and things, as
         Lessor may deem to be necessary or desirable to protect and preserve
         the rights granted under this Section. Lessee hereby grants to Lessor
         the full power and authority to appoint one or more substitutes to
         perform any of the acts that Lessor is authorized to perform under this
         Section, with a right to revoke such appointment of substitution at
         Lessor's pleasure. The power of attorney granted pursuant to this
         Section is coupled with an interest and therefore is irrevocable. Any
         person dealing with Lessor may rely upon the representation of Lessor
         relating to any authority granted by this power of attorney, including
         the intended scope of the authority, and may accept the written
         certificate of Lessor that this power of attorney is in full force and
         effect. Photographic or other facsimile reproductions of this executed
         Lease may be made and delivered by Lessor, and may be relied upon by
         any person to the same extent as though the copy were an original.
         Anyone who acts in reliance upon any representation or certificate of
         Lessor, or upon a reproduction of this Lease, shall not be liable for
         permitting Lessor to perform any act pursuant to this power of
         attorney. Notwithstanding the foregoing, Lessor covenants with Lessee
         that Lessor shall refrain from exercising the power of attorney granted
         hereby except in the case of an Event of Default hereunder or in the
         event of a default, which, in Lessor's reasonable judgment, may lead to
         the suspension or revocation of any license of Lessee or of any
         sublessee.


                                       59
<PAGE>


         34.4 INTANGIBLES AND PERSONAL PROPERTY. Notwithstanding any other
provision of this Lease but subject to Articles 40 or 41 relating to the
security interest in favor of Lessor, Leased Personal Property shall not include
goodwill nor shall it include any other intangible personal property that is
severable from Lessor's " interests in real property" within the meaning of
Section 856(d) of the Code, or any similar or successor provision thereto.

                                  ARTICLE XXXV

                             [INTENTIONALLY OMITTED]


                                  ARTICLE XXXVI

                                  MISCELLANEOUS

         36.1 COMPLIANCE WITH FACILITY MORTGAGE. Lessee covenants and agrees
that it will duly and punctually observe, perform and comply with all of the
terms, covenants and conditions (including, without limitation, covenants
requiring the keeping of books and records and delivery of Financial Statements
and other information) of any Facility Mortgage and that it will not directly or
indirectly, do any act or suffer or permit any condition or thing to occur,
which would or might constitute a default under a Facility Mortgage. Anything in
this Lease to the contrary notwithstanding, if the time for performance of any
act required of Lessee by the terms of a Facility Mortgage is shorter than the
time allowed by this Lease for performance of such act by Lessee, then Lessee
shall perform such act within the time limits specified in such Facility
Mortgage.

         36.2 SURVIVAL, CHOICE OF LAW. Anything contained in this Lease to the
contrary notwithstanding, all claims against, and liabilities of, Lessee or
Lessor arising prior to the date of expiration or termination of this Lease
shall survive such expiration or termination. If any term or provision of this
Lease or any application thereof is held invalid or unenforceable, the remainder
of this Lease and any other application of such term or provisions shall not be
affected thereby. Neither this Lease nor any provision hereof may be changed,
waived, discharged or terminated except by an instrument in writing and in
recordable form signed by Lessor and Lessee. All the terms and provisions of
this Lease shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. The headings in this Lease are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof. This Lease shall be governed by and construed in accordance with
the laws of the State, except as to matters which, under applicable procedural
conflicts of laws rules require the application of laws of another State.

         LESSEE CONSENTS TO IN PERSONAM JURISDICTION BEFORE THE STATE AND
FEDERAL COURTS OF THE STATES OF OKLAHOMA AND AGREES THAT ALL DISPUTES CONCERNING
THIS LEASE BE HEARD IN THE STATE AND FEDERAL COURTS LOCATED IN THE STATE OF
OKLAHOMA. LESSEE AGREES THAT SERVICE OF PROCESS MAY BE EFFECTED UPON IT UNDER
ANY METHOD PERMISSIBLE


                                       60
<PAGE>


UNDER THE LAWS OF THE STATE OF OKLAHOMA AND IRREVOCABLY WAIVES ANY OBJECTION TO
VENUE IN THE STATE AND FEDERAL COURTS OF THE STATE OF OKLAHOMA.

         36.3 LIMITATION ON RECOVERY. Lessee specifically agrees to look solely
to Lessor's interest in the Leased Properties for recovery of any judgment from
Lessor, it being specifically agreed that no constituent shareholder, officer or
director of Lessor shall ever be personally liable for any such judgment or for
the payment of any monetary obligation to Lessee. Furthermore, Lessor (original
or successor) shall never be liable to Lessee for any indirect, consequential,
special or punitive damages suffered by Lessee from whatever cause.

         36.4 WAIVERS. Lessee waives any defense by reason of any disability of
Lessee, and waives any other defense based on the termination of Lessee's
(including Lessee's successor's) liability from any cause. Lessee waives all
presentments, demands for performance, notices of nonperformance, protests,
notices of protest, notices of dishonor, and notices of acceptance, and waives
all notices of the existence, creation, or incurring of new or additional
obligations.

         36.5 CONSENTS. Whenever the consent or approval of Lessor is required
hereunder, Lessor may in its sole discretion and without reason withhold that
consent or approval unless otherwise specifically provided.

         36.6 COUNTERPARTS. This Lease may be executed in separate counterparts,
each of which shall be considered an original when each party has executed and
delivered to the other one or more copies of this Lease.

         36.7 RIGHTS CUMULATIVE. Except as provided herein to the contrary, the
respective rights and remedies of the parties specified in this Lease shall be
cumulative and in addition to any rights and remedies not specified in this
Lease.

         36.8 ENTIRE AGREEMENT. There are no oral or written agreements or
representations between the parties hereto affecting this Lease. This Lease
supersedes and cancels any and all previous negotiations, arrangements,
representations, brochures, agreements and understandings, if any, between
Lessor and Lessee.

         36.9 AMENDMENTS IN WRITING. No provision of this Lease may be amended
except by an agreement in writing signed by Lessor and Lessee.

         36.10 SEVERABILITY. If any provision of this Lease or the application
of such provision to any person, entity or circumstance is found invalid or
unenforceable by a court of competent jurisdiction, such determination shall not
affect the other provisions of this Lease and all other provisions of this Lease
shall be deemed valid and enforceable.

         36.11 ESTOPPEL CERTIFICATE. At any time and from time to time, Lessee
shall, without charge, within ten (10) days after request by Lessor, certify by
a written instrument executed and acknowledged by a duly authorized
representative of Lessee, addressed to Lessor


                                       61
<PAGE>


and any mortgagee or purchaser, or proposed mortgagee or proposed purchaser, or
any other party, firm or corporation specified by Lessor, as to the validity and
status of this Lease, as to the existence of any default on the part of any
party hereunder, as to the existence of any offsets, counterclaims, or defenses
thereto which may be alleged on the part of Lessee, and as to any other matters
which may be reasonably requested by Lessor.

         36.12 TIME OF THE ESSENCE. Except for the delivery of possession of the
Facilities to Lessee, time is of the essence of all provisions of this Lease of
which time is an element.

         36.13 LESSOR'S COSTS AND EXPENSES. Lessee shall be responsible for and
shall pay on demand by Lessor, all of Lessor's reasonable costs and expenses
incurred in connection with the negotiation and preparation of this Lease,
including without limitation, the reasonable fees and expenses of Lessor's
attorneys.

                                 ARTICLE XXXVII

                                     BROKERS

         37.1 COMMISSIONS. Lessee represents and warrants to Lessor that no real
estate commission, finder's fee or the like is due and owing to any person in
connection with this Lease. Lessee agrees to save, indemnify and hold Lessor
harmless from and against any and all claims, liabilities or obligations for
brokerage, finder's fees or the like in connection with this Lease or the
transactions contemplated hereby, asserted by any person on the basis of any
statement or act alleged to have been made or taken by Lessee.

                                  ARTICLE XVIII

                               MEMORANDUM OF LEASE

         38.1 MEMORANDUM OR SHORT FORM OF LEASE. Lessor and Lessee shall,
promptly upon the request of either, enter into a Memorandum or Short Form of
Lease, substantially in the form of EXHIBIT G with such modifications as may be
appropriate under the laws and customs of the States and in the customary form
suitable for recording under the laws of each of the States. Lessee shall pay
all costs and expenses of recording such memorandum or short form of this Lease.

                                  ARTICLE XXXIX

                               RECHARACTERIZATION

         39.1 RECHARACTERIZATION AS A SECURITY DOCUMENT. In the event that
notwithstanding the intent of Lessor, Lessee and Guarantor as set forth herein,
that this Lease be treated as a true lease for purposes of the UCC and other
applicable laws of the State, a court of competent jurisdiction recharacterizes
this Lease as a security document serving as collateral for a financing, the
additional provisions set forth in Article XL and Article XLI shall apply,


                                       62
<PAGE>


provided however, such application shall in no event otherwise diminish,
restrict or eliminate any of the Lessor's rights or remedies set forth in this
Lease or in any of the other documents executed in connection herewith, all of
the foregoing to remain in full force and effect for all purposes.

                                   ARTICLE XL

                             GRANT OF MORTGAGE LIEN

         40.1 GRANT OF LIEN AND SECURITY INTEREST; ASSIGNMENT OF RENTS. To
secure to the Lessor the performance by the Lessee of its covenants, agreements
and obligations under the Lease, Lessee hereby agrees as follows:

                  40.1.1 Mortgage. Subject to the terms and conditions of the
         Lease, and in addition to all other rights and remedies of Lessor as
         contained herein or under applicable law, the Lessee does hereby
         mortgage, pledge, grant, bargain, sell, convey, assign, warrant,
         transfer and set over to the Lessor, WITH POWER OF SALE, to the extent
         permitted by applicable law: (i) all of the Lessee's right, title and
         interest, if any, in the Leased Properties, and (ii) all of the
         Lessee's right, title and interest in and to all proceeds of the
         conversion, whether voluntary or involuntary, of any of the
         above-described property into cash or other liquid claims, including,
         without limitation, all awards, payments or proceeds, including
         interest thereon, and the right to receive the same, which may be made
         as a result of casualty, any exercise of the right of eminent domain or
         deed in lieu thereof, the alteration of the grade of any street and any
         injury to or decrease in the value thereof, the foregoing collectively
         being referred to hereinafter as the "Security Property".

         TO HAVE AND TO HOLD the foregoing rights, interests and properties, and
         all rights, estates, powers and privileges appurtenant thereto, unto
         the Lessor, its successors and assigns, forever, for the uses and
         purposes herein expressed, but not otherwise.

                  40.1.2 Security Interest. Subject to the terms and conditions
         of the Lease, the Lessee hereby grants to the Lessor a security
         interest in the Lessee's interest, if any, in that portion of the
         Security Property (the "UCC Property") subject to the Uniform
         Commercial Code of the state in which the Leased Properties are located
         (the "UCC"). This Lease shall also be deemed to be a security agreement
         and a financing statement filed as a fixture filing pursuant to 12A
         O.S. Section 1-9-502 and shall support any financing statement showing
         the Lessor's interest as a secured party with respect to any portion of
         the UCC Property described in such financing statement. The Lessee
         agrees, at its sole cost and expense, to execute, deliver and file from
         time to time such further instruments as may be requested by the Lessor
         to confirm and perfect the lien of the security interest in the
         collateral described in this Lease.

                  40.1.3 Assignment of Leases and Rents. The Lessee hereby
         irrevocably assigns, conveys, transfers and sets over unto the Lessor
         (subject, however, to the Lease and the


                                       63
<PAGE>


         rights of the Lessee thereunder and hereunder) all and every part of
         the rents, issues and profits that may from time to time become due and
         payable on account of any and all subleases or other occupancy
         agreements now existing, or that may hereafter come into existence with
         respect to the Leased Properties or any part thereof, including any
         guaranties of such subleases or other occupancy agreements. Upon
         request of the Lessor, the Lessee shall execute and cause to be
         recorded, at its expense, supplemental or additional assignments of any
         subleases or other occupancy agreements, of the Leased Properties. Upon
         the occurrence and continuance of a Event of Default, the Lessor is
         hereby fully authorized and empowered in its discretion (in addition to
         all other powers and rights herein granted), and subject to the Lease
         and the rights of the Lessee thereunder and hereunder, to apply for and
         collect and receive all such rents, issues and profits and to enforce
         any guaranty or guaranties, and all money so received under and by
         virtue of this assignment shall be held and applied as further security
         for the payment of the indebtedness secured hereby and to assure the
         performance by the Lessee of its covenants, agreements and obligations
         under the Lease.

         40.2 REMEDIES. Upon the occurrence and continuance of an Event of
Default:

                  40.2.1 Power of Sale Foreclosure. The Lessor shall have the
         power and authority, to the extent provided by law, after proper notice
         and lapse of such time as may be required by the Oklahoma Power of Sale
         Mortgage Foreclosure Act, 46 O.S. Section 40-49, as amended from time
         to time (the "Act"), to sell the Security Property at the time and
         place of sale fixed by the Lessor in said notice of sale, either as a
         whole, or in separate lots or parcels and in such order as the Lessor
         may elect, at auction to the highest bidder for cash in lawful money of
         the United States payable at the time of sale, all in accordance with
         the Act and any other applicable laws of the jurisdiction in which the
         Leased Properties are located, it being acknowledged that A POWER OF
         SALE HAS BEEN GRANTED IN THIS INSTRUMENT. A POWER OF SALE MAY ALLOW THE
         LESSOR TO TAKE THE SECURITY PROPERTY AND SELL IT WITHOUT GOING TO COURT
         IN A FORECLOSURE ACTION UPON THE OCCURRENCE AND CONTINUANCE OF AN EVENT
         OF DEFAULT BY THE LESSEE.

                  40.2.2 Judicial Foreclosure. The Lessor may proceed by a suit
         or suits in equity or at law, whether for a foreclosure hereunder, or
         for the sale of the Security Property, or, subject to the terms and
         conditions of the Lease, against the Lessee for the Rent, or for the
         specific performance of any covenant or agreement herein contained or
         in aid of the execution of any power herein granted, or for the
         appointment of a receiver pending any foreclosure hereunder or the sale
         of the Security Property, or for the enforcement of any other
         appropriate legal or equitable remedy.

                  40.2.3 Appointment of Receiver. Without regard to the Lessor's
         election of nonjudicial power of sale foreclosure or judicial
         foreclosure, the Lessor shall be entitled to the appointment of a
         receiver by any court of competent jurisdiction, without notice and
         without regard to the sufficiency or value of any security for the
         indebtedness secured hereby or the solvency of any party bound for its
         payment. The receiver shall have all of


                                       64
<PAGE>


         the rights and powers permitted under the laws of the state within
         which the Leased Properties are located.

                  40.2.4 Waiver of Appraisement Appraisement of the Leased
         Properties is hereby waived or not waived at the option of the Lessor,
         such option to be exercised at or prior to the time judgment is
         rendered in any judicial foreclosure.

                  40.2.5 Additional Remedies. It is the intent of the parties
         hereto that, upon the occurrence and continuance of an Event of
         Default, the Lessor shall have the remedies provided for in this
         Section 40.2; provided, however, that (i) in lieu of the remedies
         provided for in this Lease, the Lessor, at its election, may require
         the Lessee to purchase the Leased Properties and, in the event that the
         Lessee purchases the Leased Properties as provided in Section 16.4 of
         this Lease, the remedies set forth herein shall not be available to the
         Lessor with respect to such Event of Default, and (ii) in the event
         that, notwithstanding the intention of the parties, a court of
         competent jurisdiction determines that the remedies in this Section
         40.2 are unenforceable, the Lessor shall have, as a result of such
         determination, in lieu of the remedies in this Section 40.2, any and
         all of the other remedies provided for in Article 16 of this Lease. To
         the extent not in conflict with applicable law or the Lessee's
         obligations thereunder, the parties acknowledge and agree that the
         provisions of 11 U.S.C. Section 502(b)(6) are not applicable to the
         transactions contemplated by this Lease.

                  40.2.6 Cure by Purchase of Leased Properties. Notwithstanding
         anything to the contrary contained herein, the Lessee may cure any
         Event of Default affecting or relating to the Leased Properties by
         purchasing the Leased Properties as provided in Section 16.4 of this
         Lease.

                                   ARTICLE XLI

                           GRANT OF SECURITY INTEREST

         41.1 GRANT OF SECURITY INTEREST. The Lessee hereby pledges, assigns and
grants to the Lessor a security interest in and to the Collateral to secure the
prompt and complete payment and performance of all of Lessee's covenants,
agreements and obligations under this Lease.

         41.2 UCC REPRESENTATIONS AND WARRANTIES. Lessee and Guarantor represent
and warrant to the Lessor that:

                  41.2.1 Authorization, Validity and Enforceability. Lessee has
         good and valid power to grant a security interest hereunder, free and
         clear of all Encumbrances except for Encumbrances permitted under
         Section 41.3.6, and has full power and authority to grant to the Lessor
         the security interest in such Collateral pursuant hereto. When
         financing statements have been filed in the appropriate offices against
         the Lessee in the locations listed on EXHIBIT P, the Lessor will have a
         fully perfected, first priority, security interest


                                       65
<PAGE>


         in that Collateral in which a security interest may be perfected by
         filing, subject only to Encumbrances permitted under Section 41.3.6.

                  41.2.2 Conflicting Laws and Contracts. Neither the execution
         and delivery by the Lessee of this Lease, the creation and perfection
         of the security interest in the Collateral granted hereunder, nor
         compliance with the terms and provisions hereof will violate any law,
         rule, regulation, order, writ, judgment, injunction, decree or award
         binding on any Lessee or Lessee's articles or certificate of
         incorporation or by-laws, partnership agreements, or operating
         agreements, as the case may be, the provisions of any indenture,
         instrument or agreement to which Lessee is a party or is subject, or by
         which it, or its property, is bound, or conflict with or constitute a
         default thereunder, or result in the creation or imposition of any
         Encumbrance pursuant to the terms of any such indenture, instrument or
         agreement.

                  41.2.3 Type and Jurisdiction of Organization. The
         organizational type and jurisdiction for Lessee and Guarantor are set
         forth in the Preamble.

                  41.2.4 Principal Location. Each of the Lessee's and
         Guarantor's mailing address and the location of its place of business
         (if it has only one) or its chief executive office, is disclosed in
         EXHIBIT P; Lessee has no other places of business except those set
         forth in EXHIBIT P.

                  41.2.5 Property Locations. All of the Collateral is located
         solely in Tulsa, Oklahoma, on or connected with the Land or the Leased
         Improvements.

                  41.2.6 No Other Names. Lessee has not conducted business under
         any name except the name in which it has executed this Lease, which is
         the exact name as it appears in the Lessee's organizational documents,
         as amended, as filed with the Lessee's jurisdiction of organization.

                  41.2.7 No Financing Statements. No financing statement
         describing all or any portion of the Collateral which has not lapsed or
         been terminated naming the Lessee as debtor has been filed in any
         jurisdiction except (i) financing statements naming the Lessor as the
         secured party, and (ii) as permitted by Section 41.3.6. None of the
         Equipment is covered by any certificate of title.

                  41.2.8 Federal Employer Identification Number. The Federal
         employer identification numbers for both Lessee and Guarantor are set
         forth on EXHIBIT P.

         41.3 UCC COVENANTS. The following covenants shall apply to the
Collateral.

                  41.3.1 Inspection. Lessee and Guarantor will permit the
         Lessor, by its representatives and agents (i) to inspect the
         Collateral, (ii) to examine and make copies of the records of the
         Lessee relating to the Collateral and (iii) to discuss the Collateral
         and the related records of Lessee and Guarantor with, and to be advised
         as to the same by, the


                                       66
<PAGE>


         Lessee's and Guarantor's respective officers and employees, all at such
         reasonable times and intervals as the Lessor may determine, and all at
         the Lessee's and Guarantor's expense.

                  41.3.2 Taxes. Lessee and Guarantor will pay or cause to be
         paid when due all taxes, assessments and governmental charges and
         levies upon the Collateral, except those which are being contested in
         good faith by appropriate Proceedings and with respect to which no
         Encumbrance exists.

                  41.3.3 Records and Reports; Notification of Default. Lessee
         will maintain complete and accurate books and records with respect to
         the Collateral, and furnish to the Lessor such reports relating to the
         Collateral as the Lessor shall from time to time request. Each of the
         Lessee and Guarantor will give prompt notice in writing to the Lessor
         of the occurrence of any Event of Default and of any other development,
         financial or otherwise, which might materially and adversely affect the
         Collateral.

                  41.3.4 Financing Statements and Other Actions; Defense of
         Title. Both Lessee and Guarantor hereby authorize the Lessor to file
         and if requested will execute and deliver to the Lessor all financing
         statements and other documents and take such other actions as may from
         time to time be requested by the Lessor in order to maintain a first
         perfected security interest in and, if applicable, control of, the
         Collateral. Lessee and Guarantor will take any and all actions
         necessary to defend title to the Collateral against all persons and to
         defend the security interest of the Lessor in the Collateral and the
         priority thereof against any Encumbrance not expressly permitted
         hereunder.

                  41.3.5 Disposition of Collateral. Lessee will not sell, lease
         or otherwise dispose of the Collateral except (i) prior to the
         occurrence of an Event of Default, dispositions specifically permitted
         pursuant to this Lease, (ii) until such time following the occurrence
         of an Event of Default as Lessee receives a notice from the Lessor
         instructing the Lessee to cease such transactions, sales or leases of
         Inventory in the ordinary course of business, and (iii) until such time
         as Lessee receives a notice from the Lessor, proceeds of Inventory
         collected in the ordinary course of business.

                  41.3.6 Encumbrances. Neither Lessee nor Guarantor will create,
         incur, or suffer to exist any Encumbrance on the Collateral except (i)
         the security interest created by this Lease, and (ii) Permitted
         Encumbrances.

                  41.3.7 Change of Name or Mailing Address. Lessee will not (i)
         change its name or taxpayer identification number or (ii) change its
         mailing address, unless Lessee shall have given the Lessor not less
         than thirty (30) days' prior written notice of such event or occurrence
         and the Lessor shall have either (x) determined that such event or
         occurrence will not adversely affect the validity, perfection or
         priority of the Lessor's security interest in the Collateral, or (y)
         taken such steps (with the cooperation of Lessee and Guarantor to the
         extent necessary or advisable) as are necessary or advisable to
         properly maintain the validity, perfection and priority of the Lessor's
         security interest in the Collateral.


                                       67
<PAGE>


                  41.3.8 Other Financing Statements. Lessee will not sign or
         authorize the signing on its behalf of the filing of any financing
         statement naming it as debtor covering all or any portion of the
         Collateral, except as permitted by Section 41.3.6.

                  41.3.9 Maintenance of Goods. Lessee will do all things
         necessary to maintain, preserve, protect and keep the Inventory and the
         Equipment in good repair and working condition.

         41.4 ACCELERATION AND REMEDIES. Upon the acceleration of the Rent
pursuant to the terms hereof, the Lessor may exercise any or all of the
following rights and remedies:

                  41.4.1 UCC Remedies. Those rights and remedies available to a
         secured party under the UCC (whether or not the UCC applies to the
         affected Collateral) or under any other applicable law when a debtor is
         in default under a security agreement.

                  41.4.2 Disposal. Without notice except as specifically
         provided elsewhere in this Lease, sell, lease, assign, grant an option
         or options to purchase or otherwise dispose of the Collateral or any
         part thereof in one or more parcels at public or private sale, for
         cash, on credit or for future delivery, and upon such other terms as
         the Lessor may deem commercially reasonable.

                  41.4.3 Compliance with Law. The Lessor may comply with any
         applicable state or federal law requirements in connection with a
         disposition of the Collateral, and compliance will not be considered to
         adversely affect the commercial reasonableness of any sale of the
         Collateral.

         41.5 OBLIGATIONS UPON DEFAULT. Upon the request of the Lessor after the
occurrence of an Event of Default, both Lessee and Guarantor will:

                  41.5.1 Assembly of Collateral. Assemble and make available to
         the Lessor the Collateral and all records relating thereto at any place
         or places specified by the Lessor.

                  41.5.2 Lessor Access. Permit the Lessor, by the Lessor's
         representatives and agents, to enter any premises where all or any part
         of the Collateral, or the books and records relating thereto, or both,
         are located, to take possession of all or any part of the Collateral
         and to remove all or any part of the Collateral.

         41.6 ADDITIONAL UCC PROVISIONS. The following additional provisions
shall apply to the Collateral:

                  41.6.1 Notice of Disposition of Collateral; Condition of
         Collateral. Notice of the time and place of any public sale or the time
         after which any private sale or other disposition of all or any part of
         the Collateral shall be deemed reasonable if sent to the Lessee at
         least ten (10) days prior to (i) the date of any such public sale or
         (ii) the time


                                       68
<PAGE>


         after which any such private sale or other disposition may be made.
         Lessor shall have no obligation to clean-up or otherwise prepare the
         Collateral for sale.

                  41.6.2 Lessor Performance of Lessee Obligations. Without
         having any obligation to do so, the Lessor may perform or pay any
         obligation which Lessee has agreed to perform or pay in this Lease and
         Lessee and Guarantor shall reimburse the Lessor for any amounts paid by
         the Lessor pursuant to this Section 41.6.2.

                  41.6.3 Authorization for Lessor to Take Certain Action. Lessee
         irrevocably authorizes the Lessor at any time and from time to time in
         the sole discretion of the Lessor and appoints the Lessor as its
         attorney-in-fact (i) to execute on behalf of Lessee and to file
         financing statements necessary or desirable in the Lessor's sole
         discretion to perfect and to maintain the perfection and priority of
         the Lessor's security interest in the Collateral, (ii) to indorse and
         collect any cash proceeds of the Collateral, (iii) to file a carbon,
         photographic or other reproduction of this Lease or any financing
         statement with respect to the Collateral as a financing statement and
         to file any other financing statement or amendment of a financing
         statement (which does not add new collateral or add a debtor) in such
         offices as the Lessor in its sole discretion deems necessary or
         desirable to perfect and to maintain the perfection and priority of the
         Lessor's security interest in the Collateral, (iv) to apply the
         proceeds of any Collateral received by the Lessor to the Rent, and (v)
         to discharge past due taxes, assessments, charges, fees or Encumbrances
         on the Collateral (except for such Encumbrances as are specifically
         permitted hereunder), and Lessee and Guarantor agree to reimburse the
         Lessor on demand for any payment made or any expense incurred by the
         Lessor in connection therewith, provided that this authorization shall
         not relieve Lessee or Guarantor of any obligations under this Lease.

                  41.6.4 Dispositions Not Authorized. Neither Lessee or
         Guarantor is authorized to sell or otherwise dispose of the Collateral
         except as set forth in Section 41.3.5 and notwithstanding any course of
         dealing between Lessee and Guarantor, and Lessor or other conduct of
         the Lessor, no authorization to sell or otherwise dispose of the
         Collateral (except as set forth in Section 41.3.5) shall be binding
         upon the Lessor unless such authorization is in writing signed by the
         Lessor.

                                  ARTICLE XLII

                                PURCHASE OPTIONS

         42.1 OPTION TO PURCHASE. For good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, and in addition to
Lessor's right to require Lessee to purchase the Leased Properties as set forth
in Section 16.4, Lessor hereby grants to Lessee the option to purchase the
Leased Properties or portions thereof, which option may be exercised by Lessee
at any time during the Terms, all pursuant to the terms and conditions set forth
on EXHIBIT O.


                                       69
<PAGE>


         42.2. PUT OPTION OF LESSOR. For good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, Lessee grants to
Lessor the right for Lessor to require Lessee to purchase the Leased Properties
or portions thereof, either (i) any time after the date which is ninety (90)
days prior to the Realty Expiration Date, or (ii) otherwise pursuant to the
provisions of Section 14.8, subject to the same terms, covenants and conditions
applicable to Lessee's Option to Purchase as set forth in Section 42.1 and as
described on EXHIBIT O.

         42.3. TERMINATION OF LEASE. In the event of Exercise of Option as set
forth herein and the acquisition of Leased Properties by Lessee, this Lease
shall terminate effective as of the closing of such purchase.



                             SIGNATURE PAGES FOLLOW




                                       70
<PAGE>


         IN WITNESS WHEREOF, the parties hereto have respectively executed this
Lease effective as of the Effective Date.

LESSOR                        WILLIAMS HEADQUARTERS BUILDING
                              COMPANY, A Delaware Corporation


                              By: /s/ Mark W. Husband
                                  ----------------------------------------------
                              Name: Mark W. Husband
                                    --------------------------------------------
                              Title: Assistant Treasurer
                                     -------------------------------------------



LESSEE                        WILLIAMS TECHNOLOGY CENTER, LLC,
                              A Delaware Limited Liability Company


                              By: /s/ Howard S. Kalika
                                  ----------------------------------------------
                              Name: Howard S. Kalika
                                    --------------------------------------------
                              Title: Treasurer and Vice President
                                     -------------------------------------------



GUARANTOR                     WILLIAMS COMMUNICATIONS, LLC,
                              A Delaware Limited Liability Company


                              By: /s/ Howard S. Kalika
                                  ----------------------------------------------
                              Name: Howard S. Kalika
                                    --------------------------------------------
                              Title: Treasurer and Vice President
                                     -------------------------------------------



WCG - FOR THE LIMITED PURPOSE OF SECTION 8.2, 8.3, ARTICLE XVII, AND SECTION
23.2


                              WILLIAMS COMMUNICATIONS GROUP, INC.
                              A Delaware Corporation


                              By: /s/ Howard S. Kalika
                                  ----------------------------------------------
                              Name: Howard S. Kalika
                                    --------------------------------------------
                              Title: Treasurer and Vice President
                                     -------------------------------------------





                                       71
<PAGE>


EXHIBIT A     - Center Parcel Real Property Description
EXHIBIT B     - Parking Structure Parcel Property Description
EXHIBIT C     - Credit Agreement
EXHIBIT D     - Lessee's Certificate
EXHIBIT E     - Permitted Encumbrances
EXHIBIT F     - Consent and Non-Disturbance Agreement
EXHIBIT G     - Memorandum or Short Form of Lease
EXHIBIT H     - Guaranty
EXHIBIT I     - Interest Rate Calculation
EXHIBIT J     - Realty Base Rent Computation
EXHIBIT K     - Category 1 FF&E Tangible Personal Property Description
EXHIBIT L     - Category 1 FF&E Base Rent Computation
EXHIBIT M     - Category 2 FF&E Tangible Personal Property Description
EXHIBIT N     - Category 2 FF&E Base Rent Computation
EXHIBIT O     - Option to Purchase/Put Option Terms
EXHIBIT P     - UCC Information

SCHEDULE 22.2 - Sublease Parties






                                       72
<PAGE>


                                    EXHIBIT A

                     Center Parcel Real Property Description


The Easterly Half (E/2) of Block Eighty-eight (88), ORIGINAL TOWN OF TULSA,
located in the City of Tulsa, Tulsa County, State of Oklahoma, according to the
Official Plat thereof, more particularly described as follows:

BEGINNING at the Southeasterly corner of Block 88; thence Northerly 300 feet
along the Easterly line of Block 88 to the Northeasterly corner of said Block;
thence Westerly along the Northerly line of said Block a distance of 150 feet to
a point; thence Southerly a distance of 300 feet to a point on the Southerly
line of said Block; thence Easterly along the Southerly line 150 feet to the
Point of Beginning.

AND, the following described property:

A portion of East First Street adjacent to Blocks 73 and 88 of the Original
Townsite of Tulsa, Tulsa County, State of Oklahoma, a portion of South
Cincinnati Avenue adjacent to Blocks 88 and 87, Original Townsite, Tulsa County,
State of Oklahoma and said portion of East Second Street adjacent to Blocks 88
and 106, Original Townsite of Tulsa, Tulsa County, State of Oklahoma, that is
below an elevation of Three (3) feet lower than the driving lanes of said
roadway. Said potion of streets being more fully described as follows to wit:

Commencing at the point of beginning, said point being the northeast corner of
Block 88; thence westerly along the northerly line of said Block 88 a distance
of 160.00 feet; thence northerly and perpendicular to the northerly line of said
Block 88 a distance of 3.50 feet; thence easterly and parallel the northerly
line of said Block 88 a distance of 166.75 feet; thence southerly and parallel
the easterly line of said Block 88 a distance of 311. 50 feet; thence westerly
and parallel the southerly line of Block 88 a distance of 166.75 feet; thence
northerly a distance of 8.00 feet to a point on the southerly line of said Block
88, said point being 10.00 feet westerly from the southwest corner of Lot 6,
Block 88; thence easterly along the southerly line of Block 88 a distance of
160.00 feet to the southeast corner of Lot 6 Block 88; thence northerly along
the easterly line of Block 88 a distance of 300.00 feet to the point of
beginning.


Skywalk No. 1

The following described property:

         A portion of South Cincinnati Avenue adjacent to Blocks 73 and 74,
         Original Townsite of Tulsa, Tulsa County, State of Oklahoma, that is
         above an elevation of Twenty Seven (27) feet higher than the driving
         lanes of the said roadway. Said portion of South Cincinnati Avenue
         being more fully described as follows to wit:

         Commencing at the point of beginning, said point being the southwest
         corner of Lot 3 Block 74, Original Townsite; thence northerly along the
         westerly line a distance of 32.00 feet of said Lot 3, Block 74; thence
         westerly and perpendicular a distance of 80.00 feet to a point on the
         easterly line of Lot 1, Block 73, Original Townsite; thence


                                       73
<PAGE>


         southerly along the easterly line a distance of 32.0 feet of said Lot
         1, Block 73; thence easterly and perpendicular a distance of 80.00 feet
         to the point of beginning.


Skywalk No. 2

The following described:

         A portion of East First Street adjacent to Blocks 73 and 88 of the
         Original Townsite of Tulsa, Tulsa County, State of Oklahoma, that is
         above an elevation of Twenty Seven (27) feet higher than the driving
         lanes of the said roadway. Said portion of East First Street being more
         fully described as follows to wit:

         Commencing at the point of beginning, said point being the southeast
         corner of Lot 1, Block 73, Original Townsite; thence westerly along the
         southerly line of Lot 1 Block 73 a distance of 26.00 feet; thence
         southerly and perpendicular a distance of 80.00 feet to a point on the
         northerly line of Lot 3, Block 88, Original Townsite; thence easterly
         along the northerly line of Lot 3 Block 88 a distance of 26.00 feet to
         the northeast corner of Lot 3, Block 88; thence northerly and
         perpendicular a distance of 80.00 feet to the point of beginning.





                                       74
<PAGE>


                                    EXHIBIT B

                  Parking Structure Parcel Property Description


TRACT A:

Lots One (1), Two (2), Three (3) and Four (4), Block Seventy-four (74), ORIGINAL
TOWNSITE OF TULSA, now City of Tulsa, Tulsa County, State of Oklahoma, according
to the Official Plat thereof;

TRACT B:

All that part of the Original Tulsa Station and Depot Grounds of the Burlington
Northern Railroad Company's Right of Way located in Sections 1 and 2, Township
19 North, Range 12 East of the Indian Base and Meridian, more particularly
described as follows, to-wit:

         BEGINNING at a point that is the Northwest corner of Block 74, Original
         Town of Tulsa, now City of Tulsa, Tulsa County, Oklahoma, according to
         the Official Plat thereof; thence Westerly along the Westerly
         production of the North line of Block 74, a distance of 80.00 feet to a
         point, also being the Northeast corner of Block 73, said point also
         being the Southeast corner of that certain sale to the Tulsa Urban
         Renewal Authority, dated December 30, 1970, recorded December 30, 1970,
         in Book 3951 at Pages 1235, 1236, 1237 and 1238, and correction deed
         dated August 28, 1973; thence Northerly along the Northerly production
         of the East line of said Block 73 a distance of 200.00 feet; thence
         Easterly parallel 200.00 feet Northerly of the North line of said Block
         74 a distance of 80.00 feet to a point on the Northerly production of
         the West line of Block 74; thence Southerly along the Northerly
         production of the West line of Block 74 a distance of 20.00 feet;
         thence Easterly parallel 180.00 feet Northerly of the North line of
         said Block 74 a distance of 60.91 feet to a point of intersection with
         an existing concrete retaining wall; thence Northeasterly along a
         deflection angle to the left of 5 degrees42'01" a distance of 240.27
         feet to a point on the Northerly production of the East line of Block
         74; thence Southerly along said Northerly production of the East line
         of Block 74 a distance of 203.86 feet to the Northeast corner of Block
         74; thence Westerly along the Northerly line of Block 74 a distance of
         300.00 feet to the Point of Beginning of said tract of land.

AND, the following described property:

         A portion of East First Street adjacent to Block 74 and Block 87 of the
         Original Townsite of Tulsa, Tulsa County, State of Oklahoma, that is
         below an elevation of One (1) foot lower than the driving lanes of said
         roadway. Said portion of street being more fully described as follows
         to wit:

         Commencing at a point of beginning, said point being the southwest
         corner of Block 74; thence southerly and perpendicular to the south
         line of Block 74 a distance of 2.75 feet; thence easterly and parallel
         to the southerly line of said Block 74 a distance of 302.75 feet;
         thence northerly and parallel to the easterly line of Block 74 a
         distance of 191.00 feet; thence westerly and perpendicular a distance
         of 2.75 feet to the east line of Block 74; thence southerly along the
         east line of Block 74 a distance of 188.25 feet, thence westerly along
         the southerly line of Block 74 a distance of 300.00 feet, to the point
         of beginning.



                                       75
<PAGE>


                                    EXHIBIT C

                                Credit Agreement


================================================================================

                                 $1,500,000,000

                      AMENDED AND RESTATED CREDIT AGREEMENT

                                   dated as of

                                SEPTEMBER 8, 1999

                                      among

                          WILLIAMS COMMUNICATIONS, LLC,
                                   as Borrower

                      WILLIAMS COMMUNICATIONS GROUP, INC.,
                                  as Guarantor

                            THE LENDERS PARTY HERETO,

                             BANK OF AMERICA, N.A.,
                            as Administrative Agent,

                                       and

                            THE CHASE MANHATTAN BANK,
                              as Syndication Agent

                                   ----------

                            SALOMON SMITH BARNEY INC.

                                       and

                             LEHMAN BROTHERS, INC.,
                  as Joint Lead Arrangers and Joint Bookrunners
           with respect to the Incremental Facility referred to herein

                           SALOMON SMITH BARNEY INC.,

                             LEHMAN BROTHERS, INC.,

                                       and

                            MERRILL LYNCH & CO., INC.

                           as Co-Documentation Agents

================================================================================

<PAGE>


<Table>
<S>                                                                                            <C>
ARTICLE 1 DEFINITIONS


   SECTION 1.01.  Defined Terms....................................................................1
   SECTION 1.02.  Classification of Loans and Borrowings..........................................28
   SECTION 1.03.  Terms Generally.................................................................28
   SECTION 1.04.  Accounting Terms; GAAP..........................................................28

ARTICLE 2 THE CREDITS


   SECTION 2.01.  Commitments.....................................................................29
   SECTION 2.02.  Loans and Borrowings............................................................29
   SECTION 2.03.  Requests for Borrowings.........................................................30
   SECTION 2.04.  Swingline Loans.................................................................31
   SECTION 2.05.  Letters of Credit...............................................................25
   SECTION 2.06.  Funding of Borrowings...........................................................37
   SECTION 2.07.  Interest Elections..............................................................37
   SECTION 2.08.  Termination and Reduction of Commitments........................................39
   SECTION 2.09.  Repayment of Loans; Evidence of Debt............................................42
   SECTION 2.10.  Amortization of Term Loans and Incremental Term Loans...........................42
   SECTION 2.11.  Prepayment of Loans.............................................................44
   SECTION 2.12.  Fees............................................................................46
   SECTION 2.13.  Interest........................................................................48
   SECTION 2.14.  Alternate Rate of Interest......................................................49
   SECTION 2.15.  Increased Costs.................................................................49
   SECTION 2.16.  Break Funding Payments..........................................................50
   SECTION 2.17.  Taxes...........................................................................51
   SECTION 2.18.  Payments Generally; Pro Rata Treatment; Sharing of Set-offs.....................52
   SECTION 2.19.  Mitigation Obligations; Replacement of Lenders..................................54
   SECTION 2.20.  Additional Incremental Facilities and Commitments...............................54

ARTICLE 3 REPRESENTATIONS AND WARRANTIES


   SECTION 3.01.  Organization; Powers............................................................56
   SECTION 3.02.  Authorization; Enforceability...................................................56
   SECTION 3.03.  Governmental Approvals; No Conflicts............................................56
   SECTION 3.04.  Financial Condition; No Material Adverse Change.................................56
   SECTION 3.05.  Properties......................................................................57
   SECTION 3.06.  Litigation and Environmental Matters............................................57
   SECTION 3.07.  Compliance with Laws and Agreements.............................................58
   SECTION 3.08.  Investment and Holding Company Status...........................................58
   SECTION 3.09.  Taxes...........................................................................58
   SECTION 3.10.  ERISA...........................................................................58
   SECTION 3.11.  Disclosure......................................................................58
   SECTION 3.12.  Subsidiaries....................................................................59
   SECTION 3.13.  Insurance.......................................................................59
   SECTION 3.14.  Labor Matters...................................................................59
   SECTION 3.15.  Solvency........................................................................59
   SECTION 3.16.  No Burdensome Restrictions......................................................59
   SECTION 3.17.  Representations in Loan Documents True and Correct..............................59
</Table>


                                       i
<PAGE>


<Table>
<S>                                                                                            <C>
ARTICLE 4 CONDITIONS


   SECTION 4.01.  Effective Date..................................................................59
   SECTION 4.02.  Each Credit Event...............................................................59
   SECTION 4.03.  First Incremental Borrowing Date with Respect to the Incremental Facility.......60

ARTICLE 5 AFFIRMATIVE COVENANTS


   SECTION 5.01.  Financial Statements and Other Information......................................60
   SECTION 5.02.  Notices of Material Events......................................................63
   SECTION 5.03.  Existence; Conduct of Business..................................................63
   SECTION 5.04.  Payment of Obligations..........................................................63
   SECTION 5.05.  Maintenance of Properties.......................................................64
   SECTION 5.06.  Insurance.......................................................................64
   SECTION 5.07.  Casualty and Condemnation.......................................................64
   SECTION 5.08.  Books and Records; Inspection and Audit Rights..................................64
   SECTION 5.09.  Compliance with Laws............................................................64
   SECTION 5.10.  Use of Proceeds and Letters of Credit...........................................64
   SECTION 5.11.A.Initial Collateral Date.........................................................64
   SECTION 5.11.B.Collateral Event................................................................65
   SECTION 5.12.  Information Regarding Collateral................................................67
   SECTION 5.13.  Additional Subsidiaries.........................................................67
   SECTION 5.14.  Further Assurances..............................................................68
   SECTION 5.15.  Concentration Accounts..........................................................69
   SECTION 5.16.  Dissolution of CNG..............................................................69
   SECTION 5.17.  Sale of Solutions and ATL.......................................................69
   SECTION 5.18.  Qualifying Issuances............................................................69

ARTICLE 6 NEGATIVE COVENANTS


   SECTION 6.01.  Indebtedness; Certain Equity Securities.........................................70
   SECTION 6.02.  Liens...........................................................................72
   SECTION 6.03.  Fundamental Changes.............................................................73
   SECTION 6.04.  Investments, Loans, Advances, Guarantees and Acquisitions.......................74
   SECTION 6.05.  Asset Sales.....................................................................77
   SECTION 6.06.  Sale and Leaseback Transactions.................................................78
   SECTION 6.07.  Restricted Payments; Certain Payments of Indebtedness...........................78
   SECTION 6.08.  Limitation on Capital Expenditures..............................................79
   SECTION 6.09.  Transactions with Affiliates....................................................79
   SECTION 6.10.  Restrictive Agreements..........................................................79
   SECTION 6.11.  Fiscal Year.....................................................................80
   SECTION 6.12.  Change in Business..............................................................80
   SECTION 6.13.  Amendment of Material Documents.................................................80
   SECTION 6.14.  Designation of Unrestricted Subsidiaries........................................80
   SECTION 6.15.  Total Net Debt to Contributed Capital Ratio.....................................81
   SECTION 6.16.  Minimum EBITDA..................................................................81
   SECTION 6.17.  Total Leverage Ratio............................................................81
   SECTION 6.18.  Senior Leverage Ratio...........................................................82
   SECTION 6.19.  Interest Coverage Ratio.........................................................82
   SECTION 6.20.  Financial Covenant Non-Compliance Cure..........................................82

ARTICLE 7 EVENTS OF DEFAULT


   SECTION 7.01.  Events of Default...............................................................83
</Table>


                                       ii
<PAGE>


<Table>
<S>                                                                                            <C>
ARTICLE 8 THE AGENTS


   SECTION 8.01.  Appointment, Powers, Immunities.................................................85
   SECTION 8.02.  Reliance by Agents..............................................................86
   SECTION 8.03.  Delegation to Sub-Agents........................................................86
   SECTION 8.04.  Resignation of Agents...........................................................86
   SECTION 8.05.  Non-reliance on Agents or other Lenders.........................................87
   SECTION 8.06.  Syndication Agent, Incremental Facility Arrangers and Co-Documentation Agents...87

ARTICLE 9 HOLDINGS GUARANTEE


   SECTION 9.01.  The Guarantee...................................................................87
   SECTION 9.02.  Guarantee Unconditional.........................................................87
   SECTION 9.03.  Discharge Only Upon Payment in Full; Reinstatement in Certain Circumstances.....88
   SECTION 9.04.  Waiver..........................................................................88
   SECTION 9.05.  Subrogation.....................................................................89
   SECTION 9.06.  Stay of Acceleration............................................................89
   SECTION 9.07.  Successors and Assigns..........................................................89

ARTICLE 10 MISCELLANEOUS


   SECTION 10.01.  Notices........................................................................89
   SECTION 10.02.  Waivers; Amendments............................................................90
   SECTION 10.03.  Expenses; Indemnity; Damage Waiver.............................................91
   SECTION 10.04.  Successors and Assigns.........................................................92
   SECTION 10.05.  Survival.......................................................................96
   SECTION 10.06.  Counterparts; Integration; Effectiveness.......................................96
   SECTION 10.07.  Severability...................................................................96
   SECTION 10.08.  Right of Setoff................................................................96
   SECTION 10.09.  Governing Law; Jurisdiction; Consent to Service of Process.....................96
   SECTION 10.10.  WAIVER OF JURY TRIAL...........................................................97
   SECTION 10.11.  Headings.......................................................................97
   SECTION 10.12.  Confidentiality................................................................97
   SECTION 10.13.  Interest Rate Limitation.......................................................98
</Table>



                                       iii
<PAGE>



SCHEDULE 2.01  -  COMMITMENTS
SCHEDULE 3.05  -  REAL PROPERTY
SCHEDULE 3.06  -  DISCLOSED MATTERS
SCHEDULE 3.12  -  SUBSIDIARIES
SCHEDULE 3.13  -  INSURANCE
SCHEDULE 6.01  -  EXISTING INDEBTEDNESS
SCHEDULE 6.02  -  EXISTING LIENS
SCHEDULE 6.04  -  EXISTING INVESTMENTS
SCHEDULE 6.09  -  EXISTING AFFILIATE AGREEMENTS
SCHEDULE 6.10  -  EXISTING RESTRICTIVE AGREEMENTS



EXHIBIT A      -  FORM OF ASSIGNMENT AND ACCEPTANCE
EXHIBIT B      -  FORM OF BORROWING REQUEST
EXHIBIT C-1    -  FORM OF OPINION OF SPECIAL COUNSEL TO HOLDINGS, THE BORROWER
                  AND THE SUBSIDIARY LOAN PARTIES
EXHIBIT C-2    -  FORM OF OPINION OF THE GENERAL COUNSEL OF HOLDINGS
EXHIBIT D      -  FORM OF SUBSIDIARY GUARANTEE
EXHIBIT E      -  FORM OF REVOLVING NOTE
EXHIBIT F      -  FORM OF TERM NOTE
EXHIBIT G      -  FORM OF INTERCOMPANY NOTE
EXHIBIT H      -  FORM OF INTERCREDITOR AGREEMENT
EXHIBIT I      -  [INTENTIONALLY DELETED]
EXHIBIT J      -  FORM OF PROMISSORY NOTE
EXHIBIT K      -  FORM OF SECURITY AGREEMENT
EXHIBIT L      -  FORM OF INCREMENTAL TERM NOTE



                                       iv
<PAGE>



         AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") dated as of
September 8, 1999 among Williams Communications, LLC, a Delaware limited
liability company, Williams Communications Group, Inc., a Delaware corporation,
the LENDERS party hereto, BANK OF AMERICA, N.A., as Administrative Agent, THE
CHASE MANHATTAN BANK, as Syndication Agent, and SALOMON SMITH BARNEY INC. and
LEHMAN BROTHERS, INC., as Joint Lead Arrangers with respect to the Incremental
Facility referred to herein.

         WHEREAS, Holdings, the Borrower, the lenders party thereto, Bank of
America, N.A., as Administrative Agent, The Chase Manhattan Bank, as Syndication
Agent and Salomon Smith Barney Inc. and Lehman Brothers, Inc., as Joint Lead
Arrangers with respect to the Incremental Facility referred to herein, have
entered into an Amendment No. 5 dated as of April 12, 2001 ("Amendment No. 5")
pursuant to which such parties have agreed to amend and restate the Existing
Agreement referred to therein as set forth herein;

         NOW, THEREFORE, the parties hereto agree as follows:



                                    ARTICLE 1

                                   DEFINITIONS

         SECTION 1.1. Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:

         "ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.

         "Additional Capital" means the sum of:

                  (a) $850 million;

                  (b) the aggregate Net Proceeds received by the Borrower from
         the issuance or sale of any Qualifying Equity Interests of Holdings,
         subsequent to the Amendment No. 4 Effective Date; and

                  (c) the aggregate Net Proceeds from the issuance or sale of
         Qualifying Holdings Debt subsequent to the Amendment No. 4 Effective
         Date convertible or exchangeable into Qualifying Equity Interests of
         Holdings, in each case upon conversion or exchange thereof into
         Qualifying Equity Interests of Holdings subsequent to the Amendment No.
         4 Effective Date;

provided, however, that the Net Proceeds from the issuance or sale of Equity
Interests or Debt described in clause (b) or (c) shall be excluded from any
computation of Additional Capital to the extent (1) utilized to make a
Restricted Payment or (2) such Equity Interests or Debt shall have been issued
or sold to the Borrower, a Subsidiary of the Borrower or a Plan.

         "Additional Incremental Commitment" has the meaning assigned to such
term in Section 2.20.

         "Additional Incremental Facility" has the meaning assigned to such term
in Section 2.20.


<PAGE>


         "Additional Incremental Facility Agreement" has the meaning assigned to
such term in Section 2.20.

         "Additional Incremental Lender" has the meaning assigned to such term
in Section 2.20.

         "Additional Incremental Loan" means an Additional Incremental Revolving
Loan or an Additional Incremental Term Loan.

         "Additional Incremental Revolving Commitment" has the meaning assigned
to such term in Section 2.20.

         "Additional Incremental Revolving Loan" has the meaning assigned to
such term in Section 2.20.

         "Additional Incremental Term Commitment" has the meaning assigned to
such term in Section 2.20.

         "Additional Incremental Term Loan" has the meaning assigned to such
term in Section 2.20.

         "Adjusted EBITDA" means, for any period of four consecutive fiscal
quarters:

                  (i) if such period is a period ending on or after June 30,
         1999 and on or before September 30, 2001,

                           (A) an amount equal to (x)(1) EBITDA for the last
                           fiscal quarter in such period plus (2) ADP Interest
                           Expense for such fiscal quarter minus (3) gain for
                           such fiscal quarter attributable to Dark Fiber and
                           Capacity Dispositions multiplied by (y) four, plus

                           (B) Dark Fiber and Capacity Proceeds for such period;
                           and

                  (ii) if such period is any other period,

                           (A) EBITDA for such period plus (y) ADP Interest
                           Expense for such period minus (z) gain for such
                           period attributable to Dark Fiber and Capacity
                           Dispositions plus

                           (B) Dark Fiber and Capacity Proceeds for such period.

         "Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.

         "Administrative Agent" means Bank of America, in its capacity as
administrative agent for the Lenders hereunder, and any successor in such
capacity.

         "Administrative Questionnaire" means an Administrative Questionnaire in
a form supplied by the Administrative Agent.

         "ADP" means the program set forth in the Operative Documents.

         "ADP Event of Default" has the meaning assigned to such term in the
Intercreditor Agreement.


                                       2
<PAGE>


         "ADP Interest Expense" means, for any period, the amount that would be
accrued for such period in respect of the Borrower's obligations under the ADP
that would constitute "interest expense" for such period if such obligations
were treated as Capital Lease Obligations.

         "ADP Obligations" means all obligations of Holdings or any Subsidiary
under the ADP.

         "ADP Outstandings" means, at any time, the amount of the Borrower's
obligations at such time in respect of the ADP that would be considered
"principal" if such obligations were treated as Capital Lease Obligations.

         "ADP Property" has the meaning assigned to the term "Property" in the
Participation Agreement.

         "Affiliate" means, with respect to a specified Person, (i) another
Person that directly, or indirectly through one or more intermediaries, Controls
(a "controlling Person"), is Controlled by or is under common Control with the
specified Person, (ii) any Person that holds, directly or indirectly, 10% or
more of the Equity Interests of the specified Person and (iii) any Person 10% or
more of the Equity Interests of which are held directly or indirectly by the
specified Person or a controlling Person.

         "Agents" means, collectively, the Administrative Agent, the Syndication
Agent and each Co-Documentation Agent.

         "Alternate Base Rate" means, for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.

         "Amendment No.4 Effective Date" means March 19, 2001.

         "Amendment No. 5" has the meaning set forth in the preamble.

         "Amendment No. 5 Effective Date" means the date of effectiveness of
Amendment No. 5.

         "Applicable Margin" means, for any day, (a) with respect to any Term
Loan or Revolving Loan, (i) the applicable rate per annum set forth below under
the caption "Eurodollar Spread" or "ABR Spread", as the case may be, based upon
the ratings by S&P and Moody's, respectively, applicable on such date to the
Facilities plus (ii) the applicable rate per annum set forth below under the
caption "Leverage Premium", unless the Total Leverage Ratio, as determined by
reference to the financial statements delivered to the Administrative Agent in
respect of the most recently ended fiscal quarter of the Borrower, is less than
6:00 to 1:00:

         (b) with respect to any Incremental Tranche A Loan, (i) the applicable
rate per annum set forth below under the caption "Eurodollar Spread" or "ABR
Spread", as the case may be, based upon the ratings by S&P and Moody's,
respectively, applicable on such date to the Facilities plus (ii) the applicable
rate per annum set forth below under the caption "Leverage Premium", unless the
Total Leverage Ratio, as determined by reference to the financial statements
delivered to the Administrative Agent in respect of the most recently ended
fiscal quarter of the Borrower, is less than 6:00 to 1:00:

<Table>
<Caption>

                   FACILITIES           EURODOLLAR         ABR        LEVERAGE
                     RATING               SPREAD         SPREAD        PREMIUM
                   ----------           ----------       ------       --------
<S>            <C>                      <C>              <C>         <C>

LEVEL I         BBB- and Baa3 or           1.50%          0.50%         0.25%
                     higher

LEVEL II           BB+ and Ba1            1.875%         0.875%         0.25%

LEVEL III          BB and Ba2              2.25%          1.25%         0.25%

LEVEL IV           BB- and Ba3             2.50%          1.50%         0.25%

LEVEL V          Lower than BB-
                or lower than Ba3          2.75%          1.75%         0.25%
</Table>



                                       3
<PAGE>


         and

         (c) with respect to any Additional Incremental Loan, the Applicable
Margin in respect thereof set forth in the applicable Additional Incremental
Facility Agreement.

         For purposes of the foregoing clauses (a) and (b), (i) if neither S&P
nor Moody's shall have in effect a rating for the Facilities (other than by
reason of the circumstances referred to in the last sentence of this
definition), then the Applicable Margin shall be the rate set forth in Level V,
(ii) if either S&P or Moody's, but not both S&P and Moody's, shall have in
effect a rating for the Facilities, then the Applicable Margin shall be based on
such rating, (iii) if the ratings established by S&P and Moody's for the
Facilities shall fall within different Levels, then the Applicable Margin shall
be based on the lower of the two ratings, (iv) if the ratings established by S&P
and Moody's for the Facilities shall fall within the same Level, then the
Applicable Margin shall be based on that Level and (v) if the ratings
established by S&P and Moody's for the Facilities shall be changed (other than
as a result of a change in the rating system of S&P or Moody's), such change
shall be effective as of the date on which it is first announced by the
applicable rating agency. Each change in the Applicable Margin shall apply
(other than with respect to the Leverage Premium or as described in the
immediately succeeding sentence or the immediately succeeding paragraph) during
the period commencing on the effective date of such change and ending on the
date immediately preceding the effective date of the next such change. If the
rating system of S&P or Moody's shall change, or if either such rating agency
shall cease to be in the business of rating corporate debt obligations, the
Borrower and the Lenders shall negotiate in good faith to amend this definition
to reflect such changed rating system or the unavailability of ratings from such
rating agency and, pending the effectiveness of any such amendment, the
Applicable Margin shall be determined by reference to the rating most recently
in effect prior to such change or cessation. Any such amendment shall be subject
to the provisions of Section 10.02(b).

         If the Borrower shall enter into any Additional Incremental Facility
Agreement, the Borrower, the Incremental Facility Arrangers and the
Administrative Agent, on behalf of the then current Lenders, shall evaluate in
good faith at such time whether to amend this definition of Applicable Margin
with respect to the Term Loans, the Revolving Loans and the Incremental Tranche
A Term Loans. Any such amendment shall be subject to the provisions of Section
10.02(b).

         "Applicable Percentage" means, with respect to any Revolving Lender,
the percentage of the total Revolving Commitments represented by such Lender's
Revolving Commitment. If the Revolving Commitments have terminated or expired,
the Applicable Percentages shall be determined based upon the Revolving
Commitments most recently in effect, giving effect to any assignments.

         "Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 10.04), and accepted by the Administrative Agent, in the
form of Exhibit A or any other form approved by the Administrative Agent.

         "ATL" means ATL-Algar Telecom Leste S.A., a Brazilian corporation.


                                       4
<PAGE>


         "Attributable Debt" means, on any date, in respect of any lease of
Holdings or any Restricted Subsidiary entered into as part of a Sale and
Leaseback Transaction subject to Section 6.06(ii), (i) if such lease is a
Capital Lease Obligation, the capitalized amount thereof that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP,
and (ii) if such lease is not a Capital Lease Obligation, the capitalized amount
of the remaining lease payments under such lease that would appear on a balance
sheet of such Person prepared as of such date in accordance with GAAP if such
lease were accounted for as a Capital Lease Obligation.

         "Bank of America" means Bank of America, N.A.

         "Board" means the Board of Governors of the Federal Reserve System of
the United States of America.

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

         "Borrowing" means (a) Loans of the same Class and Type, made, converted
or continued on the same date and, in the case of Eurodollar Loans, as to which
a single Interest Period is in effect, or (b) a Swingline Loan.

         "Borrowing Request" means a request by the Borrower for a Borrowing in
accordance with Section 2.03.

         "Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York, New York or Dallas, Texas are
authorized or required by law to remain closed; provided that, when used in
connection with a Eurodollar Loan, the term "Business Day" shall also exclude
any day on which banks are not open for dealings in dollar deposits in the
London interbank market.

         "Capital Expenditures" means, for any period, the additions to
property, plant and equipment and other capital expenditures of Holdings and the
Restricted Subsidiaries that are (or would be) set forth in a consolidated
statement of cash flows of Holdings and the Restricted Subsidiaries for such
period prepared in accordance with GAAP, other than any such capital
expenditures that constitute Investments permitted under Section 6.04 (other
than Section 6.04(i)); provided that any use during such period of the proceeds
of any such Investment made by the recipient thereof for additions to property,
plant and equipment and other capital expenditures, as described in this
definition, shall (unless such use shall, itself, constitute an Investment
permitted under Section 6.04 (other than Section 6.04(i)) constitute "Capital
Expenditures".

         "Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.

         "Cash Equivalent Investments" means:

                  (1) Government Securities maturing, or subject to tender at
         the option of the holder thereof, within two years after the date of
         acquisition thereof;

                  (2) time deposits and certificates of deposit of (a) any
         commercial bank organized in the United States having capital and
         surplus in excess of $500,000,000 or (b) any branch located in the
         United States of any commercial bank organized under the law of any
         other country that is a member of the Organization for Economic
         Cooperation and Development having total assets in


                                       5
<PAGE>


         excess of $500,000,000, or its foreign currency equivalent at the time,
         in either case with a maturity date not more than one year from the
         date of acquisition;

                   (3) repurchase obligations with a term of not more than 30
         days for underlying securities of the types described in clause (1)
         above entered into with (a) any bank meeting the qualifications
         specified in clause (2) above or (b) any primary government securities
         dealer reporting to the Market Reports Division of the Federal Reserve
         Bank of New York;

                   (4) direct obligations issued by any state of the United
         States or any political subdivision of any such state or any public
         instrumentality thereof maturing, or subject to tender at the option of
         the holder of such obligation, within one year after the date of
         acquisition thereof; provided that, at the time of acquisition, the
         long-term debt of such state, political subdivision or public
         instrumentality has a rating of A, or higher, from S&P or A-2 or higher
         from Moody's or, if at any time neither S&P nor Moody's shaft be rating
         such obligations, then an equivalent rating from such other nationally
         recognized rating service as is acceptable to the Administrative Agent;

                  (5) commercial paper issued by the parent corporation of (a)
         any commercial bank organized in the United States having capital and
         surplus in excess of $500,000,000 or (b) any branch located in the
         United States of any commercial bank organized under the laws of any
         other country that is a member of the Organization for Economic
         Cooperation and Development having total assets in excess of
         $500,000,000, or its foreign currency equivalent at the time, and money
         market instruments and commercial paper issued by others having one of
         the three highest ratings obtainable from either S&P or Moody's, or, if
         at any time neither S&P nor Moody's shall be rating such obligations,
         then from such other nationally recognized rating service as is
         acceptable to the Administrative Agent and in each case maturing within
         one year after the date of acquisition;

                  (6) overnight bank deposits and bankers' acceptances at (a)
         any commercial bank organized in the United States having capital and
         surplus in excess of $500,000,000 or (b) any branch located in the
         United States of any commercial bank organized under the laws of any
         other country that is a member of the Organization for Economic
         Cooperation and Development having total assets in excess of
         $500,000,000 or its foreign currency equivalent at the time;

                  (7) deposits available for withdrawal on demand with (a) a
         commercial bank organized in the United States having capital and
         surplus in excess of $500,000,000 or (b) any branch located in the
         United States of any commercial bank organized under the laws of any
         other country that is a member of the Organization for Economic
         Cooperation and Development having total assets in excess of
         $500,000,000 or its foreign currency equivalent at the time; and


                                       6
<PAGE>


                  (8) investments in money market funds substantially all of
         whose assets comprise securities of the types described in clauses (1)
         through (7).

         "Change in Control" means:

         (a) the acquisition of ownership, directly or indirectly, beneficially
or of record, by any Person other than Holdings of any shares of capital stock
of the Borrower;

         (b) the acquisition of ownership, directly or indirectly, beneficially
or of record, by any Person or group (within the meaning of Section 13(d) or
14(d) of the Exchange Act and the rules of the Commission thereunder as in
effect on the date hereof) other than the Parent and its subsidiaries, of shares
representing more than 35% of either (i) the aggregate ordinary voting power
represented by the issued and outstanding Voting Stock of Holdings or (ii) the
issued and outstanding capital stock of Holdings;

         (c) other than as a result of the consummation of the Spin-Off, the
failure of the Parent and its subsidiaries to own, directly or indirectly, (i)
more than 75% (or, if (x) the Facilities are rated at least BBB- by S&P and Baa3
by Moody's and (y) the Parent shall have been released from its obligations
under the Parent Guarantee, 35%) of the aggregate ordinary voting power
represented by the issued and outstanding Voting Stock of Holdings or (ii) more
than 65% (or, if (x) the Facilities are rated at least BBB- by S&P and Baa3 by
Moody's and (y) the Parent shall have been released from its obligations under
the Parent Guarantee, 35%) of the issued and outstanding capital stock of
Holdings;

         (d) occupation of a majority of the seats (other than vacant seats) on
the board of directors of Holdings by Persons who were neither (i) nominated by
the board of directors of Holdings nor (ii) appointed by directors so nominated;
or

         (e) the acquisition of direct or indirect Control of Holdings by any
Person or group (other than, prior to the consummation of the Spin-Off, the
Parent).

         "Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender, any Swingline
Lender or any Issuing Bank (or, for purposes of Section 2.15(b), by any lending
office of such Lender, Swingline Lender or Issuing Bank or by such Lender's,
Swingline Lender's or Issuing Bank's holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.

         "Chase" means The Chase Manhattan Bank.

         "Class" means, when used in reference to any Loan or Borrowing, to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans,
Term Loans, Swingline Loans, Incremental Term Loans or Additional Incremental
Loans and, when used in reference to any Commitment or Facility, refers to
whether such Commitment or Facility is a Revolving Commitment or Facility, a
Term Commitment or Facility, an Incremental Commitment or Facility or an
Additional Incremental Commitment or Facility. The Additional Incremental Loans,
Borrowings thereof and Additional Incremental Commitments under each Additional
Incremental Facility shall constitute a separate Class from the Additional
Incremental Loans,

                                       7
<PAGE>

Borrowings thereof and Additional Incremental Commitments under each other
Additional Incremental Facility, and if an Additional Incremental Facility
includes Additional Incremental Revolving Commitments and Additional Incremental
Term Commitments, such Additional Incremental Revolving Commitments and
Additional Incremental Term Commitments and the Additional Incremental Revolving
Loans and Borrowings thereof and the Additional Incremental Term Loans and
Borrowings thereof, respectively, thereunder shall constitute separate Classes.

         "CNG" means CNG Computer Networking Group, Inc., a Delaware
corporation, and its successors and assigns.

         "Co-Documentation Agent" means each of Salomon Smith Barney Inc.,
Lehman Brothers, Inc. and Merrill Lynch & Co., Inc., in each case in its
capacity as a co-documentation agent hereunder.

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

         "Collateral" means any and all "Collateral", as defined in any
applicable Collateral Document.

         "Collateral Documents" means the Security Agreement and all security
agreements, pledge agreements, mortgages and other security agreements or
instruments or documents executed and delivered pursuant to Section 5.11B, 5.13
or 5.14.

         "Collateral Establishment Date" has the meaning assigned to such term
in Section 5.11B.

         "Collateral Event" means the failure of the Facilities to be rated at
least (i) BB- by S&P and (ii) Ba3 by Moody's.

         "Collateral Notice has the meaning assigned to such term in Section
5.11B.

         "Collateral Release Event" means the occurrence, after the occurrence
of a Collateral Event, of the earlier to occur of (i) the termination of the
Commitments, the payment in full of all obligations under the Loan Documents and
the expiration or termination of all Letters of Credit and (ii) the rating of
the Facilities by S&P of BB+ or greater and by Moody's of Ba1 or greater, in
each case after giving effect to the release of all Collateral.

         "Commission" means the United States Securities and Exchange
Commission.

         "Commitment" means a Revolving Commitment, a Term Commitment, an
Incremental Commitment, an Additional Incremental Commitment or any combination
thereof (as the context requires).

         "Commitment Fee Rate" means, (a) with respect to the Revolving
Commitments and the Term Commitments, a rate per annum equal to (x) 1.00% for
each day on which Usage is less than 33.3%, (y) 0.75% for each day on which
Usage is equal to or greater than 33.3% but less than 66.6% and (z) 0.50% for
each day on which Usage is equal to or greater than 66.6% and (b) with respect
to the Incremental Tranche A Commitments, 0.75% for each day. For purposes of
the foregoing, "Usage" means, on any date, the percentage obtained by dividing
(i) in the case of Revolving Commitments, (a) the aggregate Revolving Exposure
on such date less the aggregate principal amount of all Swingline Loans
outstanding on such date by (b) the aggregate outstanding Revolving Commitments
on such date and (ii) in the case of Term Commitments, (a) the aggregate
principal amount of all Term Loans outstanding on such date by (b) the sum of
the aggregate principal amount of all Term Loans outstanding on such date and
the aggregate unused Term Commitments on such date.

         "Commitment Fees" has the meaning assigned to such term in Section
2.12.


                                       8
<PAGE>
         "Consolidated Net Income" means, for any period, the net income or loss
of Holdings and the Restricted Subsidiaries (exclusive of the portion of net
income allocable to Persons that are not Restricted Subsidiaries, except to the
extent such amounts are received in cash by the Borrower or a Restricted
Subsidiary) for such period.

         "Consolidated Assets" means, at any date, the consolidated assets of
Holdings and the Restricted Subsidiaries.

         "Contributed Capital" means, at any date, (i) Total Net Debt at such
date plus (ii) without duplication, all cash proceeds received by Holdings on or
prior to such date from contributions to the capital, or purchases of common
equity securities, of Holdings, including, without limitation, the proceeds of
the Equity Issuance, and all other capital contributions made by the Parent and
its subsidiaries (other than Holdings and its Subsidiaries) to Holdings, but
only to the extent that proceeds of any of the foregoing are contributed by
Holdings to the Borrower.

         "Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have correlative meanings.

         "Dark Fiber and Capacity Proceeds" means, for any period, cash proceeds
received by Holdings and the Restricted Subsidiaries in respect of Dark Fiber
and Capacity Dispositions during such period.

         "Dark Fiber and Capacity Disposition" means a lease, sale, conveyance
or other disposition of fiber optic cable or capacity for a period constituting
all or substantially all of the expected useful life of either the fiber optic
cable (in the case of Dark Fiber Disposition) or optronic equipment generating
the capacity (in the case of Capacity Disposition) thereof.

         "Deemed Subsidiary Investment" has the meaning assigned to such term in
Section 6.14.

         "Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.

         "Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.

         "Disqualified Stock" of any Person means any Equity Interest of such
Person which, by its terms, or by the terms of any security into which it is
convertible or for which it is exchangeable, or upon the happening of any event,
matures or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the option of the holder thereof, in whole or in
part, on or prior to the first anniversary of the Term Maturity Date.

         "dollars" or "$" refers to lawful money of the United States of
America.

         "EBITDA" means, for any period,

                  (i) Consolidated Net Income for such period,

         plus,

                  (ii) to the extent deducted in determining Consolidated Net
         Income, the sum, without duplication, of (w) interest expense, (x)
         income tax expense, (y)


                                       9
<PAGE>


         depreciation and amortization expense and (z) non-cash extraordinary or
         non-recurring charges (if any), in each case recognized in such period;

         minus,

                  (iii) to the extent included in Consolidated Net Income for
         such period, extraordinary or non-recurring gains (if any), in each
         case recognized in such period.

         "Effective Date" means September 8, 1999.

         "Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material, the health effects of Hazardous Materials or safety matters.

         "Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of Holdings or any Restricted Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.

         "Equity Interests" means shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person.

         "Equity Issuance" means the issuance and sale by Holdings of its common
stock (x) in an initial public offering or (y) to certain strategic investors
other than the Parent or any of its subsidiaries or Affiliates.

         "Equity Issuance Registration Statement" means Amendment No. 7 to the
Registration Statement on Form S-1 with respect to the Equity Issuance filed by
Holdings with the Commission on September 2, 1999.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

         "ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.

         "ERISA Event" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an


                                       10
<PAGE>


intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of
any liability with respect to the withdrawal or partial withdrawal from any Plan
or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate
of any notice, or the receipt by any Multiemployer Plan from the Borrower or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.

         "Eurodollar", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.

         "Event of Default" has the meaning assigned to such term in Article 7.

         "Excess Cash Flow" means, for any fiscal period, the sum (without
duplication) of:

                  (a) the Consolidated Net Income (or loss) of Holdings and the
         Restricted Subsidiaries for such period, adjusted to exclude any gains
         or losses attributable to Prepayment Events; plus

                  (b) depreciation, amortization, non-cash interest expense and
         other non-cash charges or losses deducted in determining Consolidated
         Net Income (or loss) for such period; plus

                  (c) the sum of (i) the amount, if any, by which Net Working
         Capital decreased during such period plus (ii) the amount, if any, by
         which the consolidated deferred revenues of Holdings and the Restricted
         Subsidiaries increased during such period plus (iii) the aggregate
         principal amount of Capital Lease Obligations and other Indebtedness
         incurred during such period to finance Capital Expenditures, to the
         extent that mandatory principal payments in respect of such
         Indebtedness would not be excluded from clause (f) below when made;
         minus

                  (d) the sum of (i) any non-cash gains included in determining
         Consolidated Net Income (or loss) for such period plus (ii) the amount,
         if any, by which Net Working Capital increased during such period plus
         (iii) the amount, if any, by which the consolidated deferred revenues
         of Holdings and the Restricted Subsidiaries decreased during such
         period; minus

                  (e) Capital Expenditures for such period; minus

                  (f) the aggregate principal amount of long-term Indebtedness
         (including pursuant to Capital Lease Obligations) repaid or prepaid by
         Holdings and the Restricted Subsidiaries during such period, excluding
         (i) Indebtedness in respect of Revolving Loans, Incremental Revolving
         Loans, Additional Incremental Revolving Loans and Letters of Credit,
         (ii) Term Loans, Incremental Term Loans and Additional Incremental Term
         Loans prepaid pursuant to Section 2.11(b) or (c), (iii) repayments or
         prepayments of Indebtedness financed by incurring other


                                       11
<PAGE>


         Indebtedness, to the extent that mandatory principal payments in
         respect of such other Indebtedness would not be excluded from this
         clause (f) when made and (iv) Indebtedness referred to in Sections
         6.01(d), 6.01(f), 6.01(g), 6.01(i), 6.01(j), 6.01(k) and 6.01(o).

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "Excluded Taxes" means, with respect to the Administrative Agent, any
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is a
resident or is organized or in which its principal office is located or, in the
case of any Lender, in which its applicable lending office is located, (b) any
branch profits taxes imposed by the United States of America or any similar tax
imposed by any other jurisdiction described in clause (a) above and (c) in the
case of a Foreign Lender (other than an assignee pursuant to a request by the
Borrower under Section 2.19(b)) or any Participant that would be a Foreign
Lender if it were a Lender, any withholding tax that (i) is imposed on or with
respect to amounts payable to such Foreign Lender or Participant at the time
such Foreign Lender becomes a party to this Agreement (or designates a new
lending office) or such Participant become a Participant, except to the extent
that such Foreign Lender (or its assignor, if any) or Participant was entitled,
at the time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to such withholding tax
pursuant to Section 2.17(a) or (ii) is attributable to such Foreign Lender or
Participant's failure to comply with Section 2.17(e).

         "Existing International Joint Ventures" means ATL, PowerTel Limited and
Telefonica Manquehue, S.A.

         "Facilities" means the Term Facility, the Revolving Facility, the
Incremental Facility and each Additional Incremental Facility.

         "Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.

         "Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of Holdings or the Borrower, as the
case may be.

         "First Incremental Borrowing Date" means the date on which the first
Borrowing under the Incremental Facility is made in accordance with Section
4.03.

         "Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.

         "Foreign Subsidiary" means any Subsidiary that is organized under the
laws of a jurisdiction other than the United States of America or any State
thereof or the District of Columbia, other than a Subsidiary that is (whether as
a matter of law, pursuant to an election by such Subsidiary or otherwise)
treated as a partnership in which any Subsidiary that is not a Foreign
Subsidiary is a partner or as a branch of any Subsidiary that is not a Foreign
Subsidiary for United States income tax purposes.


                                       12
<PAGE>


         "GAAP" means generally accepted accounting principles in the United
States of America.

         "Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.

         "Government Securities" means direct obligations of, or obligations
fully and unconditionally guaranteed or insured by, the United States of America
or any agency or instrumentality thereof for the payment of which obligations or
guarantee the full faith and credit of the United States is pledged and which
are not callable or redeemable at the issuer's option; provided that, for
purposes of the definition of "Cash Equivalents Investments" only, such
obligations shall not constitute Government Securities if they are redeemable or
callable at a price less than the purchase price paid by the Borrower or the
applicable other Restricted Subsidiary, together with all accrued and unpaid
interest, if any, on such Government Securities.

         "Granting Lender" has the meaning set forth in Section 10.04(b)(2).

         "Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.

         "Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law as hazardous, toxic, a pollutant or a contaminant.

         "Hedge Counterparty" means each Lender that is, and each affiliate of
any Lender that is, a counterparty under a Hedging Agreement entered into with
the Borrower or any other Restricted Subsidiary.

         "Hedging Agreement" means any interest rate protection agreement,
commodity price protection agreement or other interest or currency exchange rate
or commodity price hedging arrangement.

         "High Yield Notes" means the notes issued by Holdings (i) the terms of
which either (A) are substantially similar to the terms set forth in the Notes
Offering Registration Statement or (B) are otherwise approved by the
Administrative Agent and the Syndication Agent after consultation with the
Required Banks and (ii) no part of the principal of which is required to be paid
(upon maturity or by mandatory sinking fund, mandatory redemption, mandatory
prepayment or otherwise) prior to the date that is one year after the Term
Maturity Date.

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

         "Incremental Commitments" means the Incremental Tranche A Commitments.

         "Incremental Facility" means the Incremental Tranche A Facility.


                                       13
<PAGE>


         "Incremental Facility Arrangers" means Salomon Smith Barney Inc. and
Lehman Brothers, Inc., in their respective capacities as joint lead arrangers of
the Incremental Facility.

         "Incremental Lenders" means the Incremental Tranche A Lenders.

         "Incremental Term Loans" means the Incremental Tranche A Term Loans.

         "Incremental Tranche A Amortization Date" means December 31, 2002.

         "Incremental Tranche A Commitments" means with respect to each
Incremental Tranche A Lender, the commitment, if any, of such Lender to make
Incremental Tranche A Term Loans hereunder during the Incremental Tranche A Term
Loan Availability Period, expressed as an amount representing the maximum
principal amount of the Incremental Tranche A Term Loans to be made by such
Lender hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 10.04. The initial
amount of each Lender's Incremental Tranche A Term Commitment is set forth on
Schedule 2.01(b), or in the Assignment and Acceptance pursuant to which such
Lender shall have assumed its Incremental Tranche A Term Commitment, as
applicable. The initial aggregate amount of the Incremental Tranche A Lenders'
Incremental Tranche A Term Commitments is $450,000,000.

         "Incremental Tranche A Commitment Termination Date" means the date that
is the earlier of (i) 180 days after the Amendment No. 5 Effective Date and (ii)
the date of termination of the Incremental Tranche A Commitments.

         "Incremental Tranche A Facility" means the Incremental Tranche A
Commitments and the Incremental Tranche A Term Loans hereunder.

         "Incremental Tranche A Lenders" means a Lender with an Incremental
Tranche A Commitment or an outstanding Incremental Tranche A Term Loan.

         "Incremental Tranche A Maturity Date" means September 8, 2006.

         "Incremental Tranche A Term Loan" means a Loan made pursuant to Section
2.01(b)(i).

         "Incremental Tranche A Term Loan Availability Period" means the period
from and including the First Incremental Borrowing Date to but excluding the
earlier of (i) the Incremental Tranche A Commitment Termination Date and (ii)
the date of termination of the Incremental Tranche A Commitments.

         "Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
under conditional sale or other title retention agreements relating to property
acquired by such Person, (d) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding (i) current accounts
payable incurred in the ordinary course of business and (ii) payment obligations
of such Person to the owner of assets used in a Telecommunications Business for
the use thereof pursuant to a lease or other similar arrangement with respect to
such assets or a portion thereof entered into in the ordinary course of
business), (e) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on property owned or acquired by such Person, whether or not the
Indebtedness secured thereby has been assumed, (f) all Guarantees by such Person
of Indebtedness of others, (g) all (x) Capital Lease Obligations of such Person
(provided that Capital Lease Obligations in respect of fiber optic cable
capacity arising in connection with exchanges of such capacity shall constitute
Indebtedness only to the extent of the amount of such Person's liability in
respect thereof net (but not less than zero) of such Person's right to receive
payments obtained in exchange therefor) and (y) ADP Outstandings, if any, of
such Person, (h) all obligations, contingent or otherwise, of


                                       14
<PAGE>


such Person as an account party in respect of letters of credit and letters of
guaranty, (i) all obligations, contingent or otherwise, of such Person in
respect of bankers' acceptances, (j) any Disqualified Stock and (k) all
obligations under any Hedging Agreements or Permitted Specified Security Hedging
Transactions. The Indebtedness of any Person shall include the Indebtedness of
any other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness provide that such Person is not liable
therefor. Indebtedness of the Borrower and the other Subsidiaries shall exclude
any Indebtedness of Holdings that would otherwise constitute Indebtedness of the
Borrower or any such Subsidiary only under clause (e) above and solely by virtue
of a Lien created under the Loan Documents in accordance with Section 5.11B(d),
and Indebtedness of Holdings and the Subsidiaries shall exclude any Indebtedness
of the Parent that would otherwise constitute Indebtedness of Holdings or any
Subsidiary only under clause (e) above and solely by virtue of a Lien created
under the Loan Documents in accordance with Section 5.11B(d).

         "Indemnified Taxes" means Taxes other than Excluded Taxes.

         "Information Memorandum" means the Confidential Information Memorandum
dated August 1999 relating to the Parent, Holdings, the Borrower and the
Transactions.

         "Initial Collateral Date" means the first date on which the Parent
ceases to own at least a majority of the outstanding securities having ordinary
voting power of Holdings, whether as a result of the consummation of the
Spin-Off or otherwise.

         "Intercreditor Agreement" means the Intercreditor Agreement,
substantially in the form of Exhibit H hereto, among the Lenders, the Parent,
Holdings and the Borrower.

         "Interest Coverage Ratio" means, at any date, the ratio of (i) the
amount equal to (A) EBITDA plus (B) ADP Interest Expense minus (C) gains
attributable to Dark Fiber and Capacity Dispositions plus (D) Dark Fiber and
Capacity Proceeds to (ii) Interest Expense, in each case for the period of four
consecutive fiscal quarters most recently ended on or prior to such date.

         "Interest Election Request" means a request by the Borrower to convert
or continue a Revolving Borrowing or Term Borrowing in accordance with Section
2.07.

         "Interest Expense" means, for any period, the cash interest expense of
Holdings and the Restricted Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP plus ADP Interest Expense for such
period, net of interest income for such period.

         "Interest Payment Date" means (a) with respect to any ABR Loan (other
than a Swingline Loan), the last day of each March, June, September and
December, (b) with respect to any Eurodollar Loan, the last day of the Interest
Period applicable to the Borrowing of which such Loan is a part and, in the case
of a Eurodollar Borrowing with an Interest Period of more than three months'
duration, each day prior to the last day of such Interest Period that occurs at
intervals of three months' duration after the first day of such Interest Period,
and (c) with respect to any Swingline Loan, the day that such Loan is required
to be repaid.

         "Interest Period" means with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three, or six months
(or if corresponding funding is available to each Lender of the applicable
Class, twelve months) thereafter, as the Borrower may elect; provided, that (i)
if any Interest Period would end on a day other than a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day and
(ii) any Interest Period that commences on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
last calendar month of such Interest Period) shall end on the last Business Day
of the last calendar month of


                                       15
<PAGE>


such Interest Period. For purposes hereof, the date of a Borrowing initially
shall be the date on which such Borrowing is made and thereafter shall be the
effective date of the most recent conversion or continuation of such Borrowing.

         "Issuing Bank" means each of Bank of America and Chase, each in its
capacity as an issuer of Letters of Credit hereunder, and its successors in such
capacity as provided in Section 2.05(i). Each Issuing Bank may, in its
discretion, arrange for one or more Letters of Credit to be issued by affiliates
of the Issuing Bank, in which case the term "Issuing Bank" shall include any
such affiliate with respect to Letters of Credit issued by such affiliate.

         "Investment" has the meaning assigned to such term in Section 6.04.

         "LC Disbursement" means a payment made by an Issuing Bank pursuant to a
Letter of Credit.

         "LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Revolving Lender at any
time shall be its Applicable Percentage of the total LC Exposure at such time.

         "Lenders" means the Persons listed on Schedule 2.01, any Additional
Incremental Lender that shall become a Lender pursuant to Section 2.20 and any
other Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance. Unless the context otherwise requires, the term
"Lenders" includes the Swingline Lenders and the Additional Incremental Lenders.

         "Leverage Target Date" means the first date on or after March 31, 2002
on which the Total Leverage Ratio for the fiscal quarter (or fiscal year, as the
case may be) most recently ended and with respect to which Holdings and the
Borrower shall have delivered the financial statements required to be delivered
by them with respect to such fiscal quarter (or fiscal year, as the case may be)
pursuant to Section 5.01(a) or 5.01(b) does not exceed 3.5:1.0.

         "Letter of Credit" means any letter of credit issued pursuant to this
Agreement.

         "LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate (rounded
upwards, if necessary, to the next 1/16 of 1%) at which dollar deposits of
$5,000,000 and for a maturity comparable to such Interest Period are offered by
the principal London office of the Administrative Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.

         "Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.


                                       16
<PAGE>


         "Loan Documents" means this Agreement, the Parent Guarantee, the
Subsidiary Guarantee, the Intercreditor Agreement, any Additional Incremental
Facility Agreement and the Collateral Documents (if any).

         "Loan Parties" means Holdings, the Borrower and the Subsidiary Loan
Parties.

         "Loan Party Guarantees" means the Subsidiary Guarantee.

         "Loans" means the loans made by the Lenders to the Borrower pursuant to
this Agreement.

         "Mark-to-Market Valuation" means, at any date with respect to any
Hedging Agreement or Permitted Specified Security Hedging Transaction, all net
obligations under such Hedging Agreement or Permitted Specified Security Hedging
Transaction in an amount equal to (i) if such Hedging Agreement or Permitted
Specified Security Hedging Transaction has been closed out, the termination
value thereof or (ii) if such Hedging Agreement or Permitted Specified Security
Hedging Transaction has not been closed out, the mark-to-market value thereof
determined on the basis of readily available quotations provided by any
recognized dealer in Hedging Agreements or other transactions similar to such
Hedging Agreement or Permitted Specified Security Hedging Transaction."

         "Material Adverse Change" means any event, development or circumstance
that has had or could reasonably be expected to have a Material Adverse Effect.

         "Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
Holdings and its Subsidiaries taken as a whole, (b) the ability of any Loan
Party to perform any of its obligations under any Loan Document or (c) the
rights of or benefits available to the Lenders under any Loan Document.

         "Material Indebtedness" means Indebtedness (other than the Loans and
Letters of Credit) of any one or more of Holdings and the Restricted
Subsidiaries in an aggregate principal amount exceeding $25,000,000. For
purposes of determining Material Indebtedness, the "principal amount" of the
obligations of Holdings or any Restricted Subsidiary in respect of any Hedging
Agreement or Permitted Specified Security Hedging Transaction at any time shall
be the maximum aggregate amount (giving effect to any netting agreements) that
Holdings or such Restricted Subsidiary would be required to pay if such Hedging
Agreement or Permitted Specified Security Hedging Transaction were terminated at
such time.

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

         "Mortgage" means a mortgage, deed of trust, assignment of leases and
rents, leasehold mortgage or other security document granting a Lien on any
Mortgaged Property to secure the Obligations.

         "Mortgage Establishment Date" has the meaning assigned to such term in
Section 5.11B(b).

         "Mortgaged Property" means each parcel of real property and the
improvements thereto owned by a Loan Party with respect to which a Mortgage is
granted pursuant to Section 5.11B(b).

         "Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.

         "Net Proceeds" means, with respect to any event (a) the cash proceeds
received in respect of such event including (i) any cash received in respect of
any non-cash proceeds, but only as and when received, (ii) in the case of a
casualty, insurance proceeds, and (iii) in the case of a condemnation or similar
event, condemnation awards and similar payments, net of (b) the sum of (i) all
reasonable fees and out-of-pocket expenses paid by Holdings and the Restricted
Subsidiaries to third parties (other than Affiliates) in connection with such
event, (ii) in the case of a sale or other disposition of an asset (including
pursuant to a casualty or condemnation), the amount of all payments required to
be made by Holdings and the Restricted


                                       17
<PAGE>


Subsidiaries as a result of such event to repay Indebtedness (other than Loans)
secured by such asset or otherwise subject to mandatory prepayment as a result
of such event, and (iii) the amount of all taxes paid (or reasonably estimated
to be payable) by Holdings and the Restricted Subsidiaries, and the amount of
any reserves established by Holdings and the Restricted Subsidiaries to fund
contingent liabilities reasonably estimated to be payable, in each case during
the year that such event occurred or the next succeeding year and that are
directly attributable to such event (as determined reasonably and in good faith
by the chief financial officer of Holdings).

         "Net Working Capital" means, at any date, (a) the consolidated current
assets of Holdings and the Restricted Subsidiaries as of such date (excluding
cash and Cash Equivalent Investments) minus (b) the consolidated current
liabilities of Holdings and the Restricted Subsidiaries as of such date
(excluding current liabilities in respect of Indebtedness). Net Working Capital
at any date may be a positive or negative number. Net Working Capital increases
when it becomes more positive or less negative and decreases when it becomes
less positive or more negative.

         "Notes Offering" means the public offering and sale of the High Yield
Notes.

         "Notes Offering Registration Statement" means Amendment No. 6 to the
Registration Statement on Form S-1 with respect to the Notes Offering filed by
Holdings with the Commission on September 2, 1999.

         "Obligations" means (i) obligations under the Loan Documents, including
(x) all principal of and interest (including, without limitation, Post-Petition
Interest) on any Loan under, or any Note issued pursuant to, or any
reimbursement obligation under any Letter of Credit under, the Credit Agreement
and (y) all other amounts payable under the Loan Documents and (ii) obligations
of any Loan Party under any Hedging Agreement with any Lender or any affiliate
of any Lender, including, without limitation, a conditional obligation to make a
future payment under an outstanding Hedging Agreement.

         "Operative Documents" has the meaning set forth in the Participation
Agreement.

         "Other Financing Documents" means all agreements, instruments and other
documents entered into or related to the Equity Issuance and the Notes Offering.

         "Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.

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

         "Parent Indemnity" means the Indemnification Agreement dated as of
September 1, 1999 between the Parent and Holdings.

         "Participation Agreement" means the Amended and Restated Participation
Agreement dated as of September 2, 1998, as amended from time to time, among the
Borrower, State Street Bank and Trust Company of Connecticut, National
Association, as trustee, the Noteholders and Certificate Holders named therein,
State Street Bank and Trust Company, as collateral agent, and Citibank, N.A., as
agent, and the other agents, arrangers and managing agents party thereto.

         "PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.

         "Permitted Encumbrances" means:


                                       18
<PAGE>


         (a)      Liens imposed by law for taxes that are not yet due or are
                  being contested in compliance with Section 5.04;

         (b)      carriers', warehousemen's, mechanics', materialmen's,
                  repairmen's and other like Liens imposed by law, arising in
                  the ordinary course of business and securing obligations that
                  are not overdue by more than 45 days or are being contested in
                  compliance with Section 5.04;

         (c)      pledges and deposits made in the ordinary course of business
                  in compliance with workers' compensation, unemployment
                  insurance and other social security laws or regulations;

         (d)      deposits to secure the performance of bids, trade contracts,
                  leases, statutory obligations, surety and appeal bonds,
                  performance bonds and other obligations of a like nature, in
                  each case in the ordinary course of business;

         (e)      judgment liens in respect of judgments that do not constitute
                  an Event of Default under clause (k) of Section 7.01; and

         (f)      easements, zoning restrictions, rights-of-way and similar
                  encumbrances on real property imposed by law or arising in the
                  ordinary course of business that do not secure any monetary
                  obligations and do not materially detract from the value of
                  the affected property or interfere with the ordinary conduct
                  of business of Holdings or any Restricted Subsidiary;

provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.

         "Permitted Receivables Disposition" means any transfer (by way of sale,
pledge or otherwise) by the Borrower or any Restricted Subsidiary to any other
Person (including a Receivables Subsidiary) of accounts receivable and other
rights to payment (whether constituting accounts, chattel paper, instruments,
general intangibles or otherwise and including the right to payment of interest
or finance charges) and related contract and other rights and property
(including all general intangibles, collections and other proceeds relating
thereto, all security therefor (and the property subject thereto), all
guarantees and other agreements or arrangements of whatsoever character from
time to time supporting such right to payment, and all other rights, title and
interest in goods relating to a sale which gave rise to such right of payment)
in connection with a Permitted Receivables Financing.

         "Permitted Receivables Financing" means any receivables securitization
program or other type of accounts receivable financing transaction by the
Borrower or any of its Restricted Subsidiaries in an aggregate amount not to
exceed $250,000,000 on terms reasonably satisfactory to all the Incremental
Facility Arrangers (if any) and the Administrative Agent.

         "Permitted Specified Security Hedging Transactions" means options,
collars, forwards and other similar transactions (including, without limitation,
prepaid forward transactions, collar/loan transactions and other similar
transactions) with respect to any Specified Security entered into by the
Borrower or any of its Subsidiaries to monetize the value of and/or hedge
against changes in the market price of such Specified Security."


                                       19
<PAGE>


         "Permitted Telecommunications Asset Disposition"means the transfer,
conveyance, sale, lease or other disposition of an interest in or capacity on
(1) optical fiber and/or conduit and any related equipment, technology or
software used in a Segment of the Borrower's and the Restricted Subsidiaries'
communications network, other than in the ordinary course of business; provided
that after giving effect to such disposition, the Borrower and the Restricted
Subsidiaries would retain the right to use at least the minimum retained
capacity set forth below:

         (i)      with respect to any Segment constructed by, for or on behalf
                  of the Borrower or any Subsidiary or Affiliate, (x) 24 optical
                  fibers per route mile on such Segment as deployed at the time
                  of such Permitted Telecommunications Asset Disposition or (y)
                  12 optical fibers and one empty conduit per route mile on such
                  Segment as deployed at the time of such Permitted
                  Telecommunications Asset Disposition; and

         (ii)     with respect to any Segment purchased or leased from third
                  parties, the lesser of (x) 50% of the optical fibers per route
                  mile originally purchased or leased on such Segment, (y) 24
                  optical fibers per route mile on such Segment as deployed at
                  the time of such Permitted Telecommunications Asset
                  Disposition or (z) 12 optical fibers and one empty conduit per
                  route mile on such Segment as deployed at the time of such
                  Permitted Telecommunications Asset Disposition; or

(2) single strand fiber used in a Segment of the Borrower's and the Restricted
Subsidiaries' communications network, other than in the ordinary course of
business; provided that after giving effect to such disposition, the Borrower
and the Restricted Subsidiaries would not eliminate all capacity between the
endpoint cities connected by any fiber of the Borrower or its Restricted
Subsidiaries.

         "Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.

         "Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.

         "Post-Petition Interest" means any interest that accrues after the
commencement of any case, proceeding or action relating to the bankruptcy,
reorganization or insolvency of the Borrower (or would accrue but for the
operation of applicable bankruptcy, reorganization or insolvency laws), whether
or not such interest is allowed or allowable as a claim in any such case,
proceeding or other action.

         "Prepayment Event" means:

         (a)      any sale, transfer or other disposition (including pursuant to
                  a Sale and Leaseback Transaction) of any property or asset of
                  Holdings or any Restricted Subsidiary, other than Dark Fiber
                  and Capacity Dispositions and dispositions permitted under
                  clauses (a) through (d) and (f) through (i) of Section 6.05
                  and except as contemplated by Sections 5.17 and 5.18; or

         (b)      any casualty or other insured damage to, or any taking under
                  power of eminent domain or by condemnation or similar
                  proceeding of, any property or asset of Holdings or any
                  Subsidiary, but only to the extent that the Net Proceeds
                  therefrom have not been applied to repair, restore or replace
                  such property or asset or purchase similar property or assets
                  within 360 days after such event; or


                                       20
<PAGE>


         (c)      the incurrence by Holdings, the Borrower or any Subsidiary of
                  any Indebtedness, other than Indebtedness permitted under
                  Section 6.01.

         "Prepayment Portion" means in respect of any prepayment to be made
pursuant to Section 2.11(b) or 2.11(c), a fraction, the numerator of which is
the aggregate principal amount of Term Loans, Additional Incremental Term Loans
and Incremental Term Loans of any Class subject to prepayment under such Section
on account of Excess Cash Flow or the applicable type of Prepayment Event, as
the case may be (whether or not such Loans are actually to be prepaid on account
of such Prepayment Event or Excess Cash Flow), and the denominator of which is
the sum of such aggregate principal amount and the aggregate Revolving
Commitments and Additional Incremental Revolving Commitments of any Class
subject to reduction pursuant to Section 2.08(f) or (g) on account of Excess
Cash Flow or the applicable type of Prepayment Event, as the case may be
(whether or not such Commitments are actually to be reduced on account of such
Prepayment Event or Excess Cash Flow).

         "Prime Rate" means the rate of interest per annum publicly announced
from time to time by the Administrative Agent as its prime rate in effect at its
principal office in Dallas, Texas; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.

         "Projections" has the meaning set forth in Section 3.04(d).

         "Qualifying Borrower Indebtedness" means, unsecured Indebtedness of the
Borrower to Holdings that (i) does not require the payment of any principal or
cash interest prior to the first anniversary of the Term Maturity Date, (ii) is
not redeemable by, or convertible or exchangeable for securities of the Borrower
or any of its Subsidiaries that are redeemable by, the holder thereof, and not
subject to any required sinking fund or other similar payment, prior to the
first anniversary of the Term Maturity Date, (iii) is subordinated to the
Obligations pursuant to subordination provisions at least as favorable to the
holders of the Obligations as the provisions set forth in Exhibit J hereto and
(iv) includes no covenants, events of default or acceleration provisions other
than a customary bankruptcy default and acceleration provision.

         "Qualifying Equity Interest" means, with respect to Holdings or the
Borrower, Equity Interests of Holdings or the Borrower, as the case may be, that
(i) are not mandatorily redeemable or redeemable at the option of the holder
thereof, (ii) are not convertible into or exchangeable for debt securities of
Holdings or any Restricted Subsidiary, Equity Interests in any Restricted
Subsidiary or Equity Interests that are not Qualifying Equity Interests of
Holdings, (iii) are not required to be repurchased or redeemed by Holdings or
any Restricted Subsidiary and (iv) do not require the payment of cash dividends,
in each of the foregoing cases, prior to the date that is one year after the
Term Maturity Date.

         "Qualifying Holdings Debt" means unsecured debt of Holdings (other than
the High Yield Notes) (i) no part of the principal of which is required to be
paid (upon maturity or by mandatory sinking fund, mandatory redemption,
mandatory prepayment or otherwise) prior to the date that is one year after the
Term Maturity Date, (ii) the payment of the principal of and interest on which
and other payment obligations of Holdings in respect of which are subordinated
to the prior payment in full in cash of the principal of and interest (including
Post-Petition Interest) on the Loans and all other obligations under the Loan
Documents and (iii) the terms and conditions of which are reasonably
satisfactory to the Required Lenders.

         "Qualifying Issuances" means (i) any issuance of Qualifying Equity
Interests of Holdings, (ii) any issuance of unsecured Indebtedness described in
clauses (a) or (b) of the definition thereof of Holdings or the Borrower, and
(iii) any Sale and Leaseback Transaction by the Borrower or a Restricted
Subsidiary the subject property of which is the building under construction as
of the Amendment No. 4 Effective Date and


                                       21
<PAGE>


adjacent to One Williams Center, together with the parking garage adjacent
thereto, or any one or more of three corporate jets identified by the Borrower
to the Lenders prior to the Amendment No. 4 Effective Date, so long as the terms
and conditions of any such Indebtedness or Sale and Leaseback Transaction shall
have been approved by all the Incremental Facility Arrangers (if any) and the
Administrative Agent prior to the issuance thereof.

         "Receivables Subsidiary" means any wholly-owned Unrestricted Subsidiary
(regardless of the form thereof) of the Borrower formed solely for the purpose
of, and which engages in no other activities except those necessary for,
effecting Permitted Receivables Financings.

         "Reduction Portion" means, in respect of any reduction of Revolving
Commitments or Additional Incremental Revolving Commitments to be made pursuant
to Section 2.08(f) or (g), a fraction, the numerator of which is the aggregate
Revolving Commitments and Additional Incremental Revolving Commitments of any
Class subject to reduction under such Section on account of Excess Cash Flow or
the applicable type of Prepayment Event, as the case may be (whether or not such
Commitments are actually to be reduced on account of such Prepayment Event or
Excess Cash Flow), and the denominator of which is the sum of such aggregate
Commitments and the aggregate principal amount of Term Loans, Additional
Incremental Term Loans and Incremental Term Loans of any Class subject to
prepayment under Section 2.11(b) or 2.11(c) on account of Excess Cash Flow or
the applicable type of Prepayment Event, as the case may be (whether or not such
Loans are actually to be prepaid on account of such Prepayment Event or Excess
Cash Flow).

         "Register" has the meaning set forth in Section 10.04.

         "Related Parties" means, with respect to any specified Person, such
Person's affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's affiliates.

         "Reorganization" means the contribution to the Borrower by the Parent
and its subsidiaries (other than Holdings and the Subsidiaries) of its material
subsidiaries that hold interests in international communications projects (other
than Algar Telecom S.A. (formerly known as Lightel S.A.) and by Holdings of all
of its material subsidiaries (other than the Borrower and its subsidiaries), in
each case not previously held, directly or indirectly, by the Borrower.

         "Required Lenders" means, at any time, Lenders having outstanding
Revolving Exposures, Additional Incremental Revolving Loans, Term Loans,
Incremental Term Loans, Additional Incremental Term Loans and unused Commitments
representing more than 50% of the sum of the total outstanding Revolving
Exposures, Additional Incremental Revolving Loans, Term Loans, Incremental Term
Loans, Additional Incremental Term Loans and unused Commitments at such time.

         "Restricted Payment" means any dividend or other distribution (whether
in cash, securities or other property) with respect to any shares of any class
of capital stock of Holdings, the Borrower or any Subsidiary, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such shares of capital stock of
Holdings, the Borrower or any Subsidiary or any option, warrant or other right
to acquire any such shares of capital stock of Holdings, the Borrower or any
Subsidiary.

         "Restricted Subsidiary" means the Borrower and each other Subsidiary
(other than any Foreign Subsidiary) of Holdings that has not been designated as
an Unrestricted Subsidiary pursuant to and in compliance with Section 6.14. On
the Effective Date, all Subsidiaries (other than (i) each Structured Note Trust
and (ii) any Foreign Subsidiary) of Holdings are Restricted Subsidiaries.

         "Revolving Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Revolving Maturity Date and
the date of termination of the Revolving Commitments.


                                       22
<PAGE>


         "Revolving Commitment" means, with respect to each Lender, the
commitment, if any, of such Lender to make Revolving Loans and to acquire
participations in Letters of Credit and Swingline Loans hereunder, expressed as
an amount representing the maximum aggregate amount of such Lender's Revolving
Exposure hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 10.04. The amount of
each Lender's Revolving Commitment as of the Amendment No. 5 Effective Date is
set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to
which such Lender shall have assumed its Revolving Commitment, as applicable.
The initial aggregate amount of the Lenders' Revolving Commitments is
$525,000,000.

         "Revolving Commitment Reduction Date" means September 30, 2002.

         "Revolving Exposure" means, with respect to any Lender at any time, the
sum of the outstanding principal amount of such Lender's Revolving Loans and its
LC Exposure and Swingline Exposure at such time.

         "Revolving Facility" means the Revolving Commitments and the Revolving
Loans hereunder.

         "Revolving Lender" means a Lender with a Revolving Commitment or, if
the Revolving Commitments have terminated or expired, a Lender with Revolving
Exposure.

         "Revolving Loan" means a Loan made pursuant to clause (b) of Section
2.01.

         "Revolving Maturity Date" means the sixth anniversary of the Effective
Date.

         "Sale and Leaseback Transaction" has the meaning set forth in Section
6.06.

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

         "Security Agreement" means the security agreement substantially in the
form of Exhibit K hereto among the Borrower, each Restricted Subsidiary and the
Administrative Agent entered into as of the Initial Collateral Date, as amended
from time to time.

         "Segment" means (i) with respect to the Borrower's and the other
Restricted Subsidiaries' intercity network, the through-portion of such network
between two local networks and (ii) with respect to a local network of the
Borrower and the other Restricted Subsidiaries, the entire through-portion of
such network, excluding the spurs which branch off the through-portion.

         "Senior Debt" means, at any date, without duplication, all Indebtedness
(other than Qualifying Borrower Indebtedness permitted under Section 6.01(p)) of
the Borrower and the other Restricted Subsidiaries that are subsidiaries of the
Borrower, determined on a consolidated basis at such date and the ADP
Outstandings at such date; provided that, for purposes of this definition, (i)
Indebtedness in respect of Hedging Agreements shall be equal to (A) the
aggregate net Mark-to-Market Valuation of all Hedging Agreements of the Borrower
and the Restricted Subsidiaries that are subsidiaries of the Borrower then
outstanding, to the extent that such aggregate net Mark-to-Market Valuation
constitutes a net obligation of the Borrower and such Restricted Subsidiaries
and (B) zero, if such aggregate net Mark-to-Market Valuation does not constitute
such a net obligation and (ii) Indebtedness in respect of Permitted Specified
Security Hedging Transactions shall be equal to (A) an amount equal to the
Mark-to-Market Valuation of such Permitted Specified Security Hedging
Transaction less the fair market value of the Specified Securities and related
contract rights securing such Permitted Specified Security Hedging Transaction,
if such amount is greater than zero and (B) zero, if such amount is not greater
than zero."

         "Senior Leverage Ratio" means, at any date, the ratio of (i) Senior Net
Debt at such date, to (ii) Adjusted EBITDA, for the period of four fiscal
quarters most recently ended on or prior to such date.


                                       23
<PAGE>


         "Senior Net Debt" means, at any date, Senior Debt at such date minus
the aggregate amount of all cash and Cash Equivalent Investments of the Borrower
and the other Restricted Subsidiaries that are subsidiaries of the Borrower
(excluding any cash and Cash Equivalent Investments that are blocked or
restricted so that they may not be used for general corporate purposes at such
date) in excess of $10,000,000 at such date.

         "Solutions" means Williams Communications Solutions, LLC, a Delaware
corporation, and its successors and assigns.

         "SPC" has the meaning set forth in Section 10.04(b)(2).

         "Specified Hedging Agreement" has the meaning set forth in Section
9.01.

         "Specified Indebtedness" has the meaning set forth in Section 6.07(b).

         "Specified Security" means publicly traded equity securities of actual
or prospective customers or vendors of the Borrower and its subsidiaries
acquired by the Borrower and its subsidiaries in connection with (or pursuant to
warrants, options or rights acquired in connection with) actual or prospective
commercial agreements with such customers or vendors; provided that securities
of the Borrower or any of its subsidiaries or Affiliates shall not constitute
Specified Securities.

         "Spin-Off" means the distribution by Parent to its shareholders of all
or substantially all of the capital stock of Holdings held by Parent
substantially on the terms described by the Borrower to the Lenders prior to the
Amendment No. 4 Effective Date.

         "Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.

         "Structured Note Bridge Indebtedness" means the Indebtedness permitted
to be incurred by Holdings pursuant to Section 6.01(t).

         "Structured Note Financing" means the issuance by the Structured Note
Trust of notes for cash Net Proceeds of up to $1,500,000,000 substantially on
the terms and conditions described by the Borrower in the "Term Sheet for
Structured Note" included as an attachment to the Borrower's Amendment Request
distributed to the Lenders on or prior to March 7, 2001 or otherwise approved by
all the Incremental Facility Arrangers (if any) and the Administrative Agent
prior to the issuance thereof.

         "Structured Note Trust" means WCG Note Trust and WCG Note Corp., Inc.,
each of which is an Unrestricted Subsidiary created for the purpose of
consummating the Structured Note Financing and conducting no activities other
than the consummation of the Structured Note Financing and activities incidental
thereto.

         "subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability


                                       24
<PAGE>


company, partnership, association or other entity (a) of which securities or
other ownership interests representing more than 50% of the equity or more than
50% of the ordinary voting power or, in the case of a partnership, more than 50%
of the general partnership interests are, as of such date, owned, controlled or
held, or (b) that is, as of such date, otherwise Controlled, by the parent or
one or more subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent.

         "Subsidiary" means any subsidiary of Holdings. For purposes of the
representations and warranties made herein on the Effective Date, the term
"Subsidiary" includes each of the Borrower and the other Restricted
Subsidiaries.

         "Subsidiary Designation" has the meaning set forth in Section 6.14.

         "Subsidiary Guarantee" means the Subsidiary Guarantee, substantially in
the form of Exhibit D, made by the Subsidiary Loan Parties in favor of the
Administrative Agent for the benefit of the Lenders, and any Supplements
thereto.

         "Subsidiary Loan Party" means any Restricted Subsidiary (other than the
Borrower) that is not a Foreign Subsidiary; provided that no Receivables
Subsidiary shall be a Subsidiary Loan Party for any purpose under the Loan
Documents.

         "Swingline Exposure" means, at any time, the aggregate principal amount
of all Swingline Loans outstanding at such time. The Swingline Exposure of any
Lender at any time shall be its Applicable Percentage of the total Swingline
Exposure at such time.

         "Swingline Lenders" means Bank of America and Chase, each in its
capacity as lender of Swingline Loans hereunder.

         "Swingline Loan" means a Loan made pursuant to Section 2.04.

         "Syndication Agent" means Chase, in its capacity as syndication agent
hereunder.

         "Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.

         "Telecommunications Assets" means:

         (a)      any property (other than cash or Cash Equivalent Investments)
                  to be owned or used by the Borrower or any other Restricted
                  Subsidiary and used in the Telecommunications Business; and

         (b)      Equity Interests of a Person that becomes a Restricted
                  Subsidiary as a result of the acquisition of such Equity
                  Interests by the Borrower or any other Restricted Subsidiary
                  from any Person other than an Affiliate of Holdings or the
                  Borrower; provided that such Person is primarily engaged in
                  the Telecommunications Business.

         "Telecommunications Business" means the business of:

         (a)      transmitting, or providing services relating to the
                  transmission of, voice, video or data through owned or leased
                  transmission facilities or the right to use such facilities;


                                       25
<PAGE>


         (b)      constructing, acquiring, creating, developing, operating,
                  managing or marketing communications networks, related network
                  transmission equipment, software and other devices for use in
                  a communications business;

         (c)      computer outsourcing, data center management, computer systems
                  integration, reengineering of computer software for any
                  purpose, including, without limitation, for the purposes of
                  porting computer software from one operating environment or
                  computer platform to another or to address issues commonly
                  referred to as "Year 2000 issues";

         (d)      constructing, managing or operating fiber optic
                  telecommunications networks and leasing capacity on those
                  networks to third parties;

         (e)      the sale, resale, installation or maintenance of
                  communications systems or equipment; or

         (f)      evaluating, participating in or pursuing any other activity or
                  opportunity that is primarily related to those identified in
                  (a), (b), (c), (d) or (e) above;

provided that the determination of what constitutes a Telecommunications
Business shall be made in good faith by the Board of Directors of Holdings.

         "Term Amortization Date" means September 30, 2002.

         "Term Commitment" means, with respect to each Lender, the commitment,
if any, of such Lender to make Term Loans hereunder during the Term Loan
Availability Period, expressed as an amount representing the maximum principal
amount of the Term Loans to be made by such Lender hereunder, as such commitment
may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 10.04. The amount of each Lender's Term Commitment as of the
Amendment No. 5 Effective Date is set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Term Commitment, as applicable. The initial aggregate amount of the Lenders'
Term Commitments is $525,000,000.

         "Term Commitment Termination Date" means September 8, 2000.

         "Term Facility" means the Term Commitments and the Term Loans
hereunder.

         "Term Lender" means a Lender with a Term Commitment or an outstanding
Term Loan.

         "Term Loan" means a Loan made pursuant to Section 2.01(a)(i).

         "Term Loan Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Term Commitment Termination
Date and the date of termination of the Term Commitments.

         "Term Maturity Date" means September 30, 2006.


                                       26
<PAGE>


         "Total Debt" means, at any date, without duplication, the sum of all
Indebtedness of Holdings and the Restricted Subsidiaries, determined on a
consolidated basis at such date, and the ADP Outstandings at such date, provided
that, for purposes of this definition, (i) Indebtedness in respect of Hedging
Agreements shall be equal to (A) the aggregate net Mark-to-Market Valuation of
all Hedging Agreements of Holdings and the Restricted Subsidiaries then
outstanding, to the extent that such aggregate net Mark-to-Market Valuation
constitutes a net obligation of the Borrower and such Restricted Subsidiaries
and (B) zero, if such aggregate net Mark-to-Market Valuation does not constitute
such a net obligation and (ii) Indebtedness in respect of Permitted Specified
Security Hedging Transactions shall be equal to (A) an amount equal to the
Market-to-Market Valuation of such Permitted Specified Security Hedging
Transaction less the fair market value of the Specified Securities and related
contract rights securing such Permitted Specified Security Hedging Transaction,
if such amount is greater than zero and (B) zero, if such amount is not greater
than zero.

         "Total Leverage Ratio" means, at any date, the ratio of (i) Total Net
Debt at such date to (ii) Adjusted EBITDA for the period of four fiscal quarters
most recently ended on or prior to such date.

         "Total Net Debt" means, at any date, Total Debt at such date, minus the
aggregate amount of all cash and Cash Equivalent Investments of Holdings and the
Restricted Subsidiaries (excluding any cash and Cash Equivalent Investments that
are blocked or restricted so that they may not be used for general corporate
purposes at such date) in excess of $10,000,000 at such date.

         "Total Net Debt to Contributed Capital Ratio" means, at any date, the
ratio of (i) Total Net Debt at such date to (ii) Contributed Capital at such
date.

         "Trading Subsidiary" has the meaning assigned to such term in Section
6.03(c).

         "Transactions" means the execution, delivery and performance by each
Loan Party of the Loan Documents to which it is to be a party, the borrowing of
Loans, the use of the proceeds thereof and the issuance of Letters of Credit
hereunder.

         "Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to an Adjusted LIBO Rate or the Alternate
Base Rate.

         "Unrestricted Subsidiary" means (i) any Subsidiary (other than the
Borrower) that is designated by the Board of Directors of Holdings as an
Unrestricted Subsidiary in accordance with Section 6.14, and (ii) each
Structured Note Trust.

         "Voting Stock" means, with respect to any Person, capital stock issued
by such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, whether or not the right so to
vote has been suspended by the happening of such a contingency.

         "Weighted Average Life to Maturity" means, on any date and with respect
to the Revolving Commitments, the Term Loans, any Additional Incremental
Revolving Commitments of any Class, any Incremental Term Loans, any Additional
Incremental Term Loans of any Class or any other Indebtedness or commitments to
provide financing, an amount equal to (i) the sum, for each scheduled repayment
of Term Loans, Additional Incremental Term Loans or Incremental Term Loans of
such Class or of such Indebtedness, as the case may be, to be made after such
date, or each scheduled reduction of Revolving Commitments or Additional
Incremental Revolving Commitments of such Class or other commitments to provide
financing, as the case may be, to be made after such date, of the amount of such
scheduled repayment or reduction multiplied by the number of days from such date
to the date of such scheduled prepayment or reduction divided by (ii) the
aggregate principal amount of such Term Loans, Additional Incremental Term Loans
or Incremental Term Loans or of such Indebtedness, as the case may be, or such
Revolving Commitments or Additional Incremental Revolving Commitments or other
commitments to provide financing, as the case may be.


                                       27
<PAGE>


         "Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.

         SECTION 1.2. Classification of Loans and Borrowings. For purposes of
this Agreement, Loans may be classified and referred to by Class (e.g., a
"Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type
(e.g., a "Eurodollar Revolving Loan"). Borrowings also may be classified and
referred to by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a
"Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving
Borrowing").

         SECTION 1.3. Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.

         SECTION 1.4. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.


                                       28
<PAGE>


                                    ARTICLE 2

                                   THE CREDITS

         SECTION 2.1. Commitments. Subject to the terms and conditions set forth
herein, (a) each Lender agrees (i) to make Term Loans to the Borrower from time
to time during the Term Loan Availability Period in a principal amount not
exceeding its Term Commitment, if any, (ii) to make Revolving Loans to the
Borrower from time to time during the Revolving Availability Period in an
aggregate principal amount that will not result in such Lender's Revolving
Exposure exceeding such Lender's Revolving Commitment, if any, (iii) to make
Additional Incremental Term Loans to the Borrower under any Additional
Incremental Facility during the period or on the date set forth in the
applicable Additional Incremental Facility Agreement in a principal amount not
exceeding its Additional Incremental Commitment in respect of such Additional
Incremental Facility, if any, and (iv) to make Additional Incremental Revolving
Loans to the Borrower under any Additional Incremental Facility during the
period set forth in the applicable Additional Incremental Facility Agreement in
a principal amount not exceeding at any time its Additional Incremental
Revolving Commitment in respect of such Additional Incremental Facility, if any,
(b) each Incremental Tranche A Lender agrees to make Incremental Tranche A Term
Loans to the Borrower from time to time during the Incremental Tranche A Term
Loan Availability Period in a principal amount not exceeding its Incremental
Tranche A Commitment, provided that the initial Borrowing under the Incremental
Tranche A Facility shall be in an aggregate amount not less than $225,000,000
and shall occur on the First Incremental Borrowing Date. Within the foregoing
limits and subject to the terms and conditions set forth herein, the Borrower
may borrow, prepay and reborrow Revolving Loans and Additional Incremental
Revolving Loans. Amounts repaid in respect of Term Loans, Incremental Term Loans
or Additional Incremental Term Loans may not be reborrowed.

         SECTION 2.2. Loans and Borrowings. (a) Each Loan (other than a
Swingline Loan) shall be made as part of a Borrowing consisting of Loans of the
same Class and Type made by the Lenders ratably in accordance with their
respective Commitments of the applicable Class. The failure of any Lender to
make any Loan required to be made by it shall not relieve any other Lender of
its obligations hereunder; provided that the Commitments of the Lenders are
several and no Lender shall be responsible for any other Lender's failure to
make Loans as required.

         (b) Subject to Section 2.14, each Revolving Borrowing, Term Borrowing,
Additional Incremental Revolving Borrowing, Additional Incremental Term
Borrowing and Incremental Term Borrowing shall be comprised entirely of ABR
Loans or Eurodollar Loans as the Borrower may request in accordance herewith.
Each Swingline Loan shall be an ABR Loan. Each Lender at its option may make any
Eurodollar Loan by causing any domestic or foreign branch or affiliate of such
Lender to make such Loan; provided that any exercise of such option shall not
affect the obligation of the Borrower to repay such Loan in accordance with the
terms of this Agreement.

          (c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing (w) if a Revolving Borrowing shall be in an aggregate
amount that is an integral multiple of $1,000,000 and not less than $10,000,000,
(x) if a Term Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $50,000,000 (y) if an Incremental Term
Borrowing shall be in an aggregate amount that is an integral multiple of
$1,000,000 and not less than $10,000,000 or (z) if an Additional Incremental
Term Borrowing or an Additional Incremental Revolving Borrowing shall be in
aggregate amounts that are permitted under the applicable Incremental Facility
Agreement. At the time that each ABR Borrowing is made, such Borrowing (w) if a
Revolving Borrowing shall be in an aggregate amount that is an integral multiple
of $1,000,000 and not less than $5,000,000, (x) if a Term Borrowing shall be in
an aggregate amount that is an integral multiple of $1,000,000 and not less


                                       29
<PAGE>


than $50,000,000 (y) if an Incremental Term Borrowing shall be in an aggregate
amount that is an integral multiple of $1,000,000 and not less than $10,000,000
or (z) if an Additional Incremental Term Borrowing or an Additional Incremental
Revolving Borrowing shall be in aggregate amounts that are permitted under the
applicable Incremental Facility Agreement; provided that (i) an ABR Revolving
Borrowing or ABR Additional Incremental Revolving Borrowing may be in an
aggregate amount that is equal to the entire unused balance of the total
Revolving Commitments or Additional Incremental Revolving Commitments of the
applicable Class, as the case may be, (ii) an ABR Revolving Borrowing may be in
an aggregate amount that is required to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.05(e) and (iii) an ABR Term Borrowing,
ABR Incremental Term Borrowing or ABR Additional Incremental Term Borrowing may
be in an aggregate amount that is equal to the entire unused balance of the
total Term Commitments, Incremental Term Commitments, Additional Incremental
Term Commitments of the applicable Class, as the case may be. Each Swingline
Loan shall be in an amount that is an integral multiple of $1,000,000 and not
less than $5,000,000. Borrowings of more than one Type and Class may be
outstanding at the same time; provided that there shall not at any time be more
than a total of 10 Eurodollar Borrowings outstanding.

          (d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end
after the Revolving Maturity Date, the Term Maturity Date, the Incremental
Tranche A Maturity Date or the maturity date set forth in the applicable
Additional Incremental Facility Agreement, as applicable.

         SECTION 2.3. Requests for Borrowings. To request a Borrowing (other
than a Swingline Borrowing), the Borrower shall notify the Administrative Agent
of such request by telephone (a) in the case of a Eurodollar Borrowing, not
later than 11:00 a.m., Dallas, Texas time, three Business Days before the date
of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than
11:00 a.m., Dallas, Texas time, one Business Day before the date of the proposed
Borrowing; provided that any such notice of an ABR Revolving Borrowing to
finance the reimbursement of an LC Disbursement as contemplated by Section
2.05(e) may be given not later than 10:00 a.m., Dallas, Texas time, on the date
of the proposed Borrowing. Each such telephonic Borrowing Request shall be
irrevocable and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Borrowing Request substantially in the form of
Exhibit B hereto and signed by the Borrower. Each such telephonic and written
Borrowing Request shall specify the following information in compliance with
Section 2.02:

                  (i) whether the requested Borrowing is to be a Revolving
         Borrowing, Term Borrowing, Incremental Tranche A Term Borrowing,
         Additional Incremental Revolving Borrowing or Additional Incremental
         Term Borrowing and, in the case of Additional Incremental Revolving
         Borrowings and Additional Incremental Term Borrowings, the Additional
         Incremental Facility under which such Borrowing is to be made;

                 (ii) the aggregate amount of such Borrowing;

                (iii) the date of such Borrowing, which shall be a Business
         Day;


                                       30
<PAGE>



                 (iv) whether such Borrowing is to be an ABR Borrowing or a
         Eurodollar Borrowing;

                  (v) in the case of a Eurodollar Borrowing, the initial
         Interest Period to be applicable thereto, which shall be a period
         contemplated by the definition of the term "Interest Period"; and

                 (vi) the location and number of the Borrower's account to which
         funds are to be disbursed, which shall comply with the requirements of
         Section 2.06.

         If no election as to the Type of Borrowing is specified, then the
requested Borrowing shall be an ABR Borrowing. If no Interest Period is
specified with respect to any requested Eurodollar Borrowing, then the Borrower
shall be deemed to have selected an Interest Period of one month's duration.
Promptly following receipt of a Borrowing Request in accordance with this
Section, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender's Loan to be made as part of the
requested Borrowing.

         SECTION 2.4. Swingline Loans. (a) Subject to the terms and conditions
set forth herein, the Swingline Lenders each agree to make Swingline Loans to
the Borrower from time to time during the Revolving Availability Period, in an
aggregate principal amount at any time outstanding that will not result in (i)
the aggregate principal amount of outstanding Swingline Loans of either
Swingline Lender exceeding $25,000,000 or (ii) the sum of the total Revolving
Exposures exceeding the total Revolving Commitments; provided that neither
Swingline Lender shall be required to make a Swingline Loan to refinance an
outstanding Swingline Loan. Within the foregoing limits and subject to the terms
and conditions set forth herein, the Borrower may borrow, prepay and reborrow
Swingline Loans.

         (b) To request a Swingline Loan, the Borrower shall notify the
Administrative Agent of such request by telephone (confirmed by telecopy), not
later than 12:00 noon, Dallas, Texas time, on the day of a proposed Swingline
Loan and shall advise the Administrative Agent as to which Swingline Lender the
Borrower desires to provide such Swingline Loan. Each such notice shall be
irrevocable and shall specify the requested date (which shall be a Business Day)
and amount of the requested Swingline Loan. The Administrative Agent will
promptly advise the Swingline Lender indicated by the Borrower in such notice of
any such notice received from the Borrower. The applicable Swingline Lender
shall make such Swingline Loan available to the Borrower by means of a credit to
the general deposit account of the Borrower with such Swingline Lender (or, in
the case of a Swingline Loan made to finance the reimbursement of an LC
Disbursement as provided in Section 2.05(e), by remittance to the applicable
Issuing Bank) by 3:00 p.m., Dallas, Texas time, on the requested date of such
Swingline Loan.

         (c) The applicable Swingline Lender may by written notice given to the
Administrative Agent not later than 10:00 a.m., Dallas, Texas time, on any
Business Day require the Revolving Lenders to acquire participations on such
Business Day in all or a portion of its Swingline Loans outstanding. Such notice
shall specify the aggregate amount of Swingline Loans in which Revolving Lenders
will participate. Promptly upon receipt of such notice, the Administrative Agent
will give notice thereof to each


                                       31
<PAGE>


Revolving Lender, specifying in such notice such Lender's Applicable Percentage
of such Swingline Loan or Loans. Each Revolving Lender hereby absolutely and
unconditionally agrees, upon receipt of notice as provided above, to pay to the
Administrative Agent, for the account of the applicable Swingline Lender, such
Lender's Applicable Percentage of such Swingline Loan or Loans. Each Revolving
Lender acknowledges and agrees that its obligation to acquire participations in
Swingline Loans pursuant to this paragraph is absolute and unconditional and
shall not be affected by any circumstance whatsoever, including the occurrence
and continuance of a Default or reduction or termination of the Commitments, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever. Each Revolving Lender shall comply with its obligation
under this paragraph by wire transfer of immediately available funds, in the
same manner as provided in Section 2.06 with respect to Loans made by such
Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment
obligations of the Revolving Lenders), and the Administrative Agent shall
promptly pay to the applicable Swingline Lender the amounts so received by it
from the Revolving Lenders. The Administrative Agent shall notify the Borrower
of any participations in any Swingline Loan acquired pursuant to this paragraph,
and thereafter payments in respect of such Swingline Loan shall be made to the
Administrative Agent and not to the applicable Swingline Lender. Any amounts
received by a Swingline Lender from the Borrower (or other party on behalf of
the Borrower) in respect of a Swingline Loan made by such Swingline Lender after
receipt by such Swingline Lender of the proceeds of a sale of participations
therein shall be promptly remitted to the Administrative Agent; any such amounts
received by the Administrative Agent shall be promptly remitted by the
Administrative Agent to the Revolving Lenders that shall have made their
payments pursuant to this paragraph and to the applicable Swingline Lender, as
their interests may appear. The purchase of participations in a Swingline Loan
pursuant to this paragraph shall not relieve the Borrower of any default in the
payment thereof.

         SECTION 2.5. Letters of Credit. (a) General. Subject to the terms and
conditions set forth herein, the Borrower may request the issuance of Letters of
Credit for its own account, in a form reasonably acceptable to the
Administrative Agent and the applicable Issuing Bank, at any time and from time
to time during the Revolving Availability Period. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Borrower to, or entered into by the Borrower with, the Issuing
Bank relating to any Letter of Credit, the terms and conditions of this
Agreement shall control.

         (b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing
Bank from whom the Borrower is requesting such Letter of Credit and to the
Administrative Agent (reasonably in advance of the requested date of issuance,
amendment, renewal or extension) a notice requesting the issuance of a Letter of
Credit, or identifying the Letter of Credit to be amended, renewed or extended,
and specifying the date of issuance, amendment, renewal or extension (which
shall be a Business Day), the date on which such Letter of Credit is to expire
(which shall comply


                                       32
<PAGE>


with Section 2.05(c)), the amount of such Letter of Credit, the name and address
of the beneficiary thereof and such other information as shall be necessary to
prepare, amend, renew or extend such Letter of Credit. If requested by the
applicable Issuing Bank, the Borrower also shall submit a letter of credit
application on such Issuing Bank's standard form in connection with any request
for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or
extended only if (and upon issuance, amendment, renewal or extension of each
Letter of Credit the Borrower shall be deemed to represent and warrant that),
after giving effect to such issuance, amendment, renewal or extension (i) the LC
Exposure shall not exceed $350,000,000 and (ii) the total Revolving Exposures
shall not exceed the total Revolving Commitments.

         (c) Expiration Date. Each Letter of Credit shall expire at or prior to
the close of business on the earlier of (i) the date one year after the date of
the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension), provided that a
Letter of Credit may include customary "evergreen" provisions and (ii) the date
that is five Business Days prior to the Revolving Maturity Date.

         (d) Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the applicable Issuing Bank or the Lenders, the
applicable Issuing Bank hereby grants to each Revolving Lender, and each
Revolving Lender hereby acquires from such Issuing Bank, a participation in such
Letter of Credit equal to such Lender's Applicable Percentage of the aggregate
amount available to be drawn under such Letter of Credit. In consideration and
in furtherance of the foregoing, each Revolving Lender hereby absolutely and
unconditionally agrees to pay to the Administrative Agent, for the account of
such Issuing Bank, such Lender's Applicable Percentage of each LC Disbursement
made by such Issuing Bank and not reimbursed by the Borrower on the date due as
provided in paragraph Section 2.05(e), or of any reimbursement payment required
to be refunded to the Borrower for any reason. Each Lender acknowledges and
agrees that its obligation to acquire participations pursuant to this paragraph
in respect of Letters of Credit is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including any amendment, renewal or
extension of any Letter of Credit or the occurrence and continuance of a Default
or reduction or termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever.

         (e) Reimbursement. If an Issuing Bank shall make any LC Disbursement in
respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement
by paying to the Administrative Agent an amount equal to such LC Disbursement
not later than 1:00 p.m., Dallas, Texas time, on the date that such LC
Disbursement is made, if the Borrower shall have received notice of such LC
Disbursement prior to 9:30 a.m., Dallas, Texas time, on such date, or, if such
notice has not been received by the Borrower prior to such time on such date,
then not later than 1:00 p.m., Dallas, Texas time, on (i) the Business Day that
the Borrower receives such notice, if such notice is received prior to


                                       33
<PAGE>


9:30 a.m., Dallas, Texas time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt; provided that,
if such LC Disbursement is not less than $5,000,000, the Borrower may, subject
to the conditions to borrowing set forth herein, request in accordance with
Section 2.03 or 2.04 that such payment be financed with an ABR Revolving
Borrowing or Swingline Loan in an equivalent amount and, to the extent so
financed, the Borrower's obligation to make such payment shall be discharged and
replaced by the resulting ABR Revolving Borrowing or Swingline Loan. If the
Borrower fails to make such payment when due, the Administrative Agent shall
notify each Revolving Lender of the applicable LC Disbursement, the payment then
due from the Borrower in respect thereof and such Lender's Applicable Percentage
thereof. Promptly following receipt of such notice, each Revolving Lender shall
pay to the Administrative Agent its Applicable Percentage of the payment then
due from the Borrower, in the same manner as provided in Section 2.06 with
respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis
mutandis, to the payment obligations of the Revolving Lenders), and the
Administrative Agent shall promptly pay to the applicable Issuing Bank the
amounts so received by it from the Revolving Lenders. Promptly following receipt
by the Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the
applicable Issuing Bank or, to the extent that Revolving Lenders have made
payments pursuant to this paragraph to reimburse the Issuing Bank, then to such
Lenders and the applicable Issuing Bank as their interests may appear. Any
payment made by a Revolving Lender pursuant to this paragraph to reimburse the
applicable Issuing Bank for any LC Disbursement (other than the funding of ABR
Revolving Loans or a Swingline Loan as contemplated above) shall not constitute
a Loan and shall not relieve the Borrower of its obligation to reimburse such LC
Disbursement.



                                       34
<PAGE>


         (f) Obligations Absolute. The Borrower's obligation to reimburse LC
Disbursements as provided in paragraph Section 2.05(e) shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by an Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower's obligations hereunder. Neither
the Administrative Agent, the Lenders nor either Issuing Bank, nor any of their
Related Parties, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank; provided that the foregoing shall not be construed to excuse an
Issuing Bank from liability to the Borrower to the extent of any direct damages
(as opposed to consequential damages, claims in respect of which are hereby
waived by the Borrower to the extent permitted by applicable law) suffered by
the Borrower that are caused by the Issuing Bank's failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or wilful misconduct on the part of an
Issuing Bank (as finally determined by a court of competent jurisdiction), each
Issuing Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented which appear on their
face to be in substantial compliance with the terms of a Letter of Credit, the
Issuing Bank may, in its sole discretion, either accept and make payment upon
such documents without responsibility for further investigation, regardless of
any notice or information to the contrary, or refuse to accept and make payment
upon such documents if such documents are not in strict compliance with the
terms of such Letter of Credit.

          (g) Disbursement Procedures. The applicable Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit. The applicable Issuing
Bank shall promptly notify the Administrative Agent and the Borrower by
telephone (confirmed by telecopy) of such demand for payment and whether the
Issuing Bank has made or will make an LC Disbursement thereunder; provided that
any failure to give or delay in giving such notice shall not relieve the
Borrower of its obligation to reimburse such Issuing Bank and the Revolving
Lenders with respect to any such LC Disbursement.


                                       35
<PAGE>


         (h) Interim Interest. If an Issuing Bank shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans;
provided that, if the Borrower fails to reimburse such LC Disbursement when due
pursuant to Section 2.05(e), then Section 2.13(c) shall apply. Interest accrued
pursuant to this paragraph shall be for the account of the applicable Issuing
Bank, except that interest accrued on and after the date of payment by any
Revolving Lender pursuant to Section 2.05(e) to reimburse the applicable Issuing
Bank shall be for the account of such Lender to the extent of such payment.

         (i) Replacement of the Issuing Bank. An Issuing Bank may be replaced at
any time by written agreement among the Borrower, the Administrative Agent, the
replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent
shall notify the Lenders of any such replacement of an Issuing Bank. At the time
any such replacement shall become effective, the Borrower shall pay all unpaid
fees accrued for the account of the replaced Issuing Bank pursuant to Section
2.12(b). From and after the effective date of any such replacement, (i) the
successor Issuing Bank shall have all the rights and obligations of an Issuing
Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed
to refer to such successor, to any other Issuing Bank or to any previous Issuing
Bank, or to such successor, all other Issuing Banks and all previous Issuing
Banks, as the context shall require. After the replacement of an Issuing Bank
hereunder, the replaced Issuing Bank shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Bank under this
Agreement with respect to Letters of Credit issued by it prior to such
replacement, but shall not be required to issue additional Letters of Credit.

         (j) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Lenders with LC Exposure representing greater
than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, the Borrower shall deposit in an account with the
Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lenders, an amount in cash equal to 105% of the LC Exposure as of
such date plus any accrued and unpaid interest thereon; provided that the
obligation to deposit such cash collateral shall become effective immediately,
and such deposit shall become immediately due and payable, without demand or
other notice of any kind, upon the occurrence of any Event of Default with
respect to the Borrower described in Section 7.01(h) or 7.01(i). Each such
deposit shall be held by the Administrative Agent as collateral for the payment
and performance of the obligations of the Borrower under this Agreement. The
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. Other than any interest earned
on the investment of such deposits, which investments shall be made at the
option and sole discretion of the Administrative Agent


                                       36
<PAGE>


and at the Borrower's risk and expense, such deposits shall not bear interest.
Interest or profits, if any, on such investments shall accumulate in such
account. Moneys in such account shall be applied by the Administrative Agent to
reimburse the applicable Issuing Bank for LC Disbursements for which it has not
been reimbursed and, to the extent not so applied, shall be held for the
satisfaction of the reimbursement obligations of the Borrower for the LC
Exposure at such time or, if the maturity of the Loans has been accelerated (but
subject to the consent of Revolving Lenders with LC Exposure representing
greater than 50% of the total LC Exposure), be applied to satisfy other
obligations of the Borrower under this Agreement. If the Borrower is required to
provide an amount of cash collateral hereunder as a result of the occurrence of
an Event of Default, such amount (to the extent not applied as aforesaid) shall
be returned to the Borrower within three Business Days after all Events of
Default have been cured or waived.

         SECTION 2.6. Funding of Borrowings. (a) Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 1:00 p.m., Dallas, Texas time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders; provided that Swingline Loans shall be made as provided
in Section 2.04. The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower maintained with the Administrative Agent in Dallas,
Texas and designated by the Borrower in the applicable Borrowing Request;
provided that ABR Revolving Loans made to finance the reimbursement of an LC
Disbursement as provided in Section 2.05(e) shall be remitted by the
Administrative Agent to the applicable Issuing Bank.

         (b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with Section 2.06(a) and may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount. In such event, if a Lender has not in fact made its share of the
applicable Borrowing available to the Administrative Agent, then the applicable
Lender and the Borrower severally agree to pay to the Administrative Agent
forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to the Borrower to
but excluding the date of payment to the Administrative Agent, at (i) in the
case of such Lender, the greater of the Federal Funds Effective Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation or (ii) in the case of the Borrower, the interest rate
applicable to ABR Loans. If such Lender pays such amount to the Administrative
Agent, then such amount shall constitute such Lender's Loan included in such
Borrowing.

         SECTION 2.7. Interest Elections. (a) Each Revolving Borrowing,
Additional Incremental Revolving Borrowing, Term Borrowing, Incremental Term
Borrowing and Additional Incremental Term Borrowing initially shall be of the
Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing
to a different Type or to continue such Borrowing and, in the case of a
Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section. The Borrower may elect different options with respect to different
portions of a Borrowing,


                                       37
<PAGE>


in which case each such portion shall be allocated ratably among the Lenders
holding the Loans comprising such Borrowing, and the Loans comprising each such
portion shall be considered a separate Borrowing. This Section shall not apply
to Swingline Borrowings, which may not be converted or continued.

         (b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
Borrower.

         (c) Each telephonic and written Interest Election Request shall specify
the following information in compliance with Section 2.02 and Section 2.07(f):

                  (i) the Borrowing to which such Interest Election Request
         applies and, if different options are being elected with respect to
         different portions thereof, the portions thereof to be allocated to
         each resulting Borrowing (in which case the information to be specified
         pursuant to clauses (iii) and (iv) below shall be specified for each
         resulting Borrowing);

                  (ii) the effective date of the election made pursuant to such
         Interest Election Request, which shall be a Business Day;

                  (iii) whether the resulting Borrowing is to be an ABR
         Borrowing or a Eurodollar Borrowing; and

                  (iv) if the resulting Borrowing is a Eurodollar Borrowing, the
         Interest Period to be applicable thereto after giving effect to such
         election, which shall be a period contemplated by the definition of the
         term "Interest Period".

         If any such Interest Election Request requests a Eurodollar Borrowing
but does not specify an Interest Period, then the Borrower shall be deemed to
have selected an Interest Period of one month's duration.

         (d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each applicable Lender of the details thereof
and of such Lender's portion of each resulting Borrowing.

         (e) If the Borrower fails to deliver a timely Interest Election Request
with respect to a Eurodollar Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing, then, so long as an Event of Default is
continuing (i) no outstanding


                                       38
<PAGE>


Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii)
unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing
at the end of the Interest Period applicable thereto.

          (f) A Borrowing of any Class may not be converted to or continued as a
Eurodollar Borrowing if after giving effect thereto (i) the Interest Period
therefor would commence before and end after a date on which any principal of
the Loans of such Class is scheduled to be repaid and (ii) the sum of the
aggregate principal amount of outstanding Eurodollar Borrowings of such Class
with Interest Periods ending on or prior to such scheduled repayment date plus
the aggregate principal amount of outstanding ABR Borrowings of such Class would
be less than the aggregate principal amount of Loans of such Class required to
be repaid on such scheduled repayment date.

         SECTION 2.8. Termination and Reduction of Commitments. (a) Unless
previously terminated, (i) the Term Commitments shall terminate on the Term
Commitment Termination Date, (ii) the Revolving Commitments shall terminate on
the Revolving Maturity Date, (iii) the Incremental Tranche A Commitments shall
terminate on the Incremental Tranche A Commitment Termination Date and (iv) the
Additional Incremental Commitments of any Class shall terminate on the date set
forth in the applicable Additional Incremental Facility Agreement.

         (b) Subject to adjustment pursuant to Section 2.08(h), the Revolving
Commitments outstanding on the Revolving Commitment Reduction Date shall be
automatically and permanently reduced in 12 consecutive installments on the last
day of each fiscal quarter (except with respect to the final reduction, which
shall be on the Revolving Maturity Date) set forth below in the percentage
amounts (expressed as a percentage of the aggregate amount of Revolving
Commitments outstanding on the Revolving Commitment Reduction Date) set forth
opposite such quarterly scheduled reduction date (or the Revolving Maturity
Date) below; provided that the final installment shall reduce the remaining
outstanding Revolving Commitments to zero on the Revolving Maturity Date and the
payment made in respect thereof shall equal the sum of (x) the then aggregate
unpaid principal amount of all Revolving Loans plus (y) all other unpaid amounts
owing in respect of Revolving Loans, which payment shall be due and payable not
later than the Revolving Maturity Date:

<Table>
<Caption>
            Scheduled Reduction Date                Commitment Reduction
            ------------------------                --------------------
<S>                                                 <C>

                4th Quarter 2002                           5.00%
                1st Quarter 2003                           5.00%
                2nd Quarter 2003                           5.00%
                3rd Quarter 2003                           5.00%

                4th Quarter 2003                           7.50%
                1st Quarter 2004                           7.50%
                2nd Quarter 2004                           7.50%
                3rd Quarter 2004                           7.50%

                4th Quarter 2004                          12.50%
                1st Quarter 2005                          12.50%
                2nd Quarter 2005                          12.50%
             Revolving Maturity Date                      12.50%
</Table>


                                       39
<PAGE>


         (c) Subject to adjustment pursuant to Section 2.08(h), the Additional
Incremental Revolving Commitments of any Class shall be automatically and
permanently reduced on the scheduled dates, and in the scheduled amounts, if
any, set forth in the applicable Additional Incremental Facility Agreement.

         (d) The Borrower may at any time terminate, or from time to time
reduce, the Commitments of any Class; provided that (i) each reduction of the
Commitments of any Class shall be in an amount that is an integral multiple of
$1,000,000 and not less than $10,000,000, (ii) the Borrower shall not terminate
or reduce the Revolving Commitments if, after giving effect to any concurrent
prepayment of the Revolving Loans in accordance with Section 2.11, the sum of
the Revolving Exposures would exceed the total Revolving Commitments and (iii)
the Borrower shall not terminate or reduce the Additional Incremental Revolving
Commitments of any Class if, after giving effect to any concurrent prepayment of
Additional Incremental Revolving Loans of such Class in accordance with Section
2.11, the aggregate principal amount of outstanding Additional Incremental
Revolving Loans of such Class would exceed the total Additional Incremental
Revolving Commitments of such Class.

         (e) The Borrower shall notify the Administrative Agent of any election
to terminate or reduce the Commitments under Section 2.08(d) at least three
Business Days prior to the effective date of such termination or reduction,
specifying such election and the effective date thereof. Promptly following
receipt of any notice, the Administrative Agent shall advise the Lenders of the
contents thereof. Each notice delivered by the Borrower pursuant to this Section
shall be irrevocable; provided that a notice of termination of the Revolving
Commitments or the Additional Incremental Revolving Commitments of any Class
delivered by the Borrower may state that such notice is conditioned upon the
effectiveness of other credit facilities, in which case such notice may be
revoked by the Borrower (by notice to the Administrative Agent on or prior to
the specified effective date) if such condition is not satisfied. Any
termination or reduction of the Commitments of any Class shall be permanent.
Each reduction of the Commitments of any Class shall be made ratably among the
Lenders in accordance with their respective Commitments of such Class.

         (f) In the event and on each occasion that any Net Proceeds in excess
of $5,000,000 are received by or on behalf of Holdings or any Subsidiary in
respect of any Prepayment Event, there shall be a pro rata reduction of
Revolving Commitments, Term Borrowings, Incremental Tranche A Borrowings and, if
provided for in the applicable Additional Incremental Facility Agreement,
Additional Incremental Revolving Commitments and Additional Incremental Term
Borrowings as provided in this Section 2.08(f) and in Section 2.11(b). In such
event, the Revolving Commitments and, if


                                       40
<PAGE>


provided for in the applicable Additional Incremental Facility Agreement,
Additional Incremental Revolving Commitments shall, on the third Business Day
after such Net Proceeds are received, be automatically and permanently reduced
in an aggregate amount equal to the product of 100% (or, in the case of any
Prepayment Event referred to in clause (c) of the definition of Prepayment
Event, if, on the date on which any reduction would otherwise be made in respect
of such Prepayment Event either (i) the Facilities shall be rated not lower than
BBB- by S&P and Baa3 by Moody's or (ii) the Total Leverage Ratio as of such date
is less than 3.5 to 1.0, 50%) of such Net Proceeds and the Reduction Portion in
respect of such Prepayment Event; provided that, in the case of any event
described in clause (a) or (c) of the definition of Prepayment Event, if the
Borrower shall deliver to the Administrative Agent a certificate of a Financial
Officer to the effect that the Borrower intends to apply the Net Proceeds from
such event (or a portion thereof specified in such certificate) to invest in the
Telecommunications Business of the Borrower and the other Restricted
Subsidiaries within 360 days of the receipt thereof and certifying that no
Default has occurred and is continuing, then no reduction shall be required
pursuant to this paragraph in respect of the Net Proceeds in respect of such
event (or the portion of such Net Proceeds specified in such certificate, if
applicable) except to the extent of any such Net Proceeds therefrom that have
not been so applied by the end of such period, at which time a reduction shall
be required in accordance with this paragraph (f).

         (g) Following the end of each fiscal year of the Borrower, commencing
with the fiscal year ending December 31, 2002, the Revolving Commitments and, if
provided for in the applicable Additional Incremental Facility Agreement,
Additional Incremental Revolving Commitments shall be automatically and
permanently reduced in an aggregate amount equal to the product of 50% of Excess
Cash Flow for such fiscal year and the Reduction Portion in respect of such
Excess Cash Flow; provided that if, on the date on which any reduction would
otherwise be made pursuant to this Section 2.08(g), either (i) the Facilities
shall be rated not lower than BBB- by S&P and Baa3 by Moody's or (ii) the Total
Leverage Ratio as of such date is less than 3.5 to 1.0, no such reduction shall
be required pursuant to this Section 2.08(g). Each reduction pursuant to this
paragraph shall be made on the date on which financial statements are delivered
pursuant to Section 5.01 with respect to the fiscal year for which Excess Cash
Flow is being calculated (and in any event within 90 days after the end of such
fiscal year).

         (h) Any reduction of the Revolving Commitments, other than a reduction
pursuant to Section 2.08(a) or 2.08(b) above, shall be applied to reduce the
subsequent scheduled reductions of Revolving Commitments to be made pursuant to
Section 2.08(a) or 2.08(b) above in reverse chronological order. Any reduction
of the Additional Incremental Revolving Commitments of any Class, other than a
reduction pursuant to Section 2.08(a) or 2.08(c) above, shall be applied to
reduce the subsequent scheduled reductions of Additional Incremental Revolving
Commitments of such Class to be made pursuant to Section 2.08(a) or 2.08(c) as
set forth in the applicable Additional Incremental Facility Agreement.


                                       41
<PAGE>


         SECTION 2.9. Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay (i) to the Administrative Agent for the
account of each applicable Lender the then unpaid principal amount of each
Revolving Loan of such Lender on the Revolving Maturity Date, (ii) to the
Administrative Agent for the account of each applicable Lender the then unpaid
principal amount of each Term Loan of such Lender as provided in Section 2.10,
(iii) to the Administrative Agent for the account of each applicable Incremental
Lender the then unpaid principal amount of each Incremental Tranche A Term Loan
of such Incremental Lender as set forth in Section 2.10, (iv) to the
Administrative Agent for the account of each applicable Lender the then unpaid
principal amount of each Additional Incremental Loan of any Class of such Lender
as set forth in the applicable Additional Incremental Facility Agreement and (v)
to each Swingline Lender the then unpaid principal amount of each Swingline Loan
made by it on the earlier of the Revolving Maturity Date and the first date
after such Swingline Loan is made that is the 15th or last day of a calendar
month and is at least two Business Days after such Swingline Loan is made.

         (b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.

         (c) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Class and Type thereof
and the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender's share thereof.

         (d) The entries made in the accounts maintained pursuant to Section
2.09(b) and 2.09(c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.

         (e) No promissory notes evidencing Loans hereunder will be issued
unless a Lender requests that a promissory note be issued to it to evidence its
Loans of any Class. In such event, the Borrower shall prepare, execute and
deliver to such Lender a promissory note payable to the order of such Lender
(or, if requested by such Lender, to such Lender and its registered assigns) and
in a form approved by the Administrative Agent. Thereafter, the Loans evidenced
by such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 10.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).

         SECTION 2.10. Amortization of Term Loans and Incremental Term Loans.
(a) Subject to adjustment pursuant to Section 2.10(e), the Borrower shall repay
Term Borrowings outstanding on the Term Amortization Date in 16 consecutive
installments of principal, each of which will be due and payable on the last day
of each fiscal quarter (except with respect to the final installment, which
shall be on the Term Maturity Date) set forth below in the percentage amounts
(expressed as a percentage of the aggregate


                                       42
<PAGE>


amount of Term Loans outstanding on the Term Commitment Termination Date) set
forth opposite such quarterly installment date (or the Term Maturity Date)
below; provided that the final installment shall equal the sum of (x) the then
aggregate unpaid principal amount of all Term Loans plus (y) all other unpaid
amounts owing in respect of Term Loans and shall be due and payable not later
than the Term Maturity Date:

<Table>
<Caption>
                  Payment Date                            Amount
                  ------------                            ------
<S>                                                     <C>

                4th Quarter 2002                          3.75%
                1st Quarter 2003                          3.75%
                2nd Quarter 2003                          3.75%
                3rd Quarter 2003                          3.75%

                4th Quarter 2003                          6.25%
                1st Quarter 2004                          6.25%
                2nd Quarter 2004                          6.25%
                3rd Quarter 2004                          6.25%

                4th Quarter 2004                          7.50%
                1st Quarter 2005                          7.50%
                2nd Quarter 2005                          7.50%
                3rd Quarter 2005                          7.50%

                4th Quarter 2005                          7.50%
                1st Quarter 2006                          7.50%
                2nd Quarter 2006                          7.50%
               Term Maturity Date                         7.50%
</Table>

         (b) Subject to adjustment pursuant to Section 2.10(e), the Borrower
shall repay Incremental Tranche A Borrowings outstanding on the Incremental
Tranche A Amortization Date in 16 consecutive installments of principal, each of
which will be due and payable on the last day of each fiscal quarter (except
with respect to the final installment, which shall be on the Incremental Tranche
A Maturity Date) set forth below in the percentage amounts (expressed as a
percentage of the aggregate amount of Incremental Tranche A Term Loans
outstanding on the Incremental Tranche A Commitment Termination Date) set forth
opposite such quarterly installment date (or the Incremental Tranche A Maturity
Date) below; provided that the final installment shall equal the sum of (x) the
then aggregate unpaid principal amount of all Incremental Tranche A Term Loans
plus (y) all other unpaid amounts owing in respect of the Incremental Tranche A
Term Loans, and shall be due and payable not later than the Incremental Tranche
A Maturity Date:

<Table>
<Caption>

                  Payment Date                                         Amount
                  ------------                                         ------
<S>                                                                   <C>

                4th Quarter 2002                                       3.75%
                1st Quarter 2003                                       3.75%
                 2nd Quarter 2003                                      3.75%
                3rd Quarter 2003                                       3.75%

                4th Quarter 2003                                       6.25%
                1st Quarter 2004                                       6.25%
                2nd Quarter 2004                                       6.25%
                3rd Quarter 2004                                       6.25%

                4th Quarter 2004                                       7.50%
                1st Quarter 2005                                       7.50%
</Table>



                                       43
<PAGE>


<Table>
<Caption>
                  Payment Date                                         Amount
                  ------------                                         ------
<S>                                                                   <C>

                2nd Quarter 2005                                       7.50%
                3rd Quarter 2005                                       7.50%

                4th Quarter 2005                                       7.50%
                1st Quarter 2006                                       7.50%
                2nd Quarter 2006                                       7.50%
               Incremental Tranche
                 A Maturity Date                                       7.50%

</Table>

         (c) Subject to adjustment pursuant to Section 2.10(e), the Borrower
shall repay Additional Incremental Term Borrowings of any Class on the scheduled
dates, and in the scheduled amounts, if any, set forth in the applicable
Additional Incremental Facility Agreement.

         (d) To the extent not previously paid, all Term Loans shall be due and
payable on the Term Maturity Date, all Revolving Loans shall be due and payable
on the Revolving Maturity Date, all Incremental Tranche A Term Loans shall be
due and payable on the Incremental Tranche A Maturity Date and all Additional
Incremental Loans of any Class shall be due and payable on the final maturity
date set forth in the applicable Additional Incremental Facility Agreement.

         (e) Any prepayment of a Term Borrowing or an Incremental Term Borrowing
shall be applied to reduce the subsequent scheduled repayments of Term
Borrowings or Incremental Term Borrowings, respectively to be made pursuant to
this Section in reverse chronological order. Any prepayment of an Additional
Incremental Term Borrowing of any Class shall be applied to reduce the
subsequent scheduled repayment of Additional Incremental Term Borrowings of such
Class to be made pursuant to this Section as set forth in the applicable
Additional Incremental Facility Agreement.

         (f) Prior to any repayment of any Term Borrowings or Incremental Term
Borrowings hereunder or any Additional Incremental Term Borrowings of any Class,
the Borrower shall select the Borrowing or Borrowings of such Class to be repaid
and shall notify the Administrative Agent by telephone (confirmed by telecopy)
of such selection not later than 11:00 a.m., Dallas, Texas time, three Business
Days before the scheduled date of such repayment; provided that each repayment
of Term Borrowings or Incremental Term Borrowings or any Additional Incremental
Term Borrowings of any Class shall be applied to repay any outstanding ABR Term
Borrowings or ABR Incremental Term Borrowings or ABR Additional Incremental Term
Borrowings of such Class before any other Borrowings of such Class. Each
repayment of a Borrowing shall be applied ratably to the Loans included in the
repaid Borrowing. Repayments of Term Borrowings, Incremental Term Borrowings and
Additional Incremental Term Borrowings shall be accompanied by accrued interest
on the amount repaid.

         SECTION 2.11. Prepayment of Loans. (a) The Borrower shall have the
right at any time and from time to time to prepay any Borrowing in whole or in
part, subject to the requirements of this Section. All


                                       44
<PAGE>


prepayments shall be made without premium or penalty other than, to the extent
applicable, amounts payable under Section 2.16.

         (b) In the event and on each occasion that any Net Proceeds in excess
of $5,000,000 are received by or on behalf of Holdings or any Subsidiary in
respect of any Prepayment Event, there shall be a pro rata reduction of
Revolving Commitments, Term Borrowings, Incremental Tranche A Borrowings, and if
provided for in the applicable Additional Incremental Facility Agreement,
Additional Incremental Revolving Commitments and Additional Incremental Term
Borrowings as provided in this Section 2.11(b) and in Section 2.08(f). In such
event, the Borrower shall, within three Business Days after such Net Proceeds
are received, prepay Term Borrowings, Incremental Tranche A Borrowings and, if
provided for in the applicable Additional Incremental Facility Agreement,
Additional Incremental Term Borrowings in an aggregate amount equal to the
product of 100% (or, in the case of any Prepayment Event referred to in clause
(c) of the definition of Prepayment Event, if, on the date on which any
prepayment would otherwise be made in respect of such Prepayment Event either
(i) the Facilities shall be rated not lower than BBB- by S&P and Baa3 by Moody's
or (ii) the Total Leverage Ratio as of such date is less than 3.5 to 1.0, 50%)
of such Net Proceeds and the Prepayment Portion in respect of such Prepayment
Event (such product, the "Prepayment Amount"); provided that, in the case of any
event described in clause (a) or (c) of the definition of Prepayment Event, if
the Borrower shall deliver to the Administrative Agent a certificate of a
Financial Officer to the effect that the Borrower intends to apply the Net
Proceeds from such event (or a portion thereof specified in such certificate) to
invest in the Telecommunications Business of the Borrower and the other
Restricted Subsidiaries within 360 days of the receipt thereof and certifying
that no Default has occurred and is continuing, then no prepayment shall be
required pursuant to this paragraph in respect of the Net Proceeds in respect of
such event (or the portion of such Net Proceeds specified in such certificate,
if applicable) except to the extent of any such Net Proceeds therefrom that have
not been so applied by the end of such period, at which time a prepayment shall
be required in accordance with this paragraph (b).

         (c) Following the end of each fiscal year of the Borrower, commencing
with the fiscal year ending December 31, 2002, the Borrower shall prepay Term
Borrowings, Incremental Tranche A Borrowings and, if provided for in the
applicable Additional Incremental Facility Agreement, Additional Incremental
Term Borrowings in an aggregate amount equal to the product of (i) 50% of Excess
Cash Flow for such fiscal year and (ii) the Prepayment Portion in respect of
such Excess Cash Flow (such product, the "Excess Cash Flow Prepayment Amount");
provided that if, on the date on which any prepayment would otherwise be made
pursuant to this Section 2.11(c), either (i) the Facilities shall be rated not
lower than BBB- by S&P and Baa3 by Moody's or (ii) the Total Leverage Ratio as
of such date is less than 3.5 to 1.0, no such prepayment shall be required
pursuant to this Section 2.11(c). Each prepayment pursuant to this paragraph
shall be made on or before the date on which financial statements are delivered
pursuant to Section 5.01 with respect to the fiscal year for which Excess Cash
Flow is being calculated (and in any event within 90 days after the end of such
fiscal year).


                                       45
<PAGE>


         (d) If, on any date, the aggregate Revolving Exposures of all Lenders
exceeds the aggregate Revolving Commitments of all Lenders, or the aggregate
principal amount of the Additional Incremental Revolving Loans of any Class of
all Lenders exceeds the aggregate Additional Incremental Revolving Commitments
of such Class of all Lenders, the Borrower shall immediately prepay Revolving
Loans or Additional Incremental Revolving Loans of such Class, as the case may
be (and, to the extent that any such excess remains after all Revolving Loans
have been prepaid, deposit cash collateral with the Administrative Agent to
secure outstanding LC Exposure), in an amount equal to such excess.

         (e) Prior to any optional or mandatory prepayment of Borrowings
hereunder, the Borrower shall select the Borrowing or Borrowings to be prepaid
and shall specify such selection in the notice of such prepayment pursuant to
Section 2.11(f); provided that each prepayment of Borrowings of any Class shall
be applied to prepay ABR Borrowings of such Class before any other Borrowings of
such Class.

         (f) The Borrower shall notify the Administrative Agent (and, in the
case of prepayment of a Swingline Loan, the applicable Swingline Lender) by
telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., Dallas, Texas
time, three Business Days before the date of prepayment, (ii) in the case of
prepayment of an ABR Borrowing, not later than 11:00 a.m., Dallas, Texas time,
one Business Day before the date of prepayment or (iii) in the case of
prepayment of a Swingline Loan, not later than 12:00 noon, Dallas, Texas time,
on the date of prepayment. Each such notice shall be irrevocable and shall
specify the prepayment date, the principal amount of each Borrowing or portion
thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably
detailed calculation of the amount of such prepayment; provided that, if a
notice of optional prepayment is given in connection with a conditional notice
of termination of the Revolving Commitments or any Additional Incremental
Revolving Commitments as contemplated by Section 2.08, then such notice of
prepayment may be revoked if such notice of termination is revoked in accordance
with Section 2.08. Promptly following receipt of any such notice (other than a
notice relating solely to Swingline Loans), the Administrative Agent shall
advise the Lenders of the contents thereof. Each partial prepayment of any
Borrowing shall be in an amount that would be permitted in the case of an
advance of a Borrowing of the same Type as provided in Section 2.02, except as
necessary to apply fully the required amount of a mandatory prepayment. Each
prepayment of a Borrowing shall be applied ratably to the Loans included in the
prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the
extent required by Section 2.13.

         SECTION 2.12. Fees. (a) The Borrower agrees to pay to the
Administrative Agent (i) in the case of Revolving Commitments and Term
Commitments for the account of each Lender fees for each day during the period
from and including the Effective Date to but excluding the date on which such
Commitment terminates at a rate equal to the applicable Commitment Fee Rate for
such day, (ii) in the case of Incremental Tranche A Commitments for the account
of each Incremental Tranche A Lender fees for each


                                       46
<PAGE>


day during the period from and including the Amendment No. 5 Effective Date but
excluding the Incremental Tranche A Commitment Termination Date at a rate equal
to the applicable Commitment Fee Rate for such day and (iii) in the case of any
Additional Incremental Facility Commitment, the rate set forth in the applicable
Additional Incremental Facility Agreement for such day, in each case on the
unused amount of each Commitment of such Lender on such day (collectively, the
"COMMITMENT FEES"). Accrued Commitment Fees shall be payable in arrears on the
last day of March, June, September and December of each year and on the date on
which the applicable Commitments terminate, commencing on the first such date to
occur after the date hereof. All Commitment Fees shall be computed on the basis
of a year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). For purposes of computing
commitment fees with respect to Revolving Commitments, a Revolving Commitment of
a Lender shall be deemed to be used to the extent of the outstanding Revolving
Loans and LC Exposure of such Lender (and the Swingline Exposure of such Lender
shall be disregarded for such purpose).

         (b) The Borrower agrees to pay (i) to the Administrative Agent for the
account of each Revolving Lender a participation fee with respect to its
participations in Letters of Credit for each day during the period from and
including the Effective Date to but excluding the later of the date on which
such Lender's Revolving Commitment terminates and the date on which such Lender
ceases to have any LC Exposure, which fee shall accrue at a rate equal to the
Applicable Margin on Eurodollar Revolving Loans for such day on the amount of
such Lender's LC Exposure on such day (excluding any portion thereof
attributable to unreimbursed LC Disbursements) and (ii) to the applicable
Issuing Bank a fronting fee in respect of Letters of Credit issued by such
Issuing Bank for each day during the period from and including the Effective
Date to but excluding the later of the date of termination of the Revolving
Commitments and the date on which there ceases to be any LC Exposure in respect
of Letters of Credit issued by such Issuing Bank, which shall accrue at the rate
or rates per annum separately agreed upon between the Borrower and such Issuing
Bank on the amount of the LC Exposure on such day (excluding any portion thereof
attributable to unreimbursed LC Disbursements) in respect of Letters of Credit
issued by such Issuing Bank, as well as the Issuing Bank's standard fees with
respect to the issuance, amendment, renewal or extension of any Letter of Credit
or processing of drawings thereunder. Participation fees and fronting fees
accrued through and including the last day of March, June, September and
December of each year shall be payable on the third Business Day following such
last day, commencing on the first such date to occur after the Effective Date;
provided that all such fees shall be payable on the date on which the Revolving
Commitments terminate and any such fees accruing after the date on which the
Revolving Commitments terminate shall be payable on demand. Any other fees
payable to an Issuing Bank pursuant to this paragraph shall be payable within 10
days after demand. All participation fees and fronting fees shall be computed on
the basis of a year of 360 days and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day).

         (c) The Borrower agrees to pay to the Administrative Agent, for its own
account, fees in the amounts and at the times separately agreed upon between the
Borrower and the Administrative Agent.

         (d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the applicable
Issuing Bank, in the


                                       47
<PAGE>


case of fees payable to it) for distribution, in the case of Commitment Fees and
participation fees, to the Lenders entitled thereto. Fees paid shall not be
refundable under any circumstances.

         SECTION 2.13. Interest. (a) The Loans comprising each ABR Borrowing
shall bear interest at the Alternate Base Rate plus (i) in the case of any ABR
Borrowing under the Revolving Facility, the Term Facility or the Incremental
Facility (including each Swingline Loan), the ABR Spread and, if applicable to
any loan (other than an Incremental Term Loan), the Leverage Premium (each as
set forth in "Applicable Margin") and (ii) in the case of any ABR Borrowing
under any Additional Incremental Facility, the Applicable Margin for ABR
Borrowings set forth in the applicable Additional Incremental Facility
Agreement.

         (b) The Loans comprising each Eurodollar Borrowing shall bear interest
at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
plus (i) in the case of any Eurodollar Borrowing under the Revolving Facility,
the Term Facility or the Incremental Facility, the Eurodollar Spread and, if
applicable to any loan (other than an Incremental Term Loan), the Leverage
Premium (each as set forth in "Applicable Margin") and (ii) in the case of any
Eurodollar Borrowing under any Additional Incremental Facility, the Applicable
Margin for Eurodollar Borrowings set forth in the applicable Additional
Incremental Facility Agreement.

         (c) Notwithstanding the foregoing, if any principal of or interest on
any Loan or any fee or other amount payable by the Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any ABR Loan under
the Revolving Facility, the Term Facility or the Incremental Facility, 2% plus
the highest Applicable Margin for ABR Loans plus the ABR, (ii) in the case of
overdue principal of any Eurodollar Loan under the Revolving Facility, the Term
Facility or the Incremental Facility, the higher of (x) 2% plus the highest
Applicable Margin for Eurodollar Loans plus the Adjusted LIBO Rate applicable to
such Eurodollar Loan on the day before payment was due and (y) the sum of 2%
plus the highest Applicable Margin for ABR Loans plus the ABR, (iii) in the case
of overdue principal of or overdue interest on any Additional Incremental Loan
of any Class, the rate set forth in the applicable Additional Incremental
Facility Agreement and (iv) in the case of any other amount, 2% plus the rate
applicable to ABR Revolving Loans as provided in Section 2.13(a).

         (d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and, in the case of Revolving Loans, upon
termination of the Revolving Commitments; provided that (i) interest accrued
pursuant to Section 2.13(c) shall be payable on demand, (ii) in the event of any
repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving
Loan prior to the end of the Revolving Availability Period), accrued interest on
the principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.


                                       48
<PAGE>


         (e) All interest hereunder shall be computed on the basis of a year of
360 days, except that interest computed by reference to the Alternate Base Rate
at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate or
Adjusted LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.

         SECTION 2.14. Alternate Rate of Interest. If prior to the commencement
of any Interest Period for a Eurodollar Borrowing:

         (a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or

         (b) the Administrative Agent is advised by the Required Lenders that
the Adjusted LIBO Rate for such Interest Period will not adequately and fairly
reflect the cost to such Lenders (or Lender) of making or maintaining their
Loans (or its Loan) included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.

         SECTION 2.15. Increased Costs.

         (a) If any Change in Law shall:

                  (i) impose, modify or deem applicable any reserve, special
         deposit or similar requirement against assets of, deposits with or for
         the account of, or credit extended by, any Lender (except any such
         reserve requirement reflected in the Adjusted LIBO Rate), Swingline
         Lender or Issuing Bank; or

                  (ii) impose on any Lender, Swingline Lender or Issuing Bank or
         the London interbank market any other condition affecting this
         Agreement or Eurodollar Loans made by such Lender or any Letter of
         Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost (other than
Taxes) to such Lender of making or maintaining any Eurodollar Loan (or of
maintaining its obligation to make any such Loan) or to increase the cost to
such Lender, Swingline Lender or Issuing Bank of participating in, issuing or
maintaining any Letter of Credit or to reduce the amount of any sum received or
receivable by such Lender, Swingline Lender or Issuing Bank hereunder (whether
of principal, interest or otherwise), then the Borrower will pay to such Lender,
Swingline Lender or Issuing Bank, as the case may be, such additional amount or
amounts as will compensate such Lender, Swingline Lender or Issuing Bank, as the
case may be, for such additional costs incurred or reduction suffered.


                                       49
<PAGE>


         (b) If any Lender, Swingline Lender or Issuing Bank determines that any
Change in Law regarding capital requirements has or would have the effect of
reducing the rate of return on such Lender's, Swingline Lender's or Issuing
Bank's capital or on the capital of such Lender's, Swingline Lender's or Issuing
Bank's holding company, if any, as a consequence of this Agreement or the Loans
made by, or participations in Letters of Credit held by, such Lender or
Swingline Lender, or the Letters of Credit issued by such Issuing Bank, to a
level below that which such Lender, Swingline Lender or Issuing Bank or such
Lender's, Swingline Lender's or Issuing Bank's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's,
Swingline Lender's or Issuing Bank's policies and the policies of such Lender's,
Swingline Lender's or Issuing Bank's holding company with respect to capital
adequacy), then from time to time the Borrower will pay to such Lender,
Swingline Lender or Issuing Bank, as the case may be, such additional amount or
amounts as will compensate such Lender, Swingline Lender or Issuing Bank or such
Lender's, Swingline Lender's or Issuing Bank's holding company for any such
reduction suffered.

         (c) A certificate of a Lender, Swingline Lender or Issuing Bank setting
forth the amount or amounts necessary to compensate such Lender, Swingline
Lender or Issuing Bank or its holding company, as the case may be, as specified
in Section 2.15(a) or 2.15(b) shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender or such
Issuing Bank, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.

         (d) Failure or delay on the part of any Lender, Swingline Lender or
Issuing Bank to demand compensation pursuant to this Section shall not
constitute a waiver of such Lender's, Swingline Lender's or Issuing Bank's right
to demand such compensation; provided that the Borrower shall not be required to
compensate a Lender, Swingline Lender or Issuing Bank pursuant to this Section
for any increased costs or reductions incurred more than 120 days prior to the
date that such Lender, Swingline Lender or Issuing Bank, as the case may be,
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender's, Swingline Lender's or Issuing Bank's
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 120-day period referred to above shall be extended to include the period of
retroactive effect thereof.

         SECTION 2.16. Break Funding Payments. In the event of (a) the payment
of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under Section
2.11(f) and is revoked in accordance therewith), or (d) the assignment of any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by the Borrower pursuant to Section 2.19, then,
in any such event, the Borrower shall compensate each Lender for the loss, cost
and expense attributable to such event. In the case of a Eurodollar Loan, such
loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the rate that would have been applicable to such Loan,
for the period from the date of such event to the last day of the then current
Interest Period therefor (or, in the case of a failure to borrow, convert or
continue, for the period that would have been the Interest Period for such
Loan), over (ii) the amount of interest which would accrue on such principal
amount for such period at the interest rate which such Lender would bid were it
to bid, at the commencement of such period, for dollar deposits of a comparable
amount and period from other banks in the eurodollar market. A certificate of
any Lender


                                       50
<PAGE>


setting forth any amount or amounts that such Lender is entitled to receive
pursuant to this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender the amount
shown as due on any such certificate within 10 days after receipt thereof.

         SECTION 2.17. Taxes. (a) Any and all payments by or on account of any
obligation of the Borrower hereunder or under any other Loan Document shall be
made free and clear of and without deduction for any Indemnified Taxes or Other
Taxes; provided that if the Borrower shall be required to deduct any Indemnified
Taxes or Other Taxes from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) the
Administrative Agent, Lender or Issuing Bank (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower shall pay
the full amount deducted to the relevant Governmental Authority in accordance
with applicable law.

         (b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

         (c) The Borrower shall indemnify the Administrative Agent, each Lender
and Issuing Bank, within 15 days after the date of receipt of a written demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by
the Administrative Agent, such Lender or such Issuing Bank, as the case may be,
on or with respect to any payment by or on account of any obligation of the
Borrower hereunder or under any other Loan Document (including Indemnified Taxes
or Other Taxes imposed or asserted on or attributable to amounts payable under
this Section) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrower by a Lender or Issuing Bank, or by the
Administrative Agent on its own behalf or on behalf of a Lender or Issuing Bank,
shall be conclusive absent manifest error.

         (d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.

         (e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), on or prior to the first payment by the
Borrower under this Agreement to such Foreign Lender or Participant and from
time to time thereafter as prescribed by applicable law, such properly completed
and executed documentation prescribed by applicable law or reasonably requested
by the Borrower as will permit such payments to be made without withholding or
at a reduced rate.


                                       51
<PAGE>


         (f) If any Lender determines, in its sole discretion, that it has
received a refund of any Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 2.17, it shall pay over such refund
to the Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower under this Section 2.17 with respect to
the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Lender without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund); provided, however,
that the Borrower, upon request of such Lender, agrees to repay the amount paid
over to the Borrower (plus any penalties, interest or other charges imposed by
the relevant Governmental Authority) to the Lender in the event such Lender is
required to repay such refund to such Governmental Authority. Nothing contained
in this Section 2.17(f) shall require any Lender to make available its tax
returns (or any other information relating to its taxes which it deems
confidential) to the Borrower or any other Person.

         (g) Notwithstanding anything expressed or implied to the contrary in
this Agreement or any other Loan Document (including any schedule or exhibit to
any of the foregoing), this Section 2.17 (and Section 10.04 insofar as it
relates to this Section 2.17) shall constitute the complete and exclusive
understanding of the parties in respect of all matters relating to any Taxes
(including interest thereon, additions thereto and penalties in connection
therewith).

         SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs. (a) The Borrower shall make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal, interest, fees
or reimbursement of LC Disbursements, or of amounts payable under Section 2.15,
2.16 or 2.17, or otherwise) prior to 1:00 p.m., Dallas, Texas time, on the date
when due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at Dallas, Texas,
except that payments pursuant to Sections 2.15, 2.16, 2.17 and 10.03 shall be
made directly to the Persons entitled thereto and payments pursuant to other
Loan Documents shall be made to the Persons specified therein. The
Administrative Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment under any Loan Document shall be due on a day
that is not a Business Day, the date for payment shall be extended to the next
succeeding Business Day (unless, in the case of payments in respect of
Eurodollar Loans, such next succeeding Business Day would fall in the next
calendar month, in which case such payment shall be due on the next preceding
Business Day), and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension. All payments under
each Loan Document shall be made in dollars.

         (b) If at any time insufficient funds are received by and available to
the Administrative Agent to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (ii) second, towards payment of principal
and unreimbursed LC Disbursements then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties.


                                       52
<PAGE>


         (c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans (other than Swingline Loans) or participations in
LC Disbursements or Swingline Loans resulting in such Lender receiving payment
of a greater proportion of the aggregate amount of its Loans (other than
Swingline Loans) and participations in LC Disbursements and Swingline Loans and
accrued interest thereon than the proportion received by any other Lender, then
the Lender receiving such greater proportion shall purchase (for cash at face
value) participations in the Loans (other than Swingline Loans) and
participations in LC Disbursements and Swingline Loans of other Lenders to the
extent necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans (other than Swingline Loans) and
participations in LC Disbursements and Swingline Loans; provided that (i) if any
such participations are purchased and all or any portion of the payment giving
rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement (including without limitation pursuant to Section 2.11)
or any payment obtained by a Lender as consideration for the assignment of or
sale of a participation in any of its Loans or participations in LC
Disbursements to any assignee or participant, other than to the Borrower or any
Subsidiary or Affiliate thereof (as to which the provisions of this paragraph
shall apply). The Borrower consents to the foregoing and agrees, to the extent
it may effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.

         (d) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or an Issuing Bank hereunder that the
Borrower will not make such payment, the Administrative Agent may assume that
the Borrower has made such payment on such date in accordance herewith and may,
in reliance upon such assumption, distribute to the Lenders or the applicable
Issuing Bank or Banks, as the case may be, the amount due. In such event, if the
Borrower has not in fact made such payment, then each of the Lenders or Issuing
Banks, as the case may be, severally agrees to repay to the Administrative Agent
forthwith on demand the amount so distributed to such Lender or Issuing Bank
with interest thereon, for each day from and including the date such amount is
distributed to it to but excluding the date of payment to the Administrative
Agent, at the greater of the Federal Funds Effective Rate and a rate determined
by the Administrative Agent in accordance with banking industry rules on
interbank compensation.

         (e) If any Lender shall fail to make any payment required to be made by
it pursuant to Section 2.04(c), 2.05(d) or 2.05(e), 2.06(b), 2.18(d) or
10.03(c), then the Administrative Agent may, in its discretion (notwithstanding
any contrary provision


                                       53
<PAGE>


hereof), apply any amounts thereafter received by the Administrative Agent for
the account of such Lender to satisfy such Lender's obligations under such
Sections until all such unsatisfied obligations are fully paid.

         SECTION 2.19. Mitigation Obligations; Replacement of Lenders. (a) If
any Lender requests compensation under Section 2.15, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.17, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.

         (b) If any Lender requests compensation under Section 2.15, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 10.04), all its interests, rights and obligations under this Agreement
to an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Borrower
shall have received the prior written consent of the Administrative Agent (and,
if a Revolving Commitment is being assigned, the Issuing Bank and Swingline
Lender), which consent shall not unreasonably be withheld, (ii) such Lender
shall have received payment of an amount equal to the outstanding principal of
its Loans and participations in LC Disbursements and Swingline Loans, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts) and (iii)
in the case of any such assignment resulting from a claim for compensation under
Section 2.15 or payments required to be made pursuant to Section 2.17, such
assignment will result in a reduction in such compensation or payments. A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, (i) as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply or (ii) such Lender elects to withdraw its request.

         SECTION 2.20. Additional Incremental Facilities and Commitments. (a) At
any time prior to December 31, 2002, and so long as no Default or Event of
Default shall have occurred and be continuing or would result therefrom, the
Borrower may request, on one or more occasions, by notice to the Administrative
Agent and the Incremental Facility Arrangers, that one or more Lenders (and/or
one or more other Persons which shall become Lenders as provided in Section
2.20(d) below) provide one or more additional facilities (each, an "Additional
Incremental Facility"), each of which shall provide for commitments (the
"Additional Incremental Commitments") in an aggregate amount of not less than
$100,000,000 and all of which Additional Incremental Facilities shall provide
for Additional Incremental Commitments in an aggregate amount not in excess of
$500,000,000; provided that no Lender shall have any obligation to provide any
Additional Incremental Commitment and any Lender (or any other Person


                                       54
<PAGE>


which becomes a Lender pursuant to Section 2.20(d) below) may provide Additional
Incremental Commitments without the consent of any other Lender.

         (b) The maturity date, scheduled amortization and commitment
reductions, mandatory prepayments and commitment reductions, interest rate,
minimum borrowings and prepayments, commitment fees and other amounts payable in
respect of any Additional Incremental Facility, and certain agent
determinations, shall be as set forth in an agreement (an "Additional
Incremental Facility Agreement") among the Loan Parties, the Administrative
Agent, each Incremental Facility Arranger (but only if it is acting in the
capacity of joint lead arranger with respect to such Additional Incremental
Facility) and the Lenders and other Persons agreeing to provide Additional
Incremental Commitments thereunder; provided that any term Incremental Loans
(the "Additional Incremental Term Loans") shall have a Weighted Average Life to
Maturity of no less than the Weighted Average Life to Maturity of the Term Loans
then outstanding and any revolving Incremental Commitment (the "Additional
Incremental Revolving Commitments" and any loans made pursuant thereto, the
"Additional Incremental Revolving Loans") shall have a Weighted Average Life to
Maturity of not less than the Weighted Average Life to Maturity of the Revolving
Commitments then outstanding.

         (c) [Intentionally deleted]

         (d) The effectiveness of any Additional Incremental Facility to be
created under this Section 2.20, and the obligation of any Lender or other
Person providing any Additional Incremental Commitment thereunder to make any
Additional Incremental Loans pursuant thereto, is subject to, in addition to the
conditions set forth in Article 4, the satisfaction of each of the following
conditions: each Loan Party, the Administrative Agent, each Incremental Facility
Arranger (but only if it is acting in the capacity of joint lead arranger with
respect to such Additional Incremental Facility) and each Lender or other Person
providing Additional Incremental Commitments thereunder (each, an "Additional
Incremental Lender") shall have executed and delivered to the Administrative
Agent an Additional Incremental Facility Agreement with respect to such
Additional Incremental Facility, (x) the Administrative Agent shall have
received, and (y) the Administrative Agent shall have received for the
respective accounts of any other agents and the Additional Incremental Lenders,
all fees and other amounts payable by the Borrower in respect of such Additional
Incremental Facility on or prior to such date of effectiveness and the
Administrative Agent (or its counsel) shall have received such documents and
certificates, and such legal opinions, as the Administrative Agent and the
Incremental Facility Arrangers or their counsel shall reasonably request,
including documents, certificates and legal opinions relating to the
organization, existence and good standing of each Loan Party, the authorization
of such Additional Incremental Facility and other legal matters relating to the
Loan Parties or the Loan Documents (including the applicable Additional
Incremental Facility Agreement). The Administrative Agent shall notify each
Lender as to the effectiveness of each Additional Incremental Facility
hereunder.





                                       55
<PAGE>



                                    ARTICLE 3

                         REPRESENTATIONS AND WARRANTIES

         Each of Holdings and the Borrower represents and warrants to the
Lenders that:

         SECTION 3.1. Organization; Powers. Each of Holdings and the Restricted
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.

         SECTION 3.2. Authorization; Enforceability. The Transactions to be
entered into by each Loan Party are within such Loan Party's corporate powers
and have been duly authorized by all necessary corporate and, if required,
stockholder action. This Agreement has been duly executed and delivered by each
of Holdings and the Borrower and constitutes, and each other Loan Document to
which any Loan Party is to be a party, when executed and delivered by such Loan
Party, will constitute, a legal, valid and binding obligation of Holdings, the
Borrower or such Loan Party (as the case may be), enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law.

         SECTION 3.3. Governmental Approvals; No Conflicts. The Transactions (a)
do not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority, except such as have been obtained
or made and are in full force and effect and except filings necessary to perfect
Liens created under the Loan Documents (if any), (b) will not violate any
applicable law or regulation or the charter, by-laws or other organizational
documents of Holdings or any Restricted Subsidiary or any order of any
Governmental Authority, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon Holdings or any Restricted
Subsidiary or any of their respective assets, or give rise to a right thereunder
to require any payment to be made by Holdings or any Restricted Subsidiary, and
(d) will not result in the creation or imposition of any Lien on any asset of
Holdings or any Restricted Subsidiary, except Liens created under the Loan
Documents (if any).

         SECTION 3.4. Financial Condition; No Material Adverse Change. (a)
Holdings has heretofore furnished to the Lenders Holdings' consolidated balance
sheet and statements of operations, stockholders equity and cash flows as of and
for the fiscal years ended December 31, 1998, December 31, 1999 and December 31,
2000, reported on by Ernst & Young LLP, independent public accountants. Such
financial statements present fairly, in all material respects, the financial
position and results of operations and cash flows of Holdings and the
Subsidiaries as of such dates and for such periods in accordance with GAAP.

         (b) Holdings has heretofore furnished to the Lenders its pro forma
consolidated balance sheet as of December 31, 2000 and projected pro forma
statements of operations and cash flows for the fiscal year ended December 31,
2001, prepared giving effect to (x) the Transactions under the Incremental
Facility and the Structured Note Financing and (y) the transactions described in
clause (x) and, in addition, the sale of its Williams Communications Solutions
business unit, as if such events had occurred on such date or on the first day
of such fiscal year, as the case may be. Such projected pro forma consolidated
balance sheets and statements of operations and cash flows (i) have been
prepared in good faith based on the same assumptions used to prepare the pro
forma financial statements included in the Information Memorandum (which
assumptions are believed by Holdings and the Borrower to be reasonable), (ii)
are based on the best information available to Holdings and the Borrower after
due inquiry, (iii) accurately reflect all adjustments necessary to give effect
to the Transactions under the Incremental Facility and the Structured Note
Financing and, in the case of one such set of financial statements, the sale of
its Williams Communications Solutions business unit, and (iv) present fairly, in
all material respects, the pro forma financial position of Holdings and


                                       56
<PAGE>


the Subsidiaries as of such date and for such periods as if the Transactions,
the Structured Note Financing and, in the case of one such set of financial
statements, the sale of its Williams Communications Solutions business unit had
occurred on such date or at the beginning of such period, as the case may be.

         (c) Except as disclosed in the financial statements referred to above
or the notes thereto or in the Information Memorandum and except for the
Disclosed Matters, after giving effect to the Transactions, none of Holdings or
any Restricted Subsidiary has, as of the Effective Date, any material contingent
liabilities, unusual material long-term commitments or unrealized material
losses.

         (d) The projections delivered to the Lenders on the Amendment No. 5
Effective Date (the "Projections") were based on assumptions believed by the
Borrower and Holdings in good faith to be reasonable when made and as of their
date represented the Borrower's and Holdings' good faith estimate of future
performance of Holdings and the Subsidiaries and of the Borrower and its
consolidated subsidiaries.

         (e) Since December 31, 2000, there has been no Material Adverse Change.

         SECTION 3.5. Properties. (a) Each of Holdings and the Restricted
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business (including its Mortgaged
Properties, if any), except for minor defects in title that do not interfere
with its ability to conduct its business as currently conducted or to utilize
such properties for their intended purposes. None of the properties and assets
of Holdings or any Restricted Subsidiary is subject to any Lien other than
Permitted Encumbrances, Liens created by the Collateral Documents (if any) and
other Liens permitted under Section 6.02.

         (b) Each of Holdings and the Subsidiaries owns, or is licensed to use,
all trademarks, trade names, copyrights, patents and other intellectual property
material to its business, and the use thereof by Holdings and the Subsidiaries
does not infringe upon the rights of any other Person, except for any such
infringements that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.

         (c) Schedule 3.05 sets forth the address of each real property that is
owned or leased by Holdings, the Borrower or any other Loan Party (other than
the Parent) as of the Effective Date after giving effect to the Transactions.

         SECTION 3.6. Litigation and Environmental Matters. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of Holdings or the Borrower,
threatened against or affecting Holdings or any Subsidiary (i) as to which there
is a reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect (other than the Disclosed Matters) or (ii)
that involve any of the Loan Documents or the Transactions.

         (b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, neither Holdings nor any
Subsidiary (i) has failed to comply with any Environmental Law or to obtain,
maintain or comply with any permit, license or


                                       57
<PAGE>


other approval required under any Environmental Law, (ii) has become subject to
any Environmental Liability, (iii) has received written notice of any claim with
respect to any Environmental Liability or (iv) knows of any basis for any
violations of any Environmental Law or any release, threatened release or
exposure to any Hazardous Materials that is likely to form the basis of any
Environmental Liability.

         (c) Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.

         SECTION 3.7. Compliance with Laws and Agreements. Each of Holdings and
the Subsidiaries is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.

         SECTION 3.8. Investment and Holding Company Status. Neither Holdings
nor any Restricted Subsidiary is (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.

         SECTION 3.9. Taxes. Each of Holdings and the Subsidiaries has timely
filed or caused to be filed (or the Parent has filed or caused to be filed) all
Tax returns and reports required to have been filed and has paid or caused to be
paid (or the Parent has paid or caused to be paid) all Taxes required to have
been paid by or with respect to it, except (a) Taxes that are being contested in
good faith by appropriate proceedings and for which Holdings or such Subsidiary,
as applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.

         SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $25,000,000 the fair market value of the assets of such Plan, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $25,000,000 the fair
market value of the assets of all such underfunded Plans.

         SECTION 3.11. Disclosure. Holdings and the Borrower have disclosed to
the Lenders all agreements, instruments and corporate or other restrictions to
which Holdings or any Restricted Subsidiary is subject, and all other matters
known to any of them, that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect. Neither the Information
Memorandum nor any of the other reports, financial statements, certificates or
other information furnished by or on behalf of any Loan Party to any Agent or
any Lender in connection with the negotiation of this Agreement or any other
Loan Document or delivered hereunder or thereunder (as modified or supplemented
by other information so furnished) contains any material misstatement of fact or
omits to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided that, with respect to projected financial information, Holdings and the
Borrower represent only that such information was prepared in good faith based
upon assumptions believed to be reasonable at the time.



                                       58
<PAGE>


         SECTION 3.12. Subsidiaries. Schedule 3.12 sets forth the name of, and
the direct or indirect ownership interest of Holdings or the Borrower in, each
Subsidiary and identifies each Subsidiary that is a Subsidiary Loan Party, in
each case as of the Effective Date.

         SECTION 3.13. Insurance. Schedule 3.13 sets forth a description of all
insurance maintained by or on behalf of Holdings and the Restricted Subsidiaries
as of the Effective Date. As of the Effective Date, all premiums in respect of
such insurance have been paid.

         SECTION 3.14. Labor Matters. As of the Effective Date, there are no
strikes, lockouts or slowdowns against Holdings or any Restricted Subsidiary
pending or, to the knowledge of Holdings or the Borrower, threatened. The hours
worked by and payments made to employees of Holdings and the Restricted
Subsidiaries have not been in violation of the Fair Labor Standards Act or any
other applicable Federal, state, local or foreign law dealing with such matters.
All payments due from Holdings or any Restricted Subsidiary, or for which any
claim may be made against Holdings or any Restricted Subsidiary, on account of
wages and employee health and welfare insurance and other benefits, have been
paid or accrued as a liability on the books of Holdings or such Restricted
Subsidiary. The consummation of the Transactions and the Reorganization has not
and will not give rise to any right of termination or right of renegotiation on
the part of any union under any collective bargaining agreement by which
Holdings or any Restricted Subsidiary is bound.

         SECTION 3.15. Solvency. Immediately after the consummation of the
Transactions to occur on the Effective Date and immediately following the making
of each Loan made on the Effective Date and after giving effect to the
application of the proceeds of such Loans, (a) the fair value of the assets of
each Loan Party will exceed its debts and liabilities, subordinated, contingent
or otherwise; (b) the present fair saleable value of the property of each Loan
Party will be greater than the amount that will be required to pay the probable
liability of its debts and other liabilities, subordinated, contingent or
otherwise, as such debts and other liabilities become absolute and matured; (c)
each Loan Party will be able to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured; and (d) each Loan Party will not have unreasonably small capital with
which to conduct the business in which it is engaged as such business is now
conducted and is proposed to be conducted following the Effective Date.

         SECTION 3.16. No Burdensome Restrictions. No contract, lease, agreement
or other instrument to which Holdings or any Restricted Subsidiary is a party or
by which any of their property is bound or affected, no charge, corporate
restriction, judgment, decree or order and no provision of applicable law or
governmental regulation could reasonably be expected to have Material Adverse
Effect.

         SECTION 3.17. Representations in Loan Documents True and Correct. As of
the dates when made and as of the Effective Date, each representation and
warranty of Holdings or any Restricted Subsidiary party thereto contained in any
Loan Document is true and correct.


                                    ARTICLE 4

                                   CONDITIONS

         SECTION 4.1. Effective Date. [Intentionally deleted]

         SECTION 4.2. Each Credit Event. The obligation of each Lender to make a
Loan on the occasion of any Borrowing, and of each Issuing Bank to issue, amend,
renew or extend any Letter of Credit, is subject to the satisfaction of the
following conditions:

         (a) The representations and warranties of each Loan Party set forth in
the Loan Documents (excluding Section 3.04(b)) shall be true and correct on and
as of the date of such Borrowing or the date of issuance, amendment, renewal or
extension of such Letter of Credit, as applicable.


                                       59
<PAGE>


          (b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Default shall have occurred and be continuing.

         Each Borrowing and each issuance, amendment, renewal or extension of a
Letter of Credit shall be deemed to constitute a representation and warranty by
Holdings and the Borrower on the date thereof as to the matters specified in
Sections 4.02(a), 4.02(b) and 4.03.

         SECTION 4.3. First Incremental Borrowing Date with Respect to the
Incremental Facility. The obligation of each Incremental Lender to make a Loan
on the occasion of the First Incremental Borrowing Date is subject to the
satisfaction of the following conditions (in addition to the conditions set
forth in Section 4.02):

         (a) The Spin-Off shall have been consummated.

         (b) The Initial Collateral Date shall have occurred (or shall occur on
the date of such Borrowing) and, prior to the making of any Loan on the occasion
of such Borrowing, Holdings and the Borrower shall have complied with all of the
provisions of Section 5.11A.

         (c) The First Incremental Borrowing Date shall be no later than the
date that is 180 days after the date of Amendment No. 5 Effective Date.

         (d) The Administrative Agent shall have received a certificate, in form
and substance reasonably satisfactory to the Administrative Agent, from the
Financial Officer of each of Holdings and the Borrower, certifying as to
compliance of the matters specified in Sections 4.03(a) and 4.03(b).


                                    ARTICLE 5

                              AFFIRMATIVE COVENANTS

         Until the Commitments have expired or been terminated and the principal
of and interest on each Loan and all fees payable hereunder shall have been paid
in full and all Letters of Credit shall have expired or terminated and all LC
Disbursements shall have been reimbursed, each of Holdings and the Borrower
covenants and agrees with the Lenders that:

         SECTION 5.1. Financial Statements and Other Information. Holdings and
the Borrower will furnish to the Administrative Agent and each Lender:

         (a) (i) within 90 days after the end of each fiscal year of Holdings,
its audited consolidated balance sheets and related audited consolidated
statements of operations, stockholders' equity and cash flows as of the end of
and for such fiscal year (including segment reporting with respect to each of
Holdings' and the Subsidiaries' business segments consistent with that provided
in the Notes Offering Registration Statement), setting forth in each case in
comparative form the figures for the previous fiscal year, all reported on by
Ernst & Young LLP or other independent public accountants of recognized national
standing (without a "going concern" or like qualification or exception and
without any qualification or exception as to the scope of such audit) to the
effect that


                                       60
<PAGE>


such consolidated financial statements present fairly in all material respects
the financial condition and results of operations of Holdings and the
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, (ii) within 90 days after the end of each fiscal year of the Borrower,
its audited consolidated balance sheets and related audited consolidated
statements of operations, stockholders' equity and cash flows as of the end of
and for such fiscal year (including segment reporting with respect to each of
the Borrower's and its consolidated subsidiaries' business segments consistent
with that provided with respect to the Borrower's and its consolidated
subsidiaries' business segments in the Notes Offering Registration Statement),
setting forth in each case in comparative form the figures for the previous
fiscal year, all reported on by Ernst & Young LLP or other independent public
accountants of recognized national standing (without a "going concern" or like
qualification or exception and without any qualification or exception as to the
scope of such audit) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated subsidiaries on a consolidated
basis in accordance with GAAP consistently applied and (iii) within 90 days
after the end of each fiscal year of Holdings and the Borrower, (x) supplemental
unaudited balance sheets and related unaudited statements of operations,
stockholders' equity and cash flows as of the end of and for such fiscal year,
setting forth in tabular form in each case the figures for the previous year,
for the Borrower and Holdings and the consolidating adjustments with respect
thereto and (y) segment reporting of EBITDA and Adjusted EBITDA with respect to
each business segment of Holdings and the Subsidiaries and the Borrower and its
consolidated subsidiaries consistent with the business segments reported on in
the Notes Offering Registration Statement;

         (b)(i) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of Holdings, unaudited consolidated and
consolidating balance sheets and related consolidated and consolidating
statements of operations, stockholders' equity and cash flows of Holdings and
the Subsidiaries as of the end of and for such fiscal quarter and the then
elapsed portion of the fiscal year, setting forth in each case in comparative
form the figures for the corresponding period or periods of the previous fiscal
year (or in the case of the balance sheet, as of the end of the previous fiscal
year) (including segment reporting with respect to each of Holdings' and the
Subsidiaries' business segments consistent with that provided in the Notes
Offering Registration Statement and also including segment reporting of EBITDA
and Adjusted EBITDA), all certified by a Financial Officer of Holdings as
presenting fairly in all material respects the financial condition and results
of operations of Holdings and the Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes and (ii) within 45 days after the end
of each of the first three fiscal quarters of each fiscal year of the Borrower,
unaudited consolidated balance sheets and related statements of operations,
stockholders' equity and cash flows of the Borrower and its consolidated
subsidiaries as of the end of and for such fiscal quarter and the then elapsed
portion of the fiscal year, setting forth in each case in comparative form the
figures for the corresponding period or periods of the previous fiscal year (or,
in the case of the balance sheet, as of the end of the previous fiscal year)


                                       61
<PAGE>


(including segment reporting with respect to each of the Borrower's and its
consolidated subsidiaries' business segments consistent with that provided with
respect to the Borrower's and its consolidated subsidiaries' business segments
in the Notes Offering Registration Statement and also including segment
reporting of EBITDA and Adjusted EBITDA), all certified by a Financial Officer
of the Borrower as presenting fairly in all material respects the financial
condition and results of operations of the Borrower and its consolidated
subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of
footnotes;

         (c) concurrently with any delivery of financial statements under
Section 5.01(a) or 5.01(b) above, a certificate of a Financial Officer of the
Borrower (i) certifying as to whether a Default has occurred and, if a Default
has occurred, specifying the details thereof and any action taken or proposed to
be taken with respect thereto, (ii) setting forth in reasonable detail
calculations demonstrating (x) compliance with Section 6.08 and Sections 6.15
through 6.19, including, if applicable, calculations showing capital
contributions made by the Parent pursuant to Section 6.20 and the resulting
effects on the Borrower's compliance with Section 6.08 and Sections 6.15 through
6.19 and (y) Additional Capital at such date, including detail as to the sources
and uses of Additional Capital since June 30, 1999 and (iii) stating whether any
change in GAAP or in the application thereof has occurred since the date of
Holdings' audited financial statements referred to in Section 3.04 and, if any
such change has occurred, specifying the effect of such change on the financial
statements accompanying such certificate;

         (d) concurrently with any delivery of financial statements under clause
5.01(a) above, a certificate of the accounting firm that reported on such
financial statements stating whether they obtained knowledge during the course
of their examination of such financial statements of any Default (which
certificate may be limited to the extent required by accounting rules or
guidelines);

         (e) as soon as practicable after approval by the Board of Directors of
the Parent and in any event not later than 120 days after the commencement of
each fiscal year of the Borrower, a consolidated and consolidating budget of
Holdings for such fiscal year and a consolidated budget of the Borrower for such
fiscal year (including projected consolidated (and, in the case of Holdings,
consolidating) balance sheets, related consolidated (and, in the case of
Holdings, consolidating) statements of projected operations and cash flow as of
the end of and for such fiscal year and segment information with respect to each
of Holdings' and the Subsidiaries' and the Borrower's and its consolidated
subsidiaries' business segments consistent with the categories of information
provided with respect to Holdings' and the Subsidiaries' business segments in
the Notes Offering Registration Statement, together with projected EBITDA and
Adjusted EBITDA for such segments) and, promptly when available, any significant
revisions of such budget;

         (f) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
Holdings or any


                                       62
<PAGE>


Restricted Subsidiary with the Commission, or any Governmental Authority
succeeding to any or all of the functions of the Commission, or with any
national securities exchange, or distributed by Holdings to its shareholders
generally, as the case may be, except to the extent any such report, proxy
statement or other material is available electronically on a publicly-accessible
website; and

         (g) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of Holdings
or any Restricted Subsidiary, or compliance with the terms of any Loan Document,
as the Administrative Agent or any Lender may reasonably request.

         SECTION 5.2. Notices of Material Events. Upon knowledge thereof,
Holdings or the Borrower will furnish to the Administrative Agent and each
Lender prompt written notice of the following:

         (a) the occurrence of any Default;

         (b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting Holdings,
the Borrower or any Affiliate thereof that could reasonably be expected to
result in a Material Adverse Effect;

         (c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
a Material Adverse Effect;

         (d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.

         Each notice delivered under this Section shall be accompanied by a
statement of a Financial Officer or other executive officer of the Borrower
setting forth the details of the event or development requiring such notice and
any action taken or proposed to be taken with respect thereto.

         SECTION 5.3. Existence; Conduct of Business. Each of Holdings and the
Borrower will, and will cause each other Restricted Subsidiary to, (i) continue
to engage in business of the same general type as now conducted and (ii) do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect its legal existence and the rights, licenses, permits, privileges,
franchises, patents, copyrights, trademarks and trade names material to the
conduct of its business; provided that the foregoing shall not prohibit any
merger, consolidation, liquidation or dissolution permitted under Section 6.03.

         SECTION 5.4. Payment of Obligations. Each of Holdings and the Borrower
(i) will, and will cause each other Restricted Subsidiary to, pay its
Indebtedness and other material obligations, including tax liabilities, before
the same shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
Holdings, the Borrower or such other Restricted Subsidiary has set aside on its
books adequate reserves with respect thereto in accordance with GAAP, (c) such
contest effectively suspends collection of the contested obligation and the
enforcement of any Lien securing such obligation and (d) the failure to make
payment pending such contest could not reasonably be expected to result in a
Material Adverse Effect and (ii) shall not breach, or permit any other
Restricted Subsidiary to breach, in any material respect, or permit to exist any
material default under, the terms of any material lease, commitment, contract,
instrument or obligation to which it is a party, or by


                                       63
<PAGE>


which its properties or assets are bound, except where the failure to do the
foregoing would not in the aggregate have a Material Adverse Effect.

         SECTION 5.5. Maintenance of Properties. Each of Holdings and the
Borrower will, and will cause each other Restricted Subsidiary to, keep and
maintain all property material to the conduct of its business in good working
order and condition, ordinary wear and tear excepted.

         SECTION 5.6. Insurance. Holdings and the Borrower will, and will cause
each other Restricted Subsidiary to, maintain, with financially sound and
reputable insurance companies, insurance in such amounts and against such risks
as are customarily maintained by companies engaged in the same or similar
businesses operating in the same or similar locations.

         SECTION 5.7. Casualty and Condemnation. The Borrower will (a) furnish
to the Administrative Agent and the Lenders prompt written notice of any
casualty or other insured damage to any portion of any of Holdings' and the
Restricted Subsidiaries' property or assets or the commencement of any action or
proceeding for the taking of any of Holdings' and the Restricted Subsidiaries'
property or assets or any part thereof or interest therein under power of
eminent domain or by condemnation or similar proceeding (in each case with a
value in excess of $10,000,000) and (b) ensure that the Net Proceeds of any such
event (whether in the form of insurance proceeds, condemnation awards or
otherwise) are applied, to the extent such Net Proceeds have not been utilized
to repair, restore or replace such property or assets or to acquire other
Telecommunications Assets within 360 days after such event, to prepay Loans and
reduce Commitments as provided in Sections 2.11(b) and 2.08(f), respectively.

         SECTION 5.8. Books and Records; Inspection and Audit Rights. Each of
Holdings and the Borrower will, and will cause each other Restricted Subsidiary
to, keep proper books of record and account in which materially full, true and
correct entries are made of all dealings and transactions in relation to its
business and activities. Each of Holdings and the Borrower will, and will cause
each other Restricted Subsidiary to, permit any representatives designated by
the Administrative Agent or any Lender at the expense of the Administrative
Agent or Lender, as the case may be, or, if an Event of Default shall have
occurred and be continuing, at the expense of the Borrower, upon reasonable
prior notice, to visit and inspect its properties, to examine and make extracts
from its books and records, and to discuss its affairs, finances and condition
with its officers and independent accountants, all at such reasonable times and
as often as reasonably requested, subject to Section 10.12.

         SECTION 5.9. Compliance with Laws. Each of Holdings and the Borrower
will, and will cause each other Subsidiary to, comply with all laws, rules,
regulations and orders of any Governmental Authority applicable to it or its
property (including, without limitation, Environmental Laws and ERISA and the
rules and regulations thereunder), except where the necessity of compliance
therewith is contested in good faith by appropriate action and such failure to
comply, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.

         SECTION 5.10. Use of Proceeds and Letters of Credit. (a) The proceeds
of Loans will be used (i) for working capital requirements and general corporate
purposes of the Borrower and the other Restricted Subsidiaries and (ii) to pay
the fees and expenses associated with the Facilities.

          (b) No part of the proceeds of any Loan will be used, whether directly
or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board, including Regulations U and X.

         SECTION 5.11A. Initial Collateral Date. On the Initial Collateral Date,
Holdings and the Borrower hereby agree that they will, and will cause each other
Restricted Subsidiary to:

         (a) Deliver to the Administrative Agent duly executed counterparts of
the Security Agreement, together with the following:


                                       64


<PAGE>
                (i) duly executed counterparts of each supplemental agreement
                required to be executed and delivered by the terms of the
                Security Agreement (including, without limitation, any Patent
                Security Agreement, and Trademark Security Agreement and any
                Control Agreement, in each case as defined in the Security
                Agreement);

                (ii) stock certificates representing any or all of the
                outstanding shares of capital stock or other Equity Interests of
                the Borrower and each Restricted Subsidiary and stock powers and
                instruments of transfer, endorsed in blank, with respect to such
                stock certificates;

                (iii) any or all documents and instruments, including Uniform
                Commercial Code financing statements, required by law or
                reasonably requested by the Administrative Agent to be filed,
                registered or recorded to create or perfect the Liens intended
                to be created under the Security Agreement; and

                (iv) a completed perfection certificate dated the Initial
                Collateral Date, in form and substance reasonably satisfactory
                to the Administrative Agent and the Incremental Facility
                Arrangers and signed by an executive officer or Financial
                Officer of Holdings, together with all attachments contemplated
                thereby, including the results of a search of the Uniform
                Commercial Code (or equivalent) filings made with respect to the
                Loan Parties in the jurisdictions contemplated by such
                perfection certificate and copies of the financing statements
                (or similar documents) disclosed by such search and evidence
                reasonably satisfactory to the Administrative Agent and the
                Incremental Facility Arrangers that the Liens indicated by such
                financing statements (or similar documents) are permitted by
                Section 6.02 or have been released.

         (b) Deliver to the Administrative Agent a favorable written opinion
(addressed to the Agents, the Issuing Banks, the Swingline Lenders and the
Lenders and dated the Initial Collateral Date) of each of (i) counsel for
Holdings, the Borrower and each Subsidiary Loan Party reasonably acceptable to
the Administrative Agent and the Incremental Facility Arrangers, (ii) the
general counsel of Holdings and (iii) local counsel in the jurisdictions where
the Borrower is incorporated and where its chief executive office is located
and, in the case of each such opinion required by this paragraph, covering such
matters relating to the Loan Parties, the Loan Documents, the Collateral and the
Transactions as the Administrative Agent (or its counsel), the Incremental
Facility Arrangers (or its counsel) or the Required Lenders shall reasonably
request.

         SECTION 5.11B. Collateral Event. If a Collateral Event shall have
occurred and be continuing, the Administrative Agent, the Incremental Facility
Arrangers or the Required Lenders may by written notice to the Borrower (a
"Collateral Notice"), request, and Holdings and the Borrower hereby agree that
they will, and will cause each other Restricted Subsidiary to, within 30 days of
the Borrowers' receipt of such Collateral Notice (such thirtieth day, a
"Collateral Establishment Date"):

         (a) Subject to subsection (d) of this Section 5.11B, deliver to the
Administrative Agent duly executed counterparts of the Security Agreement (to
the extent not previously delivered pursuant to Section 5.11A) and each other
Collateral Document reasonably requested by the Administrative Agent, the
Incremental Facility Arrangers or the Required Lenders, in form and substance
satisfactory to the Administrative Agent, the Incremental Facility Arrangers or
the Required Lenders, signed on behalf of Holdings, the Borrower and each
Subsidiary Loan Party requested by the Administrative Agent, the Incremental
Facility Arrangers or the Required Lenders, together with (to the extent not
previously delivered pursuant to Section 5.11A) such of the following as shall
have been so requested:

                (i) stock certificates representing any or all of the
                outstanding shares of capital stock of the Borrower and each
                other Subsidiary of Holdings owned by or on behalf of any Loan
                Party as of such Collateral Establishment Date (except that
                stock certificates representing shares of common stock of a
                Foreign Subsidiary may be limited to 66% of the outstanding
                shares of common stock of such Foreign Subsidiary) and stock
                powers and instruments of transfer, endorsed in blank, with
                respect to such stock certificates;


                                       65
<PAGE>

                (ii) any or all documents and instruments, including Uniform
                Commercial Code financing statements, required by law or
                reasonably requested by the Administrative Agent to be filed,
                registered or recorded to create or perfect the Liens intended
                to be created under the Collateral Documents; and

                (iii) a completed perfection certificate dated such Collateral
                Establishment Date, in form and substance reasonably
                satisfactory to the Administrative Agent and the Incremental
                Facility Arrangers and signed by an executive officer or
                Financial Officer of Holdings, together with all attachments
                contemplated thereby, including the results of a search of the
                Uniform Commercial Code (or equivalent) filings made with
                respect to the Loan Parties in the jurisdictions contemplated by
                such perfection certificate and copies of the financing
                statements (or similar documents) disclosed by such search and
                evidence reasonably satisfactory to the Administrative Agent and
                the Incremental Facility Arrangers that the Liens indicated by
                such financing statements (or similar documents) are permitted
                by Section 6.02 or have been released.

         (b) If requested by the Administrative Agent, the Incremental Facility
Arrangers or the Required Lenders, on or before the thirtieth day following any
Collateral Establishment Date or such later day as shall be acceptable to the
Administrative Agent, the Incremental Facility Arrangers or the Required Lenders
(a "Mortgage Establishment Date"), Holdings and the Borrower shall, and shall
cause each other Restricted Subsidiary to, deliver to the Administrative Agent
(i) counterparts of a Mortgage with respect to each Mortgaged Property as to
which such request is made, in each case signed on behalf of the record owner of
such Mortgaged Property, (ii) a policy or policies of title insurance issued by
a nationally recognized title insurance company, insuring the Lien of each such
Mortgage as a valid first Lien on the Mortgaged Property described therein, free
of any other Liens except as permitted by Section 6.02, together with such
endorsements, coinsurance and reinsurance as the Collateral Agent, the
Incremental Facility Arrangers or the Required Lenders may reasonably request,
and (iii) such surveys, abstracts and appraisals as may be required pursuant to
such Mortgages or as the Administrative Agent, the Incremental Facility
Arrangers or the Required Lenders may reasonably request.

         (c) On or before any Collateral Establishment Date or Mortgage
Establishment Date, Holdings and the Borrower shall deliver a favorable written
opinion (addressed to the Agents, the Incremental Facility Arrangers, the
Issuing Banks, the Swingline Lenders and the Lenders and dated on or prior to
such Collateral Establishment Date or Mortgage Establishment Date) of each of
(i) counsel for Holdings, the Borrower and each Subsidiary Loan Party reasonably
acceptable to the Administrative Agent, (ii) the general counsel of Holdings and
(iii) local counsel in each jurisdiction where any Collateral or Mortgaged
Property is located and, in the case of each such opinion required by this
paragraph, covering such matters relating to the Loan Parties, the Loan
Documents, the Collateral and the Transactions as the Administrative Agent (or
its counsel), the Incremental Facility Arrangers (or its counsel) or the
Required Lenders shall reasonably request.

         (d) Anything in this Agreement to the contrary notwithstanding, the
Liens created under any Collateral Document may also secure, to the extent, but
only to the extent, required under the indentures and other documents governing
such Indebtedness (without taking into account any general exceptions to any
such requirements contained in any such indentures and other documents), equally
and ratably with some or all of the Obligations, the obligations of the Parent
and Holdings under any public Indebtedness of either of them that, by its terms,
requires that such Indebtedness be equally and ratably secured by such Liens.

         (e) None of the Borrower, Holdings or any Restricted Subsidiary of
Holdings shall be required to grant to the Administrative Agent or any Lender,
pursuant to the provisions of this Section 5.11B, a Lien on any of the following
assets: (i) voting Equity Interests of any Foreign Subsidiary representing in
excess of 66% of the outstanding voting Equity Interests of such Foreign
Subsidiary, (ii) any ADP Property to the extent such ADP Property secures any
ADP Obligation and (iii) any other asset subject to a security interest
permitted by clauses (iv), (v), (viii), or (ix) of Section 6.02 but only, in the
case of any asset described in


                                       66
<PAGE>

clauses (ii) or (iii), to the extent the granting of such Lien is prohibited by
the terms of the agreement pursuant to which such security interest has been
granted.

         SECTION 5.12. Information Regarding Collateral. (a) (i) The Borrower
will furnish to the Administrative Agent prompt written notice of any change (A)
in any Loan Party's corporate name or in any trade name used to identify it in
the conduct of its business or in the ownership of its properties, (B) in the
location of any Loan Party's chief executive office, its principal place of
business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility), (C)
in any Loan Party's identity or corporate structure or (D) in any Loan Party's
Federal Taxpayer Identification Number; (ii) Holdings and the Borrower will not,
and will not permit any other Restricted Subsidiary to, effect or permit any
change referred to in the preceding sentence unless all filings have been made
under the Uniform Commercial Code or otherwise that are required in order for
the Administrative Agent to continue at all times following such change to have
a valid, legal and perfected security interest in all the Collateral; and (iii)
Holdings and the Borrower will, and will cause each other Restricted Subsidiary
to, promptly notify the Administrative Agent if any material portion of the
Collateral owned by it is damaged or destroyed.

          (b) At the time of the delivery of annual financial statements with
respect to the preceding fiscal year pursuant to Section 5.01(a), the Borrower
shall also deliver to the Administrative Agent a certificate of a Financial
Officer or the chief legal officer of the Borrower (i) setting forth the
information required pursuant to the perfection certificate or confirming that
there has been no change in such information since the date of the perfection
certificate most recently delivered or the date of the most recent certificate
delivered pursuant to this Section and (ii) certifying that all Uniform
Commercial Code financing statements (including fixture filings, as applicable)
or other appropriate filings, recordings or registrations, including all
refilings, rerecordings and reregistrations, containing a description of the
Collateral have been filed of record in each governmental, municipal or other
appropriate office in each jurisdiction identified pursuant to Section 5.12 to
the extent necessary to protect and perfect the security interests under the
Collateral Documents for a period of not less than 18 months after the date of
such certificate (except as noted therein with respect to any continuation
statements to be filed within such period).

         SECTION 5.13. Additional Subsidiaries. (a) If any additional Subsidiary
is formed or acquired, Holdings and the Borrower will notify the Administrative
Agent and the Lenders thereof and if such Subsidiary is a Subsidiary Loan Party,
(i) cause such Subsidiary, within ten Business Days after such Subsidiary Loan
Party is formed or acquired, to become a party to the Subsidiary Guarantee as an
additional guarantor thereunder and to the Security Agreement as a "Lien
Grantor" thereunder, (ii) deliver all stock certificates representing the
capital stock or other Equity Interests of such Subsidiary to the Administrative
Agent, together with stock powers and instruments of transfer, endorsed in
blank, with respect to such certificates and (iii) take all actions required
under the Security Agreement to perfect, register and/or record the Liens
granted by it thereunder and the Lien on such capital stock or other Equity
Interests or as may be reasonably requested by the Administrative Agent, the
Incremental Facility Arrangers or the Required Lenders.

          (b) If a Collateral Establishment Date has occurred and any Collateral
Event is then continuing, such Subsidiary is a Subsidiary Loan Party and the
Administrative Agent, the Incremental Facility Arrangers or the Required Lenders
so request in writing, Holdings and the Borrower shall (i) within 30 days after
such Subsidiary is formed or acquired, cause such Subsidiary to become a party
to such Collateral Documents (in


                                       67
<PAGE>

addition to the Security Agreement) as the Administrative Agent, the Incremental
Facility Arrangers or the Required Lenders shall request and promptly take such
actions as the Administrative Agent, the Incremental Facility Arrangers or the
Required Lenders shall reasonably request to create and perfect Liens on such of
such Subsidiary's assets (in accordance with the standards set forth in Section
5.11B(a)) as the Administrative Agent, the Incremental Facility Arrangers or the
Required Lenders shall so request to secure its obligations under the Subsidiary
Guarantee, and (ii) within 60 days after such Subsidiary is formed or acquired,
cause such Subsidiary to enter into such Mortgage or Mortgages as the
Administrative Agent, the Incremental Facility Arrangers or the Required Lenders
shall so request with respect to any or all material real property owned by such
Subsidiary to secure some or all of its obligations under the Subsidiary
Guarantee and to take such actions (including, without limitation, actions of
the type referred to in Section 5.11B(a)) with respect thereto as the
Administrative Agent, the Incremental Facility Arrangers or the Required Lenders
shall reasonably request.

          (c) None of the Borrower, Holdings or any Subsidiary Loan Party shall
be required to grant to the Administrative Agent or any Lender, pursuant to the
provisions of this Section 5.13, a Lien on any of the following assets: (i)
voting Equity Interests of any Foreign Subsidiary representing in excess of 66%
of the outstanding voting Equity Interests of such Foreign Subsidiary, (ii) any
ADP Property to the extent such ADP Property secures any ADP Obligation and
(iii) any other asset subject to a security interest permitted by clauses (iv),
(v), (viii), or (ix) of Section 6.02 but only, in the case of any asset
described in clauses (ii) or (iii), to the extent the granting of such Lien is
prohibited by the terms of the agreement pursuant to which such security
interest has been granted.

         SECTION 5.14. Further Assurances. (a) On any date each of Holdings and
the Borrower will, and will cause each Subsidiary Loan Party to, execute any and
all further documents, financing statements, agreements and instruments, and
take all such further actions (including the filing and recording of financing
statements, fixture filings, mortgages, deeds of trust and other documents),
which may be required under any applicable law, or which the Administrative
Agent, the Incremental Facility Arrangers or the Required Lenders may reasonably
request, to effectuate the transactions contemplated by the Loan Documents or to
grant, preserve, protect or perfect the Liens created or intended to be created
by the Collateral Documents required to be in effect on such date or the
validity or priority of any such Lien, all at the expense of the Loan Parties.
Holdings and the Borrower also agree to provide to the Administrative Agent,
from time to time upon request, evidence reasonably satisfactory to the
Administrative Agent as to the perfection and priority of the Liens created or
intended to be created by the Collateral Documents required to be in effect on
such date.

         (b) If any material assets (including any real property or improvements
thereto or any interest therein) are acquired by Holdings, the Borrower or any
Subsidiary Loan Party (other than assets constituting Collateral under any
Collateral Document that become subject to the Lien of such Collateral Document
automatically upon the acquisition thereof), the Borrower will notify the
Administrative Agent and the Lenders thereof, and, if requested by the
Administrative Agent, the Incremental Facility Arrangers or the Required
Lenders, Holdings and the Borrower will, or will cause the applicable Restricted
Subsidiary to, cause such assets to be subjected to a Lien securing some or all
of the Obligations, as requested by the Administrative Agent, the Incremental
Facility Arrangers or the Required Lenders, and will take, and cause such
Subsidiary Loan Parties


                                       68
<PAGE>

to take, such actions as shall be necessary or reasonably requested by the
Administrative Agent, the Incremental Facility Arrangers or the Required Lenders
to grant and perfect such Liens, including actions described in Section 5.11B,
all at the expense of the Loan Parties; provided that, none of the Borrower,
Holdings or any Subsidiary Loan Party shall be required to grant to the
Administrative Agent or any Lender, pursuant to the provisions of this Section
5.14, a Lien on any of the following assets: (i) at any time prior to any
Collateral Establishment Date, any assets of a type other than a type
constituting "Collateral" under the form of Security Agreement set forth on
Exhibit K hereto as in effect on the Amendment No. 4 Effective Date, (ii) voting
Equity Interests of any Foreign Subsidiary representing in excess of 66% of the
outstanding voting Equity Interests of such Foreign Subsidiary, (iii) any ADP
Property to the extent such ADP Property secures any ADP Obligation and (iv) any
other asset subject to a security interest permitted by clauses (iv), (v),
(viii), or (ix) of Section 6.02 but only, in the case of any asset described in
clauses (iii) or (iv), to the extent the granting of such Lien is prohibited by
the terms of the agreement pursuant to which such security interest has been
granted.

         SECTION 5.15. Concentration Accounts. At all times after any Collateral
Establishment Date and before a Collateral Release Date, Holdings and the
Borrower will maintain Holdings' and each Restricted Subsidiary's principal
concentration account with one or more Lenders.

         SECTION 5.16. [Intentionally deleted]

         SECTION 5.17. Sale of Solutions and ATL(a) Not later than September 30,
2001, Holdings and the Borrower shall have sold, or caused to be sold, to one or
more Persons that are not Affiliates of Holdings or any of its Subsidiaries, in
one or more transactions (x) its Williams Communications Solutions business unit
in existence on the Amendment No. 4 Effective Date (except for the portion of
such unit described in clause (b) below) and (y) all of the capital stock of ATL
held by the Borrower, Holdings or any of its Subsidiaries for fair market value
and for Net Proceeds in cash in an aggregate amount of at least $700,000,000.

          (b) Not later than December 31, 2001, Holdings and the Borrower shall
have sold or otherwise disposed of, or caused to be sold or otherwise disposed
of, to one or more Persons that are not Affiliates of Holdings or any of its
Subsidiaries, in one or more transactions, substantially all of the Canadian
assets of its Williams Communications Solutions business unit in existence on
the Amendment No. 4 Effective Date.

         SECTION 5.18. Qualifying Issuances. Not later than December 31, 2001,
the Borrower and/or Holdings shall have consummated Qualifying Issuances for Net
Proceeds in cash in an aggregate amount of at least $500,000,000; provided that
Net Proceeds in cash in an aggregate amount of not more than $350,000,000 shall
have resulted from Qualifying Issuances described in clause (ii) or (iii) of the
definition thereof.


                                    ARTICLE 6

                               NEGATIVE COVENANTS

         Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full
and all Letters of Credit have expired or terminated


                                       69
<PAGE>

and all LC Disbursements shall have been reimbursed, each of Holdings and the
Borrower covenants and agrees with the Lenders that:

         SECTION 6.1. Indebtedness; Certain Equity Securities. Holdings and the
Borrower will not, and will not permit any other Restricted Subsidiary to,
create, incur, assume or permit to exist any Indebtedness, except:

         (a) Indebtedness under the Loan Documents;

         (b) Indebtedness of Holdings under Qualifying Holdings Debt;

         (c) Indebtedness of Holdings under the High Yield Notes and
refinancings thereof, provided that any Indebtedness issued in any such
refinancing shall be on terms no less favorable to Holdings and its Restricted
Subsidiaries than the High Yield Notes, shall be in an aggregate principal
amount no greater than the High Yield Notes refinanced and shall not require any
payment of principal thereof (upon maturity or by mandatory sinking fund,
mandatory redemption, mandatory prepayment or otherwise) prior to the date that
is one year after the Term Maturity Date;

         (d) ADP Outstandings in an aggregate amount not to exceed $750,000,000
at any time outstanding;

         (e) Indebtedness existing on the date hereof and set forth in Schedule
6.01 and extensions, renewals and replacements of any such Indebtedness that do
not increase the outstanding principal amount thereof or result in an earlier
maturity date or decrease the Weighted Average Life to Maturity thereof;

         (f) Indebtedness of Holdings to any Subsidiary and of any Restricted
Subsidiary to any other Subsidiary; provided that Indebtedness of any Subsidiary
that is not a Loan Party to any Loan Party shall be subject to Section 6.04;

         (g) Guarantees by Holdings of Indebtedness of any Subsidiary and by any
Subsidiary of Indebtedness of the Borrower or any other Subsidiary; provided
that Guarantees by Holdings, the Borrower or any Subsidiary Loan Party of
Indebtedness of any Subsidiary that is not a Loan Party shall be subject to
Section 6.04;

         (h) Indebtedness of any Person that becomes a Restricted Subsidiary or
is merged into a Restricted Subsidiary after the date hereof (provided that such
Indebtedness exists at the time such Person becomes a Restricted Subsidiary and
is not created in contemplation of or in connection with such Person becoming a
Restricted Subsidiary) and extensions, renewals or replacements of any such
Indebtedness that do not increase the principal amount thereof or result in an
earlier maturity date or decreased Weighted Average Life to Maturity thereof;

         (i) Indebtedness in respect of performance, surety or appeal bonds and
Guarantees incurred or provided in the ordinary course of business securing the
performance of contractual, franchise, lease, self-insurance or license
obligations and not in connection with an incurrence of Indebtedness;


                                       70
<PAGE>

         (j) Indebtedness in respect of customary agreements providing for
indemnification, purchase price adjustments after closing or similar obligations
in connection with the disposition of any assets (other than Guarantees of
Indebtedness incurred by any Person acquiring all or any portion of such assets
for the purpose of financing such acquisition); provided that (i) any such
disposition is permitted by Section 6.05, (ii) the aggregate principal amount of
such Indebtedness does not exceed the gross proceeds actually received by
Holdings or any Restricted Subsidiary in connection with such disposition and
(iii) to the extent the gross proceeds thereof constitute Net Proceeds
hereunder, such Net Proceeds are applied in accordance with Sections 2.08(f) and
2.11(b);

         (k) Indebtedness of Holdings and the Restricted Subsidiaries pursuant
to Hedging Agreements entered into with Lenders or their affiliates in the
ordinary course of business and not for speculative purposes;

         (l) [Intentionally deleted];

         (m) [Intentionally deleted];

         (n) [Intentionally deleted];

         (o) other Indebtedness of Holdings or any Restricted Subsidiary in an
aggregate principal amount at any time outstanding, together with the aggregate
amount of Attributable Debt in respect of all Sale and Leaseback Transactions
then outstanding, not exceeding 15% of the consolidated net property, plant and
equipment of Holdings and the Restricted Subsidiaries at such time;

         (p) Indebtedness of the Borrower consisting of Qualifying Borrower
Indebtedness;

         (q) Permitted Specified Security Hedging Transactions;

         (r) Indebtedness of Holdings or the Borrower incurred pursuant to a
Qualifying Issuance; provided that the aggregate Net Proceeds in cash received
by Holdings and/or the Borrower from the issuance of such Indebtedness, plus the
Net Proceeds in cash from any Sale and Leaseback Transaction constituting a
Qualifying Issuance shall not exceed $350,000,000;

         (s) Indebtedness with respect to industrial revenue bonds issued for
the benefit of the Borrower, Holdings or any Restricted Subsidiary in an
aggregate principal or face amount not to exceed $50,000,000;

         (t) unsecured Indebtedness of Holdings in an aggregate principal amount
not to exceed $100,000,000 incurred prior to the consummation of the Structured
Note Financing so long as (i) the proceeds of such Indebtedness are used solely
to make the capital contributions described in Section 6.04(u) and (ii) the
terms and conditions of any such Indebtedness shall have been approved by all
the Incremental Facility Arrangers (if any) and the Administrative Agent prior
to the issuance thereof;


                                       71
<PAGE>

         (u) unsecured Indebtedness of Holdings owed to the Structured Note
Trust in an aggregate principal amount up to $1,500,000,000 in connection with
the consummation of the Structured Note Financing, so long as the terms and
conditions of such Indebtedness shall have been approved by all the Incremental
Facility Arrangers (if any) and the Administrative Agent prior to the issuance
thereof; and

         (v) on any date on or after the Leverage Target Date, Indebtedness of
the Borrower owing to a Receivables Subsidiary under a Permitted Receivables
Financing;

provided that, notwithstanding anything in this Agreement to the contrary, the
Borrower and the other Restricted Subsidiaries may not Guarantee any
Indebtedness of Holdings under (i) the High Yield Notes or (ii) any Qualifying
Holdings Debt.

         SECTION 6.2. Liens. (a) Holdings and the Borrower will not, and will
not permit any other Restricted Subsidiary to, create, incur, assume or permit
to exist any Lien on any property or asset now owned or hereafter acquired by
it, or assign or sell any income or revenues or rights in respect of any
thereof, except:

                  (i) Liens created under the Loan Documents (including, without
         limitation, Liens securing Indebtedness of Holdings and the Parent
         created thereunder in accordance with Section 5.11B(d));

                  (ii) Permitted Encumbrances;

                  (iii) Liens on any ADP Property securing only ADP Obligations;

                  (iv) any Lien on any property or asset of Holdings or any
         Restricted Subsidiary existing on the date hereof and set forth in
         Schedule 6.02; provided that (A) such Lien shall not apply to any other
         property or asset of Holdings or any Restricted Subsidiary and (B) such
         Lien shall secure only those obligations which it secures on the date
         hereof and extensions, renewals and replacements thereof that do not
         increase the outstanding principal amount thereof or decrease the
         Weighted Average Life to Maturity thereof;

                  (v) any Lien existing on any property or asset prior to the
         acquisition thereof by Holdings or any Restricted Subsidiary or
         existing on any property or asset of any Person that becomes a
         Restricted Subsidiary after the date hereof prior to the time such
         Person becomes a Subsidiary; provided that (A) such Lien is not created
         in contemplation of or in connection with such acquisition or such
         Person becoming a Restricted Subsidiary, as the case may be, (B) such
         Lien shall not apply to any other property or assets of Holdings or any
         Restricted Subsidiary and (C) such Lien shall secure only those
         obligations which it secures on the date of such acquisition or the
         date such Person becomes a Restricted Subsidiary, as the case may be,
         and extensions, renewals and replacements thereof that do not increase
         the outstanding principal amount thereof or decrease the Weighted
         Average Life to Maturity thereof;


                                       72
<PAGE>

                  (vi) Liens in favor of the Borrower or any Subsidiary Loan
         Party;

                  (vii) Liens on property of Holdings or any Restricted
         Subsidiary consisting of, or securing, licenses of such property;

                  (viii) Liens of a Specified Security securing Permitted
         Specified Security Hedging Transactions with respect to such Specified
         Security;

                  (ix) on any date on or after the Leverage Target Date, Liens
         created in connection with Permitted Receivables Financings, including,
         without limitation, Liens on proceeds in any form and bank accounts in
         which any such proceeds are deposited; provided that, except for the
         assets transferred pursuant to Permitted Receivables Dispositions made
         in connection with such Permitted Receivables Financings, no such Lien
         may extend to any assets of Borrower or any Subsidiary of the Borrower
         that is not a Receivables Subsidiary; and

                  (x) other Liens securing Indebtedness at any time outstanding
         that, together with the aggregate amount of Attributable Debt in
         respect of all Sale and Leaseback Transactions then outstanding, does
         not exceed 5% of the consolidated net property, plant and equipment of
         Holdings and the Restricted Subsidiaries at such time.

         (b) Notwithstanding anything to the contrary contained herein, Holdings
and the Borrower will not, and will not permit any other Restricted Subsidiary
to, create, incur, assume or permit to exist any Lien on any of its assets to
secure (i) except in accordance with Section 5.11B(d), any obligations in
respect of the High Yield Notes or any refinancing thereof, permitted under
Section 6.01(c), or (ii) except in accordance with Section 5.11B(d), any
Qualifying Holdings Debt.

         SECTION 6.3. Fundamental Changes. (a) Neither Holdings nor the Borrower
will, nor will they permit any other Restricted Subsidiary to, merge into or
consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, or liquidate or dissolve, except that, if at the time
thereof and immediately after giving effect thereto no Default shall have
occurred and be continuing (i) any Person may merge into the Borrower in a
transaction in which the Borrower is the surviving corporation, (ii) any Person
may merge into any Restricted Subsidiary in a transaction in which the surviving
entity is a Restricted Subsidiary and (iii) any Restricted Subsidiary may
liquidate or dissolve if the Borrower determines in good faith that such
liquidation or dissolution is in the best interests of the Borrower and is not
materially disadvantageous to the Lenders; provided that any such merger
involving a Person that is not a wholly owned Restricted Subsidiary immediately
prior to such merger shall not be permitted unless also permitted by Section
6.04.

         (b) The Borrower will not, and will not permit any other Restricted
Subsidiary to, engage to any material extent in any business other than
businesses of the type conducted by the Borrower and its Subsidiaries on the
date of execution of this Agreement and businesses reasonably related thereto.


                                       73
<PAGE>

         (c) Holdings will not engage in any business or activity other than (i)
the ownership of all of the outstanding Equity Interests in the Borrower, (ii)
the issuance of the High Yield Notes, (iii) issuances of Qualifying Holdings
Debt, (iv) issuances of its Equity Interests, (v) the holding of 100% of the
Equity Interests of any Unrestricted Subsidiary which is engaged exclusively in
the buying, selling and trading of telecommunications services as a commodity on
a developing or an established market (a "Trading Subsidiary") and (vi) the
holding of Qualifying Borrower Indebtedness permitted under Section 6.01(q) and,
with respect to each of the foregoing, activities incidental thereto. Holdings
will not own or acquire any assets (other than Qualifying Equity Interests in
the Borrower, Qualifying Borrower Indebtedness, Equity Interests in any Trading
Subsidiary, cash and Cash Equivalent Investments) or incur any liabilities
(other than liabilities under the Loan Documents, liabilities in respect of the
High Yield Notes, liabilities in respect of Qualified Holdings Debt permitted
hereunder, liabilities in respect of the Structured Note Financing, liabilities
imposed by law, including tax liabilities, and other liabilities incidental to
its existence and permitted business and activities).

         SECTION 6.4. Investments, Loans, Advances, Guarantees and Acquisitions.
Holdings will not, and will not permit any Restricted Subsidiary to, purchase,
hold or acquire (including pursuant to any merger with any Person that was not a
wholly owned Restricted Subsidiary prior to such merger) any capital stock,
evidences of indebtedness or other securities (including any option, warrant or
other right to acquire any of the foregoing) of, make or permit to exist any
loans or advances to, Guarantee any obligations of, or make or permit to exist
any investment or any other interest in, any other Person, or purchase or
otherwise acquire (in one transaction or a series of transactions) any assets of
any other Person constituting a business unit (collectively, "Investments"),
except:

         (a) Cash Equivalent Investments;

         (b) Investments existing on the date hereof and set forth on Schedule
6.04;

         (c) Investments by Holdings and the Restricted Subsidiaries in Equity
Interests in Subsidiaries; provided that, (i) the aggregate amount of
Investments by Loan Parties in, and Guarantees by Loan Parties of Indebtedness
of, Subsidiaries that are not Loan Parties (including, without limitation, any
Deemed Subsidiary Investment pursuant to Section 6.14) shall be subject to the
proviso to this Section 6.04 and (ii) all Equity Interests acquired or held by
Holdings pursuant to this Section 6.04(c) shall be Qualifying Equity Interests
in the Borrower or Equity Interests in a Trading Subsidiary;

         (d) loans or advances made by Holdings to any Restricted Subsidiary and
made by any Restricted Subsidiary to any other Restricted Subsidiary; provided
that the amount of such loans and advances made by Loan Parties to Subsidiaries
that are not Loan Parties shall be subject to the proviso to this Section 6.04;

         (e) Guarantees constituting Indebtedness permitted by Section 6.01;
provided that (i) no Restricted Subsidiary shall Guarantee any High Yield Notes,
any Indebtedness of Holdings or the Borrower constituting a Qualifying Issuance
or Qualifying Holdings Debt and (ii) the aggregate principal amount of
Indebtedness of Subsidiaries that are not


                                       74
<PAGE>

Loan Parties that is Guaranteed by any Loan Party shall be subject to the
proviso to this Section 6.04;

         (f) Investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;

         (g) acquisitions by the Borrower of ADP Property for consideration paid
on and prior to any date not exceeding Additional Capital as of such date; minus
(i) Investments permitted under clause (ii) of the proviso to this Section 6.04
made on or prior to such date and (iii) Capital Expenditures permitted under
Section 6.08(b) made on or prior to such date;

         (h) Hedging Agreements permitted under Section 6.01(k);

         (i) Capital Expenditures made in accordance with Section 6.08;

         (j) subject to the proviso to this Section 6.04, Investments in the
Telecommunications Business;

         (k) subject to the proviso to this Section 6.04, Investments in
Existing International Joint Ventures; provided that the acquisition by Holdings
or any Restricted Subsidiary of any equity interest in Algar Telecom S.A.
(formerly known as Lightel S.A.) owned by the Parent or its subsidiaries (other
than Holdings and the Subsidiaries) shall not be permitted under this clause (k)
but shall only be permitted under clause (p) of this Section 6.04;

         (l) exchanges and substitutions of ADP Property for like property which
take place prior to the occurrence of the Completion Date, the Expiration Date,
the Termination Date, or an ADP Event of Default, Environmental Trigger or
Unwind Event under the Operative Documents;

         (m) any Investment by a Restricted Subsidiary in any Person engaged in
the Telecommunication Business if such Investment is made in connection with an
agreement by such Person to utilize certain of the Borrower's or the Subsidiary
Loan Parties' Telecommunications Business, provided that, at any date, (i) the
aggregate amount of Investments made in all such Persons at any time outstanding
pursuant to this paragraph (m) (valued at the cost of acquisition thereof,
without regard to any increase or decrease in the value thereof based on
subsequent performance of such Person, but net of any distributions received by
the Borrower or any Subsidiary Loan Party in respect of such Investment) shall
not exceed 15% of Consolidated Assets at such time and (ii) the aggregate amount
of such Investments made in all such Persons with cash or Cash Equivalent
Investments that are at any time outstanding pursuant to this paragraph (m)
shall not exceed 5% of Consolidated Assets;


                                       75
<PAGE>

         (n) (i) loans to directors, officers and employees of Holdings or any
Restricted Subsidiary all of the proceeds of which are used (A) to pay
relocation expenses of any such director, officer or employee or (B) to purchase
Equity Interests in Holdings pursuant to and in accordance with stock option
plans or other benefit plans for directors, officers and employees of Holdings
and its Restricted Subsidiaries, provided that, in the case of any of the Loans
referred to in this subclause (B), any proceeds to Holdings of any such
purchases of Equity Interests shall be contributed to the Borrower and (ii)
other loans to directors, officers and employees of Holdings and its Restricted
Subsidiaries made in the ordinary course of business in an aggregate principal
amount not to exceed $5,000,000 at any time outstanding;

         (o) trade accounts receivable for goods sold or services provided
arising in the ordinary course of business and on customary payment terms (not
to exceed 120 days after the date such receivables are accrued in accordance
with GAAP);

         (p) Investments for which the consideration paid by Holdings and its
Restricted Subsidiaries consists exclusively of Qualifying Equity Interests in
Holdings;

         (q) Investments made in any Person (a "REINVESTMENT PERSON") in whom
the Borrower or any of its Subsidiaries has, or at any time after the Closing
Date had, an Investment permitted under clause (b), (f) or (p) above or this
clause (q) (an "ORIGINAL INVESTMENT"); provided that the aggregate amount of
Investments in any Reinvestment Person permitted under this clause (q) may not
exceed the aggregate amount of the cash proceeds received, within 270 days prior
to the making of such Investment, by the Borrower and its Subsidiaries from
sales or other dispositions of, or distributions with respect to Original
Investments in such Reinvestment Person;

         (r) Permitted Specified Security Hedging Transactions; and

         (s) Investments in Persons that become Subsidiary Loan Parties if such
Persons, prior to such Investments, were engaged principally in the transmission
of voice, video or data through or over owned or leased fiber optic cable and/or
the holding, developing or constructing of assets or technology used therein;

         (t) Letters of Credit to support obligations of a Trading Subsidiary
incurred in the ordinary course of business; and

         (u) capital contributions made by Holdings to the Borrower and by the
Borrower to the Structured Note Trust, in each case in an aggregate principal
amount not to exceed $100,000,000 and in order to consummate the Structured Note
Financing;

         (v) Investments in Receivables Subsidiaries made in connection with
Permitted Receivables Financings;

provided that the aggregate amount of all Investments (valued at the cost of
acquisition thereof, without regard to any increase or decrease in the value
thereof based on subsequent performance of the Person in


                                       76
<PAGE>

which such Investment is held), but net, in case of each such Investment (but
not below zero), of any distributions received by the Borrower or any Subsidiary
Loan Party in respect of such Investment and any proceeds received upon any
disposition (other than a disposition to Holdings or any of its Subsidiaries or
the Parent or any of its Subsidiaries) of such Investment, made pursuant to
Sections 6.04(j) and 6.04(k) on or prior to any date, or referred to in Section
6.04(c)(i), the proviso to Section 6.04(d) and Section 6.04(e)(ii) and made on
or prior to such date, shall not exceed the sum of an amount (which amount, for
purposes of this proviso only, shall not be less than zero) equal to (x) the
amount of Additional Capital as of such date minus (y) (A) acquisitions of ADP
Property permitted under Section 6.04(g) made on or prior to such date and (B)
Capital Expenditures permitted under Section 6.08(b) made on or prior to such
date.

         SECTION 6.5. Asset Sales. Holdings and the Borrower will not, and will
not permit any other Restricted Subsidiary to, sell, transfer, lease or
otherwise dispose of any asset, including any Equity Interests owned by it, nor
will Holdings permit any of its Restricted Subsidiaries to issue any additional
Equity Interests, except:

         (a) sales, transfers, leases or other dispositions of fiber optic cable
capacity, sales of inventory, and sales of used or surplus equipment and Cash
Equivalent Investments, in each case in the ordinary course of business;

         (b) sales, transfers and dispositions to the Borrower or a Subsidiary;
provided that any such sales, transfers or dispositions involving a Subsidiary
that is not a Loan Party shall be made in compliance with Section 6.09;

         (c) issuances to the Borrower or any other Restricted Subsidiary of
Equity Interests in any Restricted Subsidiary other than the Borrower;

         (d) issuances to Holdings by the Borrower of Qualifying Equity
Interests in the Borrower;

         (e) Permitted Telecommunications Asset Dispositions;

         (f) sales, transfers and dispositions of assets to the extent
constituting Investments permitted under Section 6.04;

         (g) Restricted Payments permitted under Section 6.07(a) and payments of
principal and interest permitted under Section 6.07(b);

         (h) the sale, transfer or other dispositions required by Section 5.17
or 5.18;

         (i) any transfer of Receivables and Related Transferred Rights (each as
defined in the Security Agreement attached hereto as Exhibit K) in order to
consummate a Permitted Receivables Transaction or to transfer such assets
pursuant to a factoring arrangement; and

         (j) sales, transfers and dispositions of assets (other than
Telecommunications Assets) that are not permitted by any other clause of this
Section; provided that the aggregate fair market value of all assets sold,
transferred or otherwise disposed of in


                                       77
<PAGE>

reliance upon this Section 6.05(j) shall not exceed $25,000,000 during any
fiscal year of the Borrower;

provided that all sales, transfers, leases and other dispositions permitted
under Sections 6.05(e) and 6.05(j) shall be made (x) for fair value and (y) only
if at least 75% of the consideration paid therefor is cash or Cash Equivalent
Investments (or, if less than 75%, the remainder of such consideration consists
of Telecommunications Assets).

         SECTION 6.6. Sale and Leaseback Transactions. Holdings and the Borrower
will not, and will not permit any other Restricted Subsidiary to, enter into any
arrangement, directly or indirectly, whereby it shall (a) sell or transfer any
property, real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other property
that it intends to use for substantially the same purpose or purposes as the
property sold or transferred or (b) lease any property, real or personal, from
any entity substantially all of whose activities consist of acquiring,
constructing or developing property to be leased to Holdings and the Restricted
Subsidiaries pursuant to leases intended to cover, and measured by the cost of
or the financing incurred by such entity to finance, such property (the
transactions referred to in clause (a) and (b) being collectively referred to as
"Sale and Leaseback Transactions"), except for (i) sales and leases of ADP
Property pursuant to the ADP in respect of ADP Outstandings not to exceed
$750,000,000 at any time outstanding and (ii) (x) any such sale referred to in
clause (a) above of any fixed or capital assets that is made for cash
consideration in an amount not less than the cost of such fixed or capital asset
and is consummated within 270 days after the Borrower or such other Restricted
Subsidiary acquires or completes the construction of such fixed or capital asset
and (y) any such lease referred to in clause (b) above providing for rental
payments measured by the cost of the property leased or the financing incurred
by the lessor thereof to acquire, construct or develop the property so leased;
provided that the sum of the aggregate amount of Attributable Debt in respect of
all such Sale and Leaseback Transactions permitted under this clause (ii) at any
time outstanding (other than any such Attributable Debt with respect to any Sale
and Leaseback Transaction constituting a Qualifying Issuance) and the aggregate
amount of Indebtedness secured by Liens permitted by Section 6.02(a)(viii) at
such time outstanding shall not exceed 5% of consolidated net property, plant
and equipment of Holdings and the Restricted Subsidiaries at such time. For
purposes of determining compliance with the proviso set forth in the immediately
preceding sentence, Capital Lease Obligations shall not in any event be included
in the calculation of "Attributable Debt."

         SECTION 6.7. Restricted Payments; Certain Payments of Indebtedness. (a)
Neither Holdings nor the Borrower will, nor will they permit any other
Restricted Subsidiary to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, or enter into any transaction the economic
effect of which is substantially similar to any Restricted Payment, except (i)
Holdings and the Borrower may declare and pay dividends with respect to their
capital stock payable solely in additional shares of their respective common
stock, (ii) Restricted Subsidiaries (other than the Borrower) may declare and
pay dividends ratably with respect to their capital stock, (iii) Holdings may
make Restricted Payments, not exceeding $3,000,000 during any fiscal year,
pursuant to and in accordance with stock option plans or other benefit plans for
management or employees of Holdings and the Restricted Subsidiaries; (iv) so
long as no Default shall have occurred and be continuing or result from the
making of such payment, the Borrower may pay dividends to Holdings at such times
and in such amounts as shall be necessary to permit Holdings to discharge, to
the extent permitted hereunder, its permitted liabilities; (v) on and after the
Leverage Target Date, Holdings may declare and pay dividends in cash with
respect to its convertible preferred stock outstanding as of the Amendment No. 4
Effective Date in an amount not exceeding $40,000,000 in any fiscal year and the
Borrower may declare and pay dividends to Holdings to permit Holdings to declare
and pay such dividends and (vi) at any time after the consummation of the
Structured Note Financing, the Borrower may declare and pay a dividend to
Holdings so long as (x) the aggregate amount of such dividend shall not exceed
the principal amount of the Structured Note Bridge Indebtedness outstanding at
the time such dividend is paid plus accrued interest thereon, (y) no Default has
occurred and is continuing or would result therefrom and (z) immediately upon
receipt thereof, Holdings shall apply all of the proceeds of such dividend to
repay in full the Structured Note Bridge Indebtedness then outstanding.


                                       78
<PAGE>

         (b) Neither Holdings nor the Borrower will, nor will they permit any
Restricted Subsidiary to, make, directly or indirectly, any voluntary payment or
other distribution (whether in cash, securities or other property) of or in
respect of principal of or interest on any High Yield Notes, any Qualifying
Holdings Debt or any Qualifying Borrower Indebtedness (collectively "Specified
Indebtedness"), or any voluntary payment or other distribution (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any Specified Indebtedness (or enter into any transaction the
economic effect of which is substantially similar to any of the foregoing),
except, provided no Default has occurred and is continuing or would result
therefrom, payments of regularly scheduled interest as and when due in respect
of any Specified Indebtedness other than Qualifying Borrower Indebtedness.

         SECTION 6.8. Limitation on Capital Expenditures. (a) Capital
Expenditures (other than Capital Expenditures permitted under Section 6.08(b)
below) for any fiscal year set forth below shall not exceed the amount set forth
below opposite such fiscal year:

<Table>
<Caption>
FISCAL YEAR                                               AMOUNT
- -----------                                               ------
<S>                                                   <C>
2001                                                  $2,750,000,000
2002                                                  $2,500,000,000
2003                                                  $2,250,000,000
2004                                                  $2,250,000,000
2005                                                  $2,250,000,000
2006 and each fiscal year thereafter                  $2,800,000,000
</Table>

provided that if the aggregate amount of Capital Expenditures (other than
Capital Expenditures permitted under Section 6.08(b) below) actually made in any
such period or fiscal year shall be less than the limit with respect thereto set
forth above (before giving effect to any increase therein pursuant to this
proviso) (the "Base Amount"), then an amount equal to 50% of such shortfall may
be added to the amount of such Capital Expenditures permitted for the
immediately succeeding fiscal year (such amount to be added for any fiscal year,
the "Rollover Amount"); provided further that any Capital Expenditures (other
than Capital Expenditures permitted under Section 6.08(b) below) made during any
fiscal year for which any Rollover Amount shall have been so added shall be
applied, first, to the Rollover Amount added for such fiscal year and, second,
to the Base Amount for such fiscal year.

         (b) In addition to Capital Expenditures permitted under Section 6.08(a)
above, Holdings and the Restricted Subsidiaries may make (i) Capital
Expenditures consisting of acquisitions of ADP Property permitted under Section
6.04(g) or 6.04(l) and (ii) Capital Expenditures on any date after the Amendment
No. 4 Effective Date in an aggregate amount not to exceed Additional Capital as
of such date minus (A) Investments permitted under clause (ii) of the proviso to
Section 6.04 made on or prior to such date and (B) purchases of ADP Property
permitted under Section 6.04(g) made on or prior to such date.

         SECTION 6.9. Transactions with Affiliates. Neither Holdings nor the
Borrower will, nor will they permit any other Restricted Subsidiary to, sell,
lease or otherwise transfer any property or assets to, or purchase, lease or
otherwise acquire any property or assets from, or otherwise engage in any other
transactions with, any of their respective Affiliates, except (a) transactions
that are at prices and on terms and conditions not less favorable to Holdings,
the Borrower or such other Restricted Subsidiary than could be obtained on an
arm's-length basis from unrelated third parties, (b) transactions between or
among the Borrower and the Subsidiary Loan Parties not involving any other
Affiliate, (c) any Restricted Payment permitted by Section 6.07 and (d)
transactions required to be effected pursuant to, and on terms provided for in,
existing agreements (as in effect on the date hereof) listed in Schedule 6.09
hereto.

         SECTION 6.10. Restrictive Agreements. Neither Holdings nor the Borrower
will, nor will they permit any other Restricted Subsidiary to, directly or
indirectly, enter into, incur or permit to exist any


                                       79
<PAGE>

agreement or other arrangement that prohibits, restricts or imposes any
condition upon (a) the ability of Holdings or any Restricted Subsidiary to
create, incur or permit to exist any Lien upon any of its property or assets, or
(b) the ability of any Restricted Subsidiary to pay dividends or other
distributions with respect to any shares of its capital stock or to make or
repay loans or advances to the Borrower or any other Restricted Subsidiary or to
Guarantee Indebtedness of the Borrower or any other Restricted Subsidiary;
provided that (i) the foregoing shall not apply to restrictions and conditions
imposed by law or by any Loan Document, the High Yield Notes or, to the extent
that any such restrictions therein, taken as a whole, are no more restrictive
than those contained in the High Yield Notes, any Qualifying Holdings Debt, (ii)
the foregoing shall not apply to restrictions and conditions existing on the
date hereof identified on Schedule 6.10 (but shall apply to any extension or
renewal of, or any amendment or modification expanding the scope of, any such
restriction or condition), (iii) the foregoing shall not apply to customary
restrictions and conditions contained in agreements relating to the sale of a
Subsidiary pending such sale, provided such restrictions and conditions apply
only to the Subsidiary that is to be sold and such sale is permitted hereunder,
(iv) Section 6.10(a) of the foregoing shall not apply to restrictions or
conditions imposed by any agreement relating to secured Indebtedness permitted
by this Agreement if such restrictions or conditions apply only to the property
or assets securing such Indebtedness and (v) Section 6.10(a) of the foregoing
shall not apply to customary provisions in leases and other contracts
restricting the assignment thereof.

         SECTION 6.11. Fiscal Year. Holdings and the Borrower will not, and will
not permit any other Restricted Subsidiary to, change its fiscal year from a
fiscal year ending December 31.

         SECTION 6.12. Change in Business. Holdings and the Borrower will not,
and will not permit any other Restricted Subsidiary to, engage in any material
line of business other than the Telecommunications Business.

         SECTION 6.13. Amendment of Material Documents. Holdings and the
Borrower will not, and will not permit any other Restricted Subsidiary to,
without the prior written consent of the Required Lenders, consent to any
amendment, modification or waiver of (a) its certificate of incorporation,
by-laws or other organizational documents (except for the filing of a
Certificate of Designation with the Secretary of State of Delaware relating to
the issuance of preferred securities that are Qualifying Equity Interests of
such Person, to the extent provided for in its certificate of incorporation,
by-laws or other organizational documents), (b) the Other Financing Documents,
(c) any agreements governing any Qualifying Holdings Debt, (d) the Parent
Indemnity or (e) the Operative Documents, in each of the foregoing cases if such
amendment, modification of waiver could reasonably be expected to have (i) an
adverse effect on the ability of any Loan Party to perform any of its
obligations under any Loan Document or the rights of, or benefits available to,
the Lenders under any Loan Document or (ii) a Material Adverse Effect.

         SECTION 6.14. Designation of Unrestricted Subsidiaries. Holdings and
the Borrower will not designate any Restricted Subsidiary (other than a newly
created Subsidiary in which no Investment has previously been made) as an
Unrestricted Subsidiary (a "Subsidiary Designation") unless:

         (i)      no Default shall have occurred and be continuing at the time
                  of or after giving effect to such Subsidiary Designation;

         (ii)     after giving effect to such Subsidiary Designation, Holdings
                  would be in compliance with the covenants contained in Section
                  6.08 and Sections 6.15 through 6.19 on a pro forma basis as if
                  such Subsidiary Designation had been made on the first day of
                  the period of four fiscal quarters most recently ended in
                  respect of which financial statements have been delivered by
                  the Company pursuant to Section 5.01(a) or 5.01(b);

         (iii)    Holdings has delivered to the Administrative Agent (x) written
                  notice of such Subsidiary Designation and (y) a certificate of
                  a Financial Officer


                                       80
<PAGE>

                  setting forth in reasonable detail calculations demonstrating
                  pro forma compliance with the financial covenants contained in
                  Section 6.08 and Sections 6.15 through 6.19, as required by
                  clause (ii) above; and

         (iv)     on the date of such Subsidiary Designation, Holdings and the
                  Borrower would not be prohibited by Section 6.04(c) and the
                  proviso to Section 6.04 from making an Investment (a "Deemed
                  Subsidiary Investment") in an aggregate amount equal to the
                  fair market value (valued at the date of such Subsidiary
                  Designation) of (x) the net assets of such Restricted
                  Subsidiary or (y) if less than 100% of the Equity Interests in
                  such Restricted Subsidiary are held by Holdings and its
                  Restricted Subsidiaries, in an aggregate amount equal to the
                  percentage interest of Holdings and the Restricted
                  Subsidiaries in such net assets.

         Holdings and the Borrower will not, and will not permit any other
Restricted Subsidiary to (x) Guarantee any Indebtedness of any Unrestricted
Subsidiary, (y) be directly or indirectly liable for any Indebtedness of any
Unrestricted Subsidiary or (z) be directly or indirectly liable for any other
Indebtedness which provides that the holder thereof may (upon notice, lapse of
time or both) declare a default thereon (or cause such Indebtedness or the
payment thereof to be accelerated, payable or subject to repurchase prior to its
final scheduled maturity) upon the occurrence of a default with respect to any
other Indebtedness that is Indebtedness of an Unrestricted Subsidiary, except in
the case of clause (x) or (y) to the extent permitted under Section 6.01 and
Section 6.04 hereof. In no event may the Borrower be designated as an
Unrestricted Subsidiary.

         SECTION 6.15. Total Net Debt to Contributed Capital Ratio. The Total
Net Debt to Contributed Capital Ratio shall at no time prior to January 1, 2002
exceed .65 to 1.00.

         SECTION 6.16. Minimum EBITDA. The amount equal to (i) EBITDA for the
period of four fiscal quarters ending during any period set forth below plus
(ii) ADP Interest Expense for such period minus (iii) gains for such period
attributable to Dark Fiber and Capacity Dispositions plus (iv) Dark Fiber and
Capacity Proceeds for such period shall not be less than the amount set forth
below opposite such period:

<Table>
<Caption>
PERIOD                                                AMOUNT
- ------                                                ------
<S>                                                   <C>
January 1, 2001-March 31, 2001                        $200,000,000
April 1, 2001-June 30, 2001                           $300,000,000
July 1, 2001-September 30, 2001                       $350,000,000
October 1, 2001-December 31, 2001                     $350,000,000
</Table>

         SECTION 6.17. Total Leverage Ratio. (a) The Total Leverage Ratio during
any period set forth below shall not exceed the ratio set forth below opposite
such period:

<Table>
<Caption>
                                                      TOTAL
PERIOD                                                LEVERAGE RATIO
- ------                                                --------------
<S>                                                   <C>
March 31, 2002-December 30, 2002                      12.50:1.00
December 31, 2002-December 30, 2003                   9.50:1.00
December 31, 2003 and thereafter                      4.00:1.00
</Table>

                                       81
<PAGE>

         SECTION 6.18. Senior Leverage Ratio. The Senior Leverage Ratio during
any period set forth below shall not exceed the ratio set forth below opposite
such period:

<Table>
<Caption>
                                                      SENIOR
PERIOD                                                LEVERAGE RATIO
- ------                                                --------------
<S>                                                   <C>
March 31, 2002-December 30, 2002                      5.25:1.00
December 31, 2002-December 30, 2003                   3.25:1.00
December 31, 2003 and thereafter                      2.50:1.00
</Table>

         SECTION 6.19. Interest Coverage Ratio. The Interest Coverage Ratio for
any period of four consecutive fiscal quarters ending during any period set
forth below shall not be less than the ratio set forth below opposite such
period:

<Table>
<Caption>
                                                     INTEREST
PERIOD                                               COVERAGE RATIO
- ------                                               --------------
<S>                                                  <C>
June 30, 2002-June 29, 2003                          1.00:1.00
June 30, 2003-December 30, 2003                      1.50:1.00
December 31, 2003 and thereafter                     2.00:1.00
</Table>

         SECTION 6.20. Financial Covenant Non-Compliance Cure. (a) At any time
prior to the consummation of the Spin-Off, in the event that Holdings and the
Restricted Subsidiaries fail to comply with any of Sections 6.15 through 6.19,
inclusive, for any period or on any date set forth therein, the Parent shall
have the right, but not the obligation, to make, within three Business Days of
the date upon which financial statements as of the last day of such period are
delivered or required to be delivered pursuant to Section 5.01(a) or (b), a cash
equity contribution to Holdings in exchange for Qualifying Equity Interests of
Holdings (which Holdings shall thereupon contribute to the Borrower, in exchange
for Qualifying Equity Interests of the Borrower) to cure such failure.

          (b) If such contribution is made to cure a failure to comply with the
covenant contained in Section 6.16, such contribution shall be in an amount
sufficient, when added to EBITDA for the applicable period, to enable Holdings
and the Restricted Subsidiaries to comply with such covenant on a consolidated
basis. Upon the making of any such capital contribution to Holdings and to the
Borrower in the amount specified above, the amount so contributed (to the
extent, but only to the extent, of the shortfall in EBITDA for the applicable
period) shall thereafter be deemed to have been EBITDA in the last fiscal
quarter of such period for purposes of all calculations in respect of compliance
with Section 6.16 thereafter.

          (c) If such contribution is made to cure a failure to comply with a
covenant contained in Section 6.15, 6.17, 6.18 or 6.19, such contribution shall
be in an amount sufficient, when applied to repay or prepay Indebtedness of
Holdings and the Restricted Subsidiaries, to enable Holdings and the Restricted
Subsidiaries, on a pro forma basis after giving effect to such contribution and
application, to comply with such covenant on a consolidated basis.

          (d) The right to cure provided in this Section 6.20 may not be
exercised in respect of more than two consecutive quarters or more than three
times in the aggregate during the term of the Facilities.


                                       82
<PAGE>

                                    ARTICLE 7

                                EVENTS OF DEFAULT

         SECTION 7.1. Events of Default. If any of the following events ("Events
of Default") shall occur:

         (a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise;

         (b) the Borrower shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount referred to in Section 7.01(a))
payable under this Agreement or any other Loan Document, when and as the same
shall become due and payable, and such failure shall continue unremedied for a
period of three Business Days;

         (c) any representation or warranty made or deemed made by or on behalf
of the Parent or any Loan Party in or in connection with any Loan Document or
any amendment or modification thereof or waiver thereunder, or in any report,
certificate, financial statement or other document furnished pursuant to or in
connection with any Loan Document or any amendment or modification thereof or
waiver thereunder, shall prove to have been incorrect in any material respect
when made or deemed made;

         (d) (i) Holdings or the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.02, 5.03 (with respect
to the existence of Holdings or the Borrower), 5.10, 5.11A, 5.11B, 5.13, 5.17,
5.18 or in Article 6, or (i) such failure shall continue unremedied for a period
of 30 days after the earlier to occur of (x) knowledge thereof by any Loan Party
or (y) notice thereof from the Administrative Agent to the Borrower (which
notice will be given at the request of any Lender);

         (e) any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in any Loan Document (other than those
specified in Sections 7.01(a), 7.01(b) or 7.01(d)), and such failure shall
continue unremedied for a period of 30 days after the earlier to occur of (i)
knowledge thereof by any Loan Party or (ii) notice thereof from the
Administrative Agent to the Borrower (which notice will be given at the request
of any Lender);

         (f) Holdings or any Restricted Subsidiary shall fail to make any
payment (whether of principal or interest and regardless of amount) in respect
of any Material Indebtedness, when and as the same shall become due and payable
(subject to any applicable grace period);

         (g) any event or condition occurs that results in any Material
Indebtedness or Permitted Receivables Financing becoming due prior to its
scheduled maturity or that enables or permits (with or without the giving of
notice, the lapse of time or both) the holder or holders of any Material
Indebtedness or Permitted Receivables Financing or any trustee or agent on its
or their behalf to cause any Material Indebtedness or Permitted Receivables
Financing to become due, or to require the prepayment, repurchase,


                                       83
<PAGE>

redemption or defeasance thereof, prior to its scheduled maturity; provided that
this Section 7.01(g) shall not apply to secured Indebtedness permitted hereunder
that becomes due as a result of the voluntary sale or transfer of the property
or assets securing such Indebtedness;

         (h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of Holdings or any Restricted Subsidiary or its debts, or of a
substantial part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for Holdings or any Restricted Subsidiary or for a substantial
part of its assets, and, in any such case, such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or ordering any
of the foregoing shall be entered;

         (i) Holdings or any Restricted Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation, reorganization
or other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in Section 7.01(h), (iii) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for Holdings or any Restricted Subsidiary or for a
substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;

         (j) Holdings or any Restricted Subsidiary shall become unable, admit in
writing its inability or fail generally, to pay its debts as they become due;

         (k) one or more judgments for the payment of money in an aggregate
amount in excess of $25,000,000 shall be rendered against Holdings, any
Restricted Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution shall
not be effectively stayed, or any action shall be legally taken by a judgment
creditor to attach or levy upon any assets of Holdings or any Restricted
Subsidiary to enforce any such judgment;

         (l) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of Holdings and
the Restricted Subsidiaries in an aggregate amount exceeding $25,000,000 for all
periods;

         (m) any Lien (if any) purported to be created under any Collateral
Document shall cease to be, or shall be asserted by any Loan Party not to be, a
valid and perfected Lien on any Collateral having a fair market value in excess
of $1,000,000, with the priority required by the applicable Collateral Document,
except (i) as a result of the sale or other disposition of the applicable
Collateral in a transaction permitted under the Loan Documents or (ii) pursuant
to a Collateral Release Event;


                                       84
<PAGE>

         (n) any Guarantee by Holdings or any Subsidiary Loan Party under any
Loan Document shall cease for any reason (other than the merger out of existence
of such Guarantor pursuant to a transaction permitted hereunder or pursuant to
the express terms of such Guarantee) to be in full force and effect, or Holdings
or any Subsidiary Loan Party shall so assert in writing;

         (o) a Change in Control shall occur; and

         (p) at any time prior to the consummation of the Spin-Off, the senior
unsecured long-term debt of the Parent shall be rated less than BBB- by S&P or
less than Baa3 by Moody's;

then, and in every such event (other than an event with respect to Holdings or
the Borrower described in Section 7.01(h) or 7.01(i)), and at any time
thereafter during the continuance of such event, the Administrative Agent may,
and at the request of the Required Lenders shall, by notice to the Borrower,
take either or both of the following actions, at the same or different times:
(i) terminate the Commitments, and thereupon the Commitments shall terminate
immediately, and (ii) declare the Loans then outstanding to be due and payable
in whole (or in part, in which case any principal not so declared to be due and
payable may thereafter be declared to be due and payable), and thereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon and all fees and other obligations of the Borrower accrued
hereunder, shall become due and payable immediately, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
Holdings and the Borrower; and in the case of any event with respect to Holdings
or the Borrower described in Section 7.01(h) or 7.01(i), the Commitments shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of the
Borrower accrued hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by Holdings and the Borrower.


                                    ARTICLE 8

                                   THE AGENTS

         SECTION 8.1. Appointment, Powers, Immunities. (a) Each Lender,
Swingline Lender and Issuing Bank hereby irrevocably appoints the Administrative
Agent as its agent and authorizes the Administrative Agent to take such actions
on its behalf and to exercise such powers as are delegated to the Administrative
Agent by the terms of the Loan Documents, together with such actions and powers
as are reasonably incidental thereto.

         (b) The institutions serving as Agents hereunder shall have the same
rights and powers in their capacities as Lenders, Swingline Lenders or Issuing
Banks, as the case may be, as any other Lenders, Swingline Lenders or Issuing
Banks and may exercise the same as though they were not Agents, and each such
institution and its affiliates may accept deposits from, lend money to and
generally engage in any kind of business with Holdings or any Subsidiary or
other Affiliate thereof as if it were not an Agent hereunder.

         (c) The Agents shall not have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the generality of
the foregoing, (i) the Agents shall not be subject to any fiduciary or other
implied duties, regardless of whether a Default has occurred and is continuing,
(ii) the Agents shall not have any duty to take


                                       85
<PAGE>

any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated by the Loan Documents
that an Agent is required to exercise in writing by the Required Lenders (or
such other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 10.02), and (iii) except as expressly set
forth in the Loan Documents, the Agents shall not have any duty to disclose, and
shall not be liable for the failure to disclose, any information relating to
Holdings or any Subsidiary that is communicated to or obtained by any
institution serving as an Agent or any of its affiliates in any capacity.

         (d) No Agent shall be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 10.02) or in the absence of its own gross negligence or
wilful misconduct.

         (e) No Agent shall be deemed to have knowledge of any Default unless
and until written notice thereof is given to such Agent by Holdings, the
Borrower or a Lender, and no Agent shall be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with any Loan Document, (ii) the contents of any certificate,
report or other document delivered thereunder or in connection therewith, (iii)
the performance or observance of any of the covenants, agreements or other terms
or conditions set forth in any Loan Document, (iv) the validity, enforceability,
effectiveness or genuineness of any Loan Document or any other agreement,
instrument or document, or (v) the satisfaction of any condition set forth in
Article 4 or elsewhere in any Loan Document, other than, in the case of the
Administrative Agent, to confirm receipt of items expressly required to be
delivered to the Administrative Agent.

         SECTION 8.2. Reliance by Agents. Each Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person. Each
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to be made by the proper Person, and shall not incur any
liability for relying thereon. Each Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.

         SECTION 8.3. Delegation to Sub-Agents. Each Agent may perform any and
all of its duties and exercise any of its rights and powers by or through any
one or more sub-agents appointed by such Agent. The Agents and any such
sub-agents may perform any and all of their duties and exercise rights and
powers through their respective Related Parties. The exculpatory provisions of
the preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of each Agent and any such sub-agent, and shall apply to their
respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Agent.

         SECTION 8.4. Resignation of Agents. Subject to the appointment and
acceptance of a successor Agent as provided in this paragraph, any Agent may
resign at any time by notifying the Lenders, the Issuing Banks and the Borrower.
Upon any such resignation, the Required Lenders shall have the right, in
consultation with the Borrower, to appoint a successor. If no successor shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Agent gives notice of its
resignation, then the retiring Agent may, on behalf of the Lenders and the
Issuing Banks,


                                       86
<PAGE>

appoint a successor Agent which shall be a bank organized under the laws of the
United States or any State thereof, having (x) an office in any State of the
United States and (y) capital, surplus and undivided profits aggregating at
least $200,000,000, or an affiliate of any such bank. Upon the acceptance of its
appointment as Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. The fees payable by the Borrower to a successor Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the Agent's resignation
hereunder, the provisions of this Article and Section 10.03 shall continue in
effect for the benefit of such retiring Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Agent.

         SECTION 8.5. Non-reliance on Agents or other Lenders. Each Lender
acknowledges that it has, independently and without reliance upon any Agent or
any other Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon any Agent, any Issuing Bank or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any other Loan Document or related agreement or any
document furnished hereunder or thereunder.

         SECTION 8.6. Syndication Agent, Incremental Facility Arrangers and
Co-Documentation Agents. Notwithstanding anything in this Agreement or any Loan
Document to the contrary, the Syndication Agent, the Incremental Facility
Arrangers and the Co-Documentation Agents shall have no obligation or
responsibility as such hereunder other than, in the case of the Syndication
Agent or the Incremental Facility Arrangers, as expressly set forth herein.


                                    ARTICLE 9

                               HOLDINGS GUARANTEE

         SECTION 9.1. The Guarantee. Holdings unconditionally and irrevocably
guarantees the full and punctual payment of all present and future indebtedness
and other obligations of the Borrower evidenced by or arising under any Loan
Document and all present and future indebtedness and other obligations of the
Borrower or any other Restricted Subsidiary under any Hedging Agreement
permitted under Section 6.01 (a "Specified Hedging Agreement") as and when the
same shall become due and payable, whether at maturity or by declaration or
otherwise, according to the terms hereof and thereof (including, without
limitation, any Post-Petition Interest). If the Borrower or any other Restricted
Subsidiary fails punctually to pay any indebtedness or other obligation
guaranteed hereby which is due and payable, Holdings unconditionally agrees to
cause such payment to be made punctually as and when the same shall become due
and payable, whether at maturity or by declaration or otherwise, and as if such
payment were made by the Borrower or such other Restricted Subsidiary.

         SECTION 9.2. Guarantee Unconditional. The obligations of Holdings under
this Article 9 shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:

                  (a) any extension, renewal, settlement, compromise, waiver or
         release in respect of any obligation of the Borrower or any other Loan
         Party under any Loan Document or Specified Hedging Agreement, by
         operation of law or otherwise;


                                       87
<PAGE>

                  (b) any modification, amendment or waiver of or supplement to
         any Loan Document or Specified Hedging Agreement;

                  (c) any release, impairment, non-perfection or invalidity of
         any direct or indirect security, or of any guarantee or other liability
         of any third party, for any obligation of the Borrower or any Loan
         Party under any Loan Document or Specified Hedging Agreement;

                  (d) any change in the corporate existence, structure or
         ownership of the Borrower or any other Loan Party or any insolvency,
         bankruptcy, reorganization or other similar proceeding affecting the
         Borrower or any other Loan Party or its assets, or any resulting
         release or discharge of any obligation of the Borrower or any other
         Loan Party contained in any Loan Document or Specified Hedging
         Agreement;

                  (e) the existence of any claim, set-off or other rights which
         Holdings may have at any time against the Borrower or any other Loan
         Party, any Agent, any Issuing Bank, any Lender or any other Person,
         whether or not arising in connection herewith or any unrelated
         transaction; provided that nothing herein shall prevent the assertion
         of any such claim by separate suit or compulsory counterclaim;

                  (f) any invalidity or unenforceability relating to or against
         the Borrower or any other Loan Party for any reason of any Loan
         Document or Specified Hedging Agreement, or any provision of applicable
         law or regulation purporting to prohibit the payment by any other Loan
         Party of any amount payable by it under any Loan Document or Specified
         Hedging Agreement; or

                  (g) any other act or omission to act or delay of any kind by
         any other Loan Party, any Lender or any other Person or any other
         circumstance that might, but for the provisions of this Section,
         constitute a legal or equitable discharge of Holdings' obligations
         under this Article 9.

         SECTION 9.3. Discharge Only Upon Payment in Full; Reinstatement in
Certain Circumstances. Holdings' obligations under this Article 9 constitute a
continuing guaranty and shall remain in full force and effect until the
Commitments shall have been terminated, all Letters of Credit shall have expired
or been terminated, all Specified Hedging Agreements shall have been terminated
and all amounts payable under the Loan Documents and the Specified Hedging
Agreements shall have been indefeasibly paid in full. If at any time any amount
payable by the Borrower under any Loan Document or by the Borrower or any other
Restricted Subsidiary under any Specified Hedging Agreement is rescinded or must
be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of any Loan Party or otherwise, Holdings' obligations under this
Article 9 with respect to such payment shall be reinstated at such time as
though such payment had become due but had not been made at such time.

         SECTION 9.4. Waiver. Holdings irrevocably waives acceptance hereof,
presentment, demand, protest and any notice not provided for herein, as well as
any requirement that at any time any action be taken by any Person against the
Borrower or any other Restricted Subsidiary or any other Person.


                                       88
<PAGE>

         SECTION 9.5. Subrogation. When Holdings makes any payment under this
Article 9 with respect to the obligations of the Borrower or any other
Restricted Subsidiary, Holdings shall be subrogated to the rights of the payee
against the Borrower or such other Restricted Subsidiary with respect to the
portion of such obligations paid by Holdings; provided that Holdings shall not
enforce any payment by way of subrogation or contribution against the Borrower
or any Subsidiary so long as any amount payable under any Loan Document or
Specified Hedging Agreement remains unpaid.

         SECTION 9.6. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by any Loan Party under any Loan Document or
Specified Hedging Agreement is stayed upon the insolvency, bankruptcy or
reorganization of such Loan Party, all such amounts otherwise subject to
acceleration under the terms of such Loan Document or Specified Hedging
Agreement shall nonetheless be payable by Holdings under this Article 9
forthwith on demand by the Administrative Agent made, in the case of any Loans,
at the request of the requisite number of Lenders specified in Section 7.01
hereof or, in the case of obligations under a Specified Hedging Agreement, at
the request of the relevant Lender or Lenders or affiliate or affiliates of such
Lender or Lenders.

         SECTION 9.7. Successors and Assigns. This guarantee is for the benefit
of the Lenders, the Hedge Counterparties and their respective successors and
assigns. If any Loans, participations in Letters of Credit or Swingline Loans or
other amounts payable under the Loan Documents are assigned pursuant to Section
10.04 of the Credit Agreement, or any rights under any Specified Hedging
Agreement are assigned pursuant thereto, the rights under this Article 9, to the
extent applicable to the indebtedness so assigned, shall be transferred with
such indebtedness.


                                   ARTICLE 10

                                  MISCELLANEOUS

         SECTION 10.1. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

         (a) if to Holdings or the Borrower, to it at Williams Communications
Group, Inc., One Williams Center, Suite 2600, Tulsa, Oklahoma 74172, Attention
of (other than administrative notices) Scott E. Schubert (Telecopy No.
918-573-6024) or (for administrative notices) Attention of Kerri Lyle (Telecopy
No. 918-573-6558);

         (b) if to the Administrative Agent, to it at Bank of America, N.A., 901
Main Street, Dallas, Texas 75202, Attention of (other than Borrowing Requests)
Pamela Kurtzman, 64th Floor (Telecopy No. (214) 209-9390) or (for Borrowing
Requests) Judy Schneidmiller, 14th Floor (Telecopy No. 214-209-2118);

         (c) if to Bank of America, as Issuing Bank, to it at 901 Main Street,
64th Floor, Main Street, Dallas, Texas 75202, Attention of Pamela Kurtzman
(Telecopy No. 214-209-9390);

         (d) if to Chase, as Issuing Bank, to it at 270 Park Avenue, 37th Floor,
New York, New York 10017, Attention of Joe Brusco (Telecopy No. 212-270-4164);


                                       89
<PAGE>

         (e) if to Bank of America, as Swingline Lender, to it at 901 Main
Street, 64th Floor, Main Street, Dallas, Texas 75202, Attention of Pamela
Kurtzman (Telecopy No. 214-209-9390);

         (f) if to Chase, as Swingline Lender, to it at One Chase Manhattan
Plaza, 8th Floor, New York, New York 10081, Attention of Winslowe Ogbourne
(Telecopy No. 212-552-5700); and

         (g) if to any other Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.

         Any party hereto may change its address or telecopy number for notices
and other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.

         SECTION 10.2. Waivers; Amendments. (a) No failure or delay by the
Administrative Agent, any Issuing Bank, any Swingline Lender or any Lender in
exercising any right or power hereunder or under any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Administrative Agent, the Issuing Banks, the Swingline Lenders and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of any Loan Document or consent to any departure by any Loan Party
therefrom shall in any event be effective unless the same shall be permitted by
Section 10.02(b), and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the making of a Loan or issuance of a Letter of
Credit shall not be construed as a waiver of any Default, regardless of whether
the Administrative Agent, any Lender, any Issuing Bank or any Swingline Lender
may have had notice or knowledge of such Default at the time.

         (b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by Holdings, the Borrower and the Required Lenders or, in the case
of any other Loan Document, pursuant to an agreement or agreements in writing
entered into by the Administrative Agent and the Loan Party or Loan Parties that
are parties thereto, in each case with the consent of the Required Lenders;
provided that no such agreement shall (i) increase the Commitment of any Lender
without the written consent of such Lender, (ii) reduce the principal amount of
any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce
any fees payable hereunder, without the written consent of each Lender affected
thereby, (iii) postpone the scheduled date of payment of the principal amount of
any Loan or LC Disbursement, or any interest thereon, or any fees payable
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the written
consent of each Lender affected thereby, (iv) change Section 2.18(b) or 2.18(c)
in a manner that would alter the pro rata sharing of payments required thereby,
without the written consent of each Lender, (v) change any of the provisions of
this Section or the definition of "Required Lenders" or


                                       90
<PAGE>

any other provision of any Loan Document specifying the number or percentage of
Lenders (or Lenders of any Class) required to waive, amend or modify any rights
thereunder or make any determination or grant any consent thereunder, without
the written consent of each Lender (or each Lender of such Class, as the case
may be), (vi) release Holdings or substantially all of the Subsidiary Loan
Parties from their respective Guarantees hereunder under the Subsidiary
Guarantee (except as expressly provided herein or therein), or limit its
liability in respect of such Guarantee, without the written consent of each
Lender, (vii) change any condition set forth in Section 4.03 without the written
consent of each Incremental Lender, or (viii) change any provisions of any Loan
Document in a manner that by its terms adversely affects the rights in respect
of payments due to, or requirements to make loans by, Lenders holding Loans of
any Class differently than those holding Loans of any other Class, without the
written consent of Lenders holding a majority in interest of the outstanding
Loans and unused Commitments of each affected Class; provided further that (A)
no such agreement shall amend, modify or otherwise affect the rights or duties
of the Administrative Agent, any Issuing Bank or any Swingline Lender without
the prior written consent of the Administrative Agent, the affected Issuing Bank
or the affected Swingline Lender, as the case may be, and (B) any waiver,
amendment or modification of this Agreement that by its terms affects the rights
or duties under this Agreement of the Lenders with Commitments or Loans of any
Class or Classes (but not Lenders with Commitments or Loans of any other Class
or Classes) may be effected by an agreement or agreements in writing entered
into by Holdings, the Borrower and the requisite percentage in interest of the
Lenders with Commitments or Loans of the affected Class or Classes.

         SECTION 10.3. Expenses; Indemnity; Damage Waiver. (a) The Borrower
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent, the Syndication Agent and the Incremental Facility
Arrangers and their respective affiliates, including the reasonable fees,
charges and disbursements of counsel for the Administrative Agent, the
Syndication Agent and the Incremental Facility Arrangers in connection with the
syndication of the credit facilities provided for herein, the preparation and
administration of the Loan Documents or any amendments, modifications or waivers
of the provisions thereof (whether or not the transactions contemplated hereby
or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses
incurred by any Issuing Bank in connection with the issuance, amendment, renewal
or extension of any Letter of Credit or any demand for payment thereunder and
(iii) all out-of-pocket expenses incurred by the Administrative Agent, the
Syndication Agent, the Incremental Facility Arrangers, any Issuing Bank, any
Swingline Lender or any Lender, including the fees, charges and disbursements of
any counsel for the Administrative Agent, the Incremental Facility Arrangers and
the Syndication Agent, any Issuing Bank, any Swingline Lender or any Lender, in
connection with the enforcement or protection of its rights in connection with
the Loan Documents, including its rights under this Section, or in connection
with the Loans made or Letters of Credit issued hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.

         (b) The Borrower shall indemnify the Administrative Agent, the
Syndication Agent, the Incremental Facility Arrangers, the Issuing Banks, the
Swingline Lenders and each Lender, and each Related Party of any of the
foregoing Persons (each such Person being called an "Indemnitee") against, and
hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including the fees, charges and disbursements
of any counsel for any Indemnitee, incurred by or asserted against any
Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery


                                       91
<PAGE>

of any Loan Document or any other agreement or instrument contemplated hereby,
the performance by the parties to the Loan Documents of their respective
obligations thereunder or the consummation of the Transactions or any other
transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use
of the proceeds therefrom (including any refusal by any Issuing Bank to honor a
demand for payment under a Letter of Credit if the documents presented in
connection with such demand do not strictly comply with the terms of such Letter
of Credit), (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by Holdings or any
Subsidiary, or any Environmental Liability related in any way to Holdings or any
Subsidiary, or (iv) any actual or prospective claim, litigation, investigation
or proceeding relating to any of the foregoing, whether based on contract, tort
or any other theory and regardless of whether any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
are determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or wilful misconduct of such
Indemnitee.

         (c) To the extent that the Borrower fails to pay any amount required to
be paid by it to the Administrative Agent, the Incremental Facility Arrangers,
any Issuing Bank or any Swingline Lender under Sections 10.03(a) or 10.03(b),
each Lender severally agrees to pay to the Administrative Agent, the Syndication
Agent, the Incremental Facility Arrangers, any Issuing Bank or any Swingline
Lender, as the case may be, such Lender's pro rata share (determined as of the
time that the applicable unreimbursed expense or indemnity payment is sought) of
such unpaid amount; provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Administrative Agent, the Syndication Agent, the
Incremental Facility Arrangers, any Issuing Bank or any Swingline Lender in its
capacity as such. For purposes hereof, a Lender's "pro rata share" shall be
determined based upon its share of the sum of the total Revolving Exposures,
outstanding Loans (other than Revolving Loans) and unused Commitments (other
than Revolving Commitments) at the time.

         (d) To the extent permitted by applicable law, Holdings and the
Borrower will not and will not permit any other Restricted Subsidiary to assert,
and each hereby waives for itself and on behalf of its subsidiaries, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the Transactions, any Loan or
Letter of Credit or the use of the proceeds thereof.

         (e) All amounts due under this Section shall be payable promptly after
written demand therefor.

         SECTION 10.4. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including any
affiliate of any Issuing Bank that issues any Letter of Credit), except that the


                                       92
<PAGE>

Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender, each Issuing Bank
and each Swingline Lender (and any attempted assignment or transfer by the
Borrower without such consent shall be null and void). Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby (including any affiliate of any Issuing Bank that issues any
Letter of Credit) and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent, the Issuing Banks, the Swingline
Lenders and the Lenders) any legal or equitable right, remedy or claim under or
by reason of this Agreement.

         (b) (1) Any Lender may assign to one or more assignees all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its Commitments and the Loans at the time owing to it); provided that (i)
each of the Borrower (except in the case of an assignment to a Lender or an
affiliate of a Lender) and Administrative Agent (except in the case of an
assignment to an affiliate of a Lender) (and, in the case of an assignment of
all or a portion of a Revolving Commitment or any Lender's obligations in
respect of its LC Exposure or Swingline Exposure, the Issuing Banks and the
Swingline Lenders) must give its prior written consent to such assignment (which
consent shall not be unreasonably withheld), (ii) except in the case of an
assignment to a Lender or an affiliate of a Lender or an assignment of the
entire remaining amount of the assigning Lender's Commitments or Loans, after
giving effect to such assignment, the amount of the Commitments or Loans of each
Class held by each of the assignor Lender and its affiliates and the assignee
Lender and its affiliates (determined in each case as of the date the Assignment
and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $1,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, (iii) each partial
assignment shall be made as an assignment of a proportionate part of all the
assigning Lender's rights and obligations under this Agreement, except that this
Section 10.04(b)(iii) shall not be construed to prohibit the assignment of a
proportionate part of all the assigning Lender's rights and obligations in
respect of one Class of Commitments or Loans, (iv) the parties to each
assignment (excluding any assignment by a Lender to an affiliate of such Lender)
shall execute and deliver to the Administrative Agent an Assignment and
Acceptance, together with a processing and recordation fee of $3,500, (v) the
parties to each assignment by a Lender to an affiliate of such Lender shall
execute and deliver to the Administrative Agent an Assignment and Acceptance,
together with a processing and recordation fee of $1,500, (vi) the assignee, if
it shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire and (vii) the Incremental Facility Arrangers shall
be notified by the Administrative Agent of any assignment of the Incremental
Facility; and provided further that any consent of the Borrower otherwise
required under this paragraph shall not be required if an Event of Default has
occurred and is continuing. Subject to acceptance and recording thereof pursuant
to Section 10.04(d), from and after the effective date specified in each
Assignment and Acceptance the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Acceptance, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all of the assigning
Lender's rights and obligations under this


                                       93
<PAGE>
Agreement, such Lender shall cease to be a party hereto but shall continue to
be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 10.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with Section 10.04(e). Each Lender that is an
investment fund hereby agrees to notify the Administrative Agent and the
Incremental Facility Arrangers of any change of the identity of the investment
manager for such fund.

         (2) Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Lender") may grant to a special purpose funding vehicle (an
"SPC") identified as such in writing from time to time by the Granting Lender to
the Administrative Agent and the Borrower, the option to provide to the Borrower
all or any part of any Loan that such Granting Lender would otherwise be
obligated to make to the Borrower pursuant to this Agreement; provided that (i)
nothing herein shall constitute a commitment by any SPC to make any Loan, (ii)
if an SPC elects not to exercise such option or otherwise fails to provide all
or any part of such Loan, the Granting Lender shall be obligated to make such
Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder
shall utilize the Commitment of the Granting Lender to the same extent, and as
if, such Loan were made by such Granting Lender. Each party hereto hereby agrees
that no SPC shall be liable for any indemnity or similar payment obligation
under this Agreement (all liability for which shall remain with the Granting
Lender). In furtherance of the foregoing, each party hereto hereby agrees (which
agreement shall survive the termination of this Agreement) that, prior to the
date that is one year and one day after the payment in full of all outstanding
commercial paper or other senior indebtedness of any SPC, it will not institute
against, or join any other person in instituting against, such SPC any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under the laws of the United States or any State thereof. In addition,
notwithstanding anything to the contrary contained in this Section 10.04, any
SPC may (i) with notice to, but without the prior written consent of, the
Borrower and the Administrative Agent and without paying any processing fee
therefor, assign all or a portion of its interests in any Loans to the Granting
Lender or to any financial institutions (consented to by the Borrower and
Administrative Agent) providing liquidity and/or credit support to or for the
account of such SPC to support the funding or maintenance of Loans and (ii)
disclose on a confidential basis any non-public information relating to its
Loans to any rating agency, commercial paper dealer or provider of any surety,
guarantee or credit or liquidity enhancement to such SPC. This section may not
be amended without the written consent of each SPC that, at the time of such
proposed amendment, has an outstanding Loan or Loans to the Borrower. For
purposes of Section 10.02 of this Agreement and any other provision of any Loan
Document requiring the consent or approval of any Lender, the Granting Lender
shall, notwithstanding the funding of any Loans by any SPC, have the sole right
to consent to or approve any waiver or amendment of any provision of this
Agreement or any other Loan Document or to exercise any other right to consent
or to grant approval under any Loan Document.

         (c) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in any State of the United
States, a copy of each Assignment and Acceptance delivered to it and a register
for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amount of the Loans and LC Disbursements owing to,
each Lender pursuant to the terms hereof from time to time (the "Register"). The
entries in the Register shall be conclusive, and Holdings, the Borrower, the
Administrative Agent, the Issuing Banks, the Swingline Lenders and the Lenders
may treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower, any Issuing Bank, any Swingline Lender and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.


                                       94
<PAGE>
         (d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in Section 10.04(b)
and any written consent to such assignment required by Section 10.04(b), the
Administrative Agent shall accept such Assignment and Acceptance and record the
information contained therein in the Register. No assignment shall be effective
for purposes of this Agreement unless it has been recorded in the Register as
provided in this paragraph.

         (e) Any Lender may, without the consent of the Borrower, the
Administrative Agent, any Issuing Bank or any Swingline Lender, sell
participations to one or more banks or other entities (a "Participant") in all
or a portion of such Lender's rights and obligations under this Agreement
(including all or a portion of its Commitments and the Loans owing to it);
provided that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) Holdings, the Borrower,
the Administrative Agent, the Issuing Banks, the Swingline Lenders and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce the Loan
Documents and to approve any amendment, modification or waiver of any provision
of the Loan Documents; provided that such agreement or instrument may provide
that such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section
10.02(b) that affects such Participant. Subject to Section 10.04(f), the
Borrower agrees that each Participant shall be entitled to the benefits of
Sections 2.15, 2.16 and 2.17 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to Section 10.04(b). To the extent
permitted by law, each Participant also shall be entitled to the benefits of
Section 10.08 as though it were a Lender, provided such Participant agrees to be
subject to Section 2.18(c) as though it were a Lender.

         (f) A Participant shall not be entitled to receive any greater payment
under Section 2.15 or 2.17 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Borrower's
prior written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 2.17 unless the Borrower
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 2.17(e) as
though it were a Lender.

         (g) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided


                                       95
<PAGE>

that no such pledge or assignment of a security interest shall release a Lender
from any of its obligations hereunder or substitute any such pledgee or assignee
for such Lender as a party hereto.

         SECTION 10.5. Survival. All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, any Issuing
Bank, any Swingline Lender or any Lender may have had notice or knowledge of any
Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount
payable under this Agreement is outstanding and unpaid or any Letter of Credit
is outstanding and so long as the Commitments have not expired or terminated.
The provisions of Sections 2.15, 2.16, 2.17 and 10.03 and Article 8 shall
survive and remain in full force and effect regardless of the consummation of
the transactions contemplated hereby, the repayment of the Loans, the expiration
or termination of the Letters of Credit and the Commitments or the termination
of this Agreement or any provision hereof.

         SECTION 10.6. Counterparts; Integration; Effectiveness. This Agreement
may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and any separate letter agreements with respect to fees payable
to the Administrative Agent or any Issuing Bank constitute the entire contract
among the parties relating to the subject matter hereof and supersede any and
all previous agreements and understandings, oral or written, relating to the
subject matter hereof. Except as provided in Section 4.01, this Agreement shall
become effective when it shall have been executed by the Administrative Agent
and when the Administrative Agent shall have received counterparts hereof which,
when taken together, bear the signatures of each of the other parties hereto,
and thereafter shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.

         SECTION 10.7. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

         SECTION 10.8. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender, Issuing Bank and Swingline Lender and
each of their respective affiliates is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other obligations at any time owing by such Lender, Issuing
Bank, Swingline Lender or affiliate to or for the credit or the account of the
Borrower or Holdings against any and all of the obligations of the Borrower or
Holdings, as the case may be, now or hereafter existing under this Agreement
held by such Lender, Issuing Bank or Swingline Lender, irrespective of whether
or not such Lender, Issuing Bank or Swingline Lender shall have made any demand
under this Agreement and although such obligations may be unmatured. The rights
of each Lender, Issuing Bank and Swingline Lender under this Section are in
addition to other rights and remedies (including other rights of setoff) which
such Lender, Issuing Bank or Swingline Lender may have.

         SECTION 10.9. Governing Law; Jurisdiction; Consent to Service of
Process. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.


                                       96
<PAGE>

         (b) Each of Holdings and the Borrower hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to any Loan Document, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement or any other Loan Document shall
affect any right that the Administrative Agent, any Issuing Bank, any Swingline
Lender or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or any other Loan Document against Holdings, the
Borrower or their respective properties in the courts of any jurisdiction.

         (c) Each of Holdings and the Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
any other Loan Document in any court referred to in Section 10.09(b). Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.

         (d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 10.01. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.

         SECTION 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.

         SECTION 10.11. Headings. Article and Section headings used herein and
the Table of Contents are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

         SECTION 10.12. Confidentiality. Each of the Administrative Agent, the
Issuing Banks, the Swingline Lenders and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its affiliates' (other than affiliates that are


                                       97
<PAGE>

direct competitors of any material business of Holdings and the Restricted
Subsidiaries) directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or any other Loan Document or the enforcement of rights hereunder or thereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement (other than a direct competitor of any material business of Holdings
and the Restricted Subsidiaries), (g) with the consent of the Borrower or (h) to
the extent such Information (i) becomes publicly available other than as a
result of a breach of this Section or (ii) becomes available to the
Administrative Agent, any Issuing Bank, any Swingline Lender or any Lender on a
nonconfidential basis from a source other than Holdings or the Borrower. For the
purposes of this Section, "Information" means all information received from
Holdings or the Borrower relating to Holdings or the Borrower or its business,
other than any such information that is available to the Administrative Agent,
any Issuing Bank, any Swingline Lender or any Lender on a nonconfidential basis
prior to disclosure by Holdings or the Borrower; provided that, in the case of
information received from Holdings or the Borrower after the date hereof, such
information is clearly identified at the time of delivery as confidential. Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.

         SECTION 10.13. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.


                                       98
<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.


                                WILLIAMS COMMUNICATIONS, LLC


                                By /s/ Scott E. Schubert
                                   ---------------------------------------------
                                   Title: Senior Vice President and Chief
                                              Financial Officer


                                WILLIAMS COMMUNICATIONS GROUP, INC.


                                By /s/ Scott E. Schubert
                                   ---------------------------------------------
                                   Title: Senior Vice President and Chief
                                               Financial Officer


                                BANK OF AMERICA, N.A.


                                By /s/ Pamela S. Kurtzman
                                   ---------------------------------------------
                                   Title: Principal


                                THE CHASE MANHATTAN BANK


                                By /s/ Constance M. Coleman
                                   ---------------------------------------------
                                   Title: Vice President


                                BANK OF MONTREAL


                                By /s/ W.T. Calder
                                   ---------------------------------------------
                                   Title: Managing Director


                                       99
<PAGE>

                                THE BANK OF NEW YORK


                                By /s/ Brendan T. Nedzi
                                   ---------------------------------------------
                                   Title: Senior Vice President


                                SCOTIABANC INC.


                                By /s/ M. D. Smith
                                   ---------------------------------------------
                                   Title: Treasurer


                                ABN AMRO BANK, N.V.


                                By /s/
                                   ---------------------------------------------
                                   Title:


                                By /s/
                                   ---------------------------------------------
                                   Title:


                                FLEET NATIONAL BANK


                                By /s/ Suzanne M. MacKay
                                   ---------------------------------------------
                                   Title: Vice President


                                CIBC INC.


                                By /s/ Amy V. Kothari
                                   ---------------------------------------------
                                   Title: Executive Director


                                      100
<PAGE>

                                CREDIT SUISSE FIRST BOSTON


                                By /s/ David L. Sawyer
                                   ---------------------------------------------
                                   Title: Vice President


                                By /s/ Lalita Advani
                                   ---------------------------------------------
                                   Title: Assistant Vice President


                                DEUTSCHE BANK AG
                                NEW YORK BRANCH AND/OR CAYMAN ISLANDS BRANCH


                                By /s/ Steve M. Godeke
                                   ---------------------------------------------
                                   Title: Director


                                By /s/ Alexander Richarz
                                   ---------------------------------------------
                                   Title: Vice President


                                CREDIT LYONNAIS NEW YORK BRANCH


                                By /s/ Jeremy Horn
                                   ---------------------------------------------
                                   Title: Authorized Signature


                                      101
<PAGE>

                                BANK AUSTRIA CREDIT ANSTALT
                                CORPORATE FINANCE, INC.


                                By /s/ John T. Murphy
                                   ---------------------------------------------
                                   Title: Senior Vice President

                                By /s/ William W. Hunter
                                   ---------------------------------------------
                                   Title: Vice President


                                FIRST UNION NATIONAL BANK


                                By /s/ Brand Hosford
                                   ---------------------------------------------
                                   Title: Vice President


                                IBM CREDIT CORPORATION


                                By /s/ Thomas S. Curcio
                                   ---------------------------------------------
                                   Title: Manager of Credit


                                THE INDUSTRIAL BANK OF JAPAN,
                                LIMITED, NEW YORK BRANCH


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


                                      102
<PAGE>

                                BANK OF OKLAHOMA N.A.


                                By /s/ Robert D. Mattax
                                   ---------------------------------------------
                                   Title: Senior Vice President


                                BANK ONE, N.A.


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


                                KBC BANK, N.V.


                                By /s/ Robert Snauffer
                                   ---------------------------------------------
                                   Title: First Vice President


                                By /s/ Eric Raskin
                                   ---------------------------------------------
                                   Title: Assistant Vice President


                                THE FUJI BANK, LIMITED


                                By /s/ Nobuoki Koike
                                   ---------------------------------------------
                                   Title: Vice President & Senior Team Leader


                                      103
<PAGE>

                                INCREMENTAL TRANCHE A LENDERS:


                                BANK OF AMERICA, N.A.


                                By /s/ Pamela S. Kurtzman
                                   ---------------------------------------------
                                   Title: Principal


                                THE CHASE MANHATTAN BANK


                                By /s/ Constance M. Coleman
                                   ---------------------------------------------
                                   Title: Vice President


                                LEHMAN COMMERCIAL PAPER INC.


                                By /s/ G. Andrew Keith
                                   ---------------------------------------------
                                   Title: Authorized Signatory


                                CITICORP USA, INC.


                                By /s/ Caesar W. Wyszomirski
                                   ---------------------------------------------
                                   Title: Vice President


                                MERRILL LYNCH & CO., INC.


                                By /s/ Merrill Lynch & Co., Inc.
                                   ---------------------------------------------
                                   Name:  Parker A. Weil
                                   Title: Managing Director


                                      104
<PAGE>

Acknowledged and agreed:

CRITICAL CONNECTIONS, INC.
SBCI - PACIFIC NETWORKS, INC.
WCS COMMUNICATIONS SYSTEMS, INC.
WCS, INC.
WILLIAMS COMMUNICATIONS OF
     VIRGINIA, INC.
WILLIAMS COMMUNICATIONS
     PROCUREMENT, L.L.C.
WILLIAMS COMMUNICATIONS
     PROCUREMENT, L.P.
WILLIAMS GLOBAL COMMUNICATIONS
     HOLDINGS, INC.
WILLIAMS INTERNATIONAL
     VENTURES COMPANY
WILLIAMS LEARNING NETWORK, INC.
WILLIAMS LOCAL NETWORK, INC.
WILLIAMS WIRELESS, INC.
WILLIAMS TECHNOLOGY CENTER, LLC
WILLIAMS COMMUNICATIONS AIRCRAFT, LLC


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


                                      105
<PAGE>

                                  SCHEDULE 2.01
                                   COMMITMENTS

<Table>
<Caption>
REVOLVING AND TERM                        REVOLVING          TERM
LENDERS                                   COMMITMENT      COMMITMENT
<S>                                      <C>             <C>
Bank of America, N.A.                     32,500,000       32,500,000
The Chase Manhattan Bank                  50,000,000       50,000,000
Bank of Montreal                          42,625,000       42,625,000
The Bank of New York                      42,625,000       42,625,000
ABN AMRO Bank N.V.                        34,250,000       34,250,000
CIBC Inc.                                 34,250,000       34,250,000
Credit Lyonnais
   New York Branch                        34,250,000       34,250,000
Credit Suisse First Boston                34,250,000       34,250,000
Deutsche Bank AG
   New York Branch and/or
   Cayman Islands Branch                  34,250,000       34,250,000
Fleet National Bank                       34,250,000       34,250,000
Scotiabanc Inc.                           34,250,000       34,250,000
Bank Austria Creditanstalt
   Corporate Finance, Inc.                17,500,000       17,500,000
First Union National Bank                 17,500,000       17,500,000
The Fuji Bank, Limited                    17,500,000       17,500,000
IBM Credit Corporation                    17,500,000       17,500,000
The Industrial Bank of Japan, Limited
   New York Branch                        17,500,000       17,500,000
Bank of Oklahoma N.A.                     10,000,000       10,000,000
Bank One, N.A.                            10,000,000       10,000,000
KBC Bank N.V.                             10,000,000       10,000,000
                           Total         525,000,000      525,000,000

         GRAND TOTAL                                     1,050,000,000


INCREMENTAL LENDERS

Citicorp USA, Inc.                                         150,000,000
Lehman Commercial Paper, Inc.                              150,000,000
Merrill Lynch & Co., Inc.                                   75,000,000
The Chase Manhattan Bank                                    40,000,000
Bank of America, N.A.                                       35,000,000

         GRAND TOTAL                                       450,000,000
</Table>


                                      106
<PAGE>


                                    EXHIBIT D

                              Lessee's Certificate

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

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

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

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

         LEASE:            Master Lease dated September 11, 2001, by and among
                           Williams Headquarters Building Company, as Lessor,
                           Williams Technology Center, LLC, as Lessee
                           ("Lessee"), and Williams Communications, LLC, as
                           Guarantor ("Guarantor") (the "Lease"), covering the
                           Williams Technology Center and related land and
                           improvements, all located in the City of Tulsa,
                           Oklahoma (the "Premises").

                  Lessee hereby certifies and states to you the following:

                  1.       The Lease is presently in full force and effect and
                           unmodified [LIST AMENDMENTS IF APPLICABLE], and has
                           not been cancelled or terminated.

                  2.       The term of the Lease has commenced and the full
                           rental is now accruing thereunder.

                  3.       The undersigned has accepted possession of the
                           Premises covered by the Lease and any and all
                           improvements located thereon.

                  4.       All improvements required by the terms of the Lease
                           to be constructed by Lessor have been completed to
                           the satisfaction of the undersigned.

                  5.       Rent in the amount of $____________ was last paid on
                           _________________, 20___, and no rent under the Lease
                           has been paid more than thirty (30) days in advance
                           of its due date.

                  6.       The address for notices to be sent to the Lessee is
                           as set forth in the Lease or, if there has been a
                           change, at the address set forth hereinbelow.

                  7.       Neither the Lessee nor the Guarantor, as of the date
                           hereof, has any charge, lien or claim of offset under
                           the Lease, the Guaranty or otherwise, against any
                           rents or other charges due or to become due to the
                           Lessor thereunder.

                  8.       Neither the Lessor nor the Lessee, is in default
                           under any of the terms of


                                      107
<PAGE>

                           the Lease, and there currently exists no circumstance
                           or event which with the passage of time, could mature
                           into a default by any party under the Lease.

                  9.       The Guaranty dated of even date with the Lease, and
                           all of its terms, covenants and conditions, are in
                           full force and effect.

                  [ADD ADDITIONAL PROVISIONS NECESSARY FOR PARTICULAR
         TRANSACTION].

                  The Lessee understands that in connection with [DESCRIBE
         TRANSACTION IN QUESTION], your company is specifically relying on the
         accuracy and completeness of all of the statements contained herein.

                  EXECUTED this ____ day of _________________, 20___.


                                           WILLIAMS TECHNOLOGY CENTER, LLC,
                                           A Delaware Limited Liability Company



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

                                           -------------------------------------
                                                        (Address)

                                           -------------------------------------
                                                    (City, State, Zip)


                                      108
<PAGE>

                                    EXHIBIT E

                             Permitted Encumbrances

         (a)      Encumbrances imposed by law for taxes that are not yet due or
                  are being contested in compliance with the Lease;

         (b)      carriers', warehousemen's, mechanics', materialmen's,
                  repairmen's and other like Encumbrances imposed by law,
                  arising in the ordinary course of business and securing
                  obligations that are not overdue by more than thirty (30) days
                  or are being contested in compliance with the Lease;

         (c)      pledges and deposits made in the ordinary course of business
                  in compliance with workers' compensation, unemployment
                  insurance and other social security laws or regulations;

         (d)      deposits to secure the performance of bids, trade contracts,
                  leases, statutory obligations, surety and appeal bonds,
                  performance bonds and other obligations of a like nature, in
                  each case in the ordinary course of business;

         (e)      judgment liens in respect of judgments that do not constitute
                  an Event of Default under the Lease; and

         (f)      easements, zoning restrictions, rights-of-way and similar
                  Encumbrances on real property imposed by law or arising in the
                  ordinary course of business that do not secure any monetary
                  obligations and do not materially detract from the value of
                  the Leased Properties or interfere with the ordinary conduct
                  of business of Lessee or Guarantor;

         (g)      Schedule B-Section 2, Exception No.'s 3 and 6 through 37 of
                  Commitment for Title Insurance No. E-134132-A, dated July 2,
                  2001, at 7:00 a.m. and issued by Guaranty Abstract Company on
                  behalf of Lawyers Title Insurance Corporation.

provided that the term "Permitted Encumbrances" shall not include any
Encumbrance securing any Debt.


                                      109
<PAGE>

                                    EXHIBIT F


                      CONSENT AND NON-DISTURBANCE AGREEMENT

         THIS CONSENT AND NON-DISTURBANCE AGREEMENT is entered into as of the
____ day of _____________, 20__, between WILLIAMS HEADQUARTERS BUILDING COMPANY,
a Delaware corporation ("Lessor"), having an office at One Williams Center,
Suite 2200, Tulsa, Oklahoma 74172, and
______________________________________________, a ____________________
("Sublessee"), having an office at ______________________________
___________________________.

                                    RECITALS

         A. By that certain Master Lease entered into between Lessor and
WILLIAMS TECHNOLOGY CENTER, LLC, a Delaware limited liability company
("Lessee"), dated effective as of September 11, 2001, Lessor leased certain real
property and improvements commonly known as the Williams Technology Center,
Tulsa, Oklahoma (collectively the "Premises") to Lessee (the "Master Lease").

         B. By that certain Sublease Agreement dated _____________, 20__,
entered into between Lessee and Sublessee, Lessee subleased a portion of the
Premises to Sublessee (the "Sublease"), which Sublease's effectiveness was
conditioned upon the receipt of Lessor's consent thereto.

         C. The parties hereto desire to provide for the consent by Lessor to
the Sublease, and the non-disturbance of Sublessee by the Lessor, in specified
circumstances in the event the Master Lease is terminated.

         IN CONSIDERATION of the premises, the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:

         1. CONSENT TO SUBLEASE. Lessor hereby consents to the Sublease and all
of its terms, covenants and conditions, subject to the terms of this Agreement.
Sublessee agrees that no amendment or modification of the Sublease shall be
valid or enforceable unless and until the Lessor has specifically consented to
such amendment or modification in writing, in each and every instance.

         2. SUBLEASE CONTINUATION. In the event the Master Lease is terminated,
provided Sublessee is not then in default under the Sublease, the Sublease shall
continue in full force and effect, without necessity for executing any new
lease, as a direct lease between Sublessee and the Lessor, upon all of the same
terms, covenants and provisions contained in the Sublease and in such event:


                                      110
<PAGE>

                  2.1 Sublessee Bound. Sublessee shall be bound to Lessor under
         all of the terms, covenants and provisions of the Sublease for the
         remainder of the term thereof (including any extension periods, if
         Sublessee elects or has elected to exercise any option to extend the
         term) and Sublessee hereby agrees to attorn to Lessor under the
         Sublease; and

                  2.2 Lessor Bound. From and after the termination of the Master
         Lease, so long as Lessor is the owner of the Premises, Lessor shall be
         subject to and shall be deemed to have assumed all of the terms,
         covenants and provisions of the Sublease for the remainder of the term
         thereof (including also any extension periods, if Sublessee elects or
         has elected to exercise its option to extend the term).

         3. NOTICES. Any notices or communications given under this Agreement
shall be in writing and shall be deemed given on the earlier of actual receipt
or three (3) days after deposit in the U.S. Mail, by registered or certified
mail, return receipt requested, postage prepaid, at the respective addresses set
forth above, or at such other address as the party entitled to notice may
designate by written notice as provided herein.

         4. SUCCESSORS AND ASSIGNS. Except as otherwise provided in Paragraph 2
hereinabove, this Agreement shall bind and inure to the benefit the parties
hereto and their respective successors and assigns.

         5. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties and cannot be changed, modified, waived or canceled except
by an agreement in writing executed by the parties against whom enforcement of
such modification, change, waiver or cancellation is sought.

         EXECUTED as of the date first hereinabove written.

LESSOR:                                    WILLIAMS HEADQUARTERS BUILDING
                                           COMPANY, A Delaware Corporation

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

SUBLESSEE:                                                                     ,
                                           ------------------------------------
                                           A
                                             -----------------------------------
                                           By:
                                               ---------------------------------
                                           Name:
                                                 -------------------------------
                                           Title:
                                                  ------------------------------


                                      111
<PAGE>

                                    EXHIBIT G

                        Memorandum or Short Form of Lease

AFTER RECORDING RETURN TO


Ms. Arlene M. Phillips
Guaranty Abstract Company
320 S. Boulder
Tulsa, Oklahoma  74103-3400
                                 (This space reserved for recording information)


                           MEMORANDUM OF MASTER LEASE

                  THIS MEMORANDUM OF MASTER LEASE, is entered into this 11th day
of September, 2001, by and among WILLIAMS HEADQUARTERS BUILDING COMPANY, a
Delaware corporation ("Lessor"), WILLIAMS TECHNOLOGY CENTER, LLC, a Delaware
limited liability company ("Lessee"), and WILLIAMS COMMUNICATIONS, LLC, a
Delaware limited liability company ("Guarantor").

                                   WITNESSETH:

                  For and in consideration of the sum of TEN AND NO/100 DOLLARS
($10.00) and other good and valuable consideration the receipt and sufficiency
of which are hereby acknowledged, the Lessor hereby demises, leases and lets to
the Lessee, and Lessee hereby takes, leases and lets from Lessor, certain real
property more particularly described on Exhibit "A" attached hereto and made a
part hereof, together with the improvements located thereon and various items of
personal property and fixtures connected therewith, in the City of Tulsa, County
of Tulsa, State of Oklahoma (all of which are more particularly described in the
Master Lease hereinafter referenced), together with all the hereditaments,
privileges and appurtenances thereto belonging (hereinafter collectively called
the "Leased Properties").

                  TO HAVE AND TO HOLD the Leased Properties for a term of ten
(10) years, commencing on September 11, 2001, and terminating at 12:00 P.M. on
September 10, 2011 (the "Term"), with the option (i) in Lessee to purchase the
Leased Properties by written notice to Lessor ,and (ii) in Lessor to require the
Lessee to purchase the Leased Properties, all as provided under the terms of a
certain Master Lease Agreement dated effective as of September 11, 2001, entered
into by and among Lessor, Lessee and Guarantor (hereinafter called the "Master
Lease"), at the rentals and subject to the terms, covenants and conditions
appearing in the Master Lease. The Master Lease also contains the guaranty by
Guarantor, of all of the duties and obligations of Lessee set forth therein as
well as certain other duties and obligations.

         1. MORTGAGE. Subject to the terms and conditions of the Master Lease,
and in addition to all other rights and remedies of Lessor as contained herein
or under applicable law, the Lessee does hereby mortgage, pledge, grant,
bargain, sell, convey, assign, warrant, transfer


                                      112
<PAGE>

and set over to the Lessor, WITH POWER OF SALE, to the extent permitted by
applicable law: (i) all of the Lessee's right, title and interest, if any, in
the Leased Properties, and (ii) all of the Lessee's right, title and interest in
and to all proceeds of the conversion, whether voluntary or involuntary, of any
of the Leased Properties into cash or other liquid claims, including, without
limitation, all awards, payments or proceeds, including interest thereon, and
the right to receive the same, which may be made as a result of casualty, any
exercise of the right of eminent domain or deed in lieu thereof, the alteration
of the grade of any street and any injury to or decrease in the value thereof,
the foregoing collectively being referred to hereinafter as the "Security
Property".

TO HAVE AND TO HOLD the foregoing rights, interests and properties, and all
rights, estates, powers and privileges appurtenant thereto, unto the Lessor, its
successors and assigns, forever, for the uses and purposes herein expressed, but
not otherwise.

         2. SECURITY INTEREST. Subject to the terms and conditions of the Master
Lease, the Lessee hereby grants to the Lessor a security interest in the
Lessee's interest, if any, in that portion of the Security Property (the "UCC
Property") subject to the Uniform Commercial Code of the State of Oklahoma (the
"UCC"). The Master Lease shall also be deemed to be a security agreement and a
financing statement filed as a fixture filing pursuant to 12A O.S. Section
9-402(6) and shall support any financing statement showing the Lessor's interest
as a secured party with respect to any portion of the UCC Property described in
such financing statement. The Lessee agrees, at its sole cost and expense, to
execute, deliver and file from time to time such further instruments as may be
requested by the Lessor to confirm and perfect the lien of the security interest
in the collateral described in the Master Lease.

         3. ASSIGNMENT OF LEASES AND RENTS. The Lessee hereby irrevocably
assigns, conveys, transfers and sets over unto the Lessor (subject, however, to
the Master Lease and the rights of the Lessee thereunder and hereunder) all and
every part of the rents, issues and profits that may from time to time become
due and payable on account of any and all subleases or other occupancy
agreements now existing, or that may hereafter come into existence with respect
to the Leased Properties or any part thereof, including any guaranties of such
subleases or other occupancy agreements. Upon request of the Lessor, the Lessee
shall execute and cause to be recorded, at its expense, supplemental or
additional assignments of any subleases or other occupancy agreements, of the
Leased Properties. Upon the occurrence and continuance of a Event of Default,
the Lessor is hereby fully authorized and empowered in its discretion (in
addition to all other powers and rights herein granted), to apply for and
collect and receive all such rents, issues and profits and to enforce any
guaranty or guaranties, and all money so received under and by virtue of this
assignment shall be held and applied as further security for the payment of the
indebtedness secured hereby and to assure the performance by the Lessee of its
covenants, agreements and obligations under the Master Lease.

A POWER OF SALE HAS BEEN GRANTED IN THIS INSTRUMENT. A POWER OF SALE MAY ALLOW
THE LESSOR TO TAKE THE SECURITY PROPERTY AND SELL IT WITHOUT GOING TO COURT IN A
FORECLOSURE ACTION UPON THE OCCURRENCE AND CONTINUANCE OF AN EVENT OF DEFAULT BY
THE LESSEE.


                                      113
<PAGE>

         4. INCORPORATION OF TERMS. The terms, covenants and conditions of the
Master Lease are incorporated herein by reference with the same force and effect
as though fully set forth herein. Capitalized terms not specifically defined
herein shall have the meanings as set forth in the Master Lease.

         5. EFFECT OF MEMORANDUM. The purpose of this Memorandum of Master Lease
is to give notice of the existence of such Master Lease, and it is understood
that this Memorandum of Master Lease shall not modify or amend the Master Lease
in any respect. In the event there are any conflicts between the Master Lease
and this Memorandum of Master Lease, the Master Lease shall control in all
cases.

                  IN WITNESS WHEREOF, the parties have executed this instrument
as of the date first above written.

LESSOR                                     WILLIAMS HEADQUARTERS BUILDING
                                           COMPANY, A Delaware Corporation


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



LESSEE                                     WILLIAMS TECHNOLOGY CENTER, LLC,
                                           A Delaware Limited Liability Company


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



GUARANTOR                                  WILLIAMS COMMUNICATIONS, LLC,
                                           A Delaware Limited Liability Company


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


                                      114
<PAGE>

STATE OF OKLAHOMA       )
                        )       Section
COUNTY OF TULSA         )

                  The foregoing instrument was acknowledged before me on
September _____, 2001, by Mark W. Husband, as Assistant Treasurer of WILLIAMS
HEADQUARTERS BUILDING COMPANY, a Delaware corporation.


                                                  ------------------------------
                                                  Notary Public
My Commission Expires:

- ------------------------
(SEAL)




STATE OF OKLAHOMA       )
                        )       Section
COUNTY OF TULSA         )

                  The foregoing instrument was acknowledged before me on
September ____, 2001, by __________________________, as Vice President of
WILLIAMS TECHNOLOGY CENTER, LLC, a Delaware limited liability company.


                                                  ------------------------------
                                                  Notary Public
My Commission Expires:

- ------------------------
(SEAL)


                                      115
<PAGE>

STATE OF OKLAHOMA       )
                        )       Section
COUNTY OF TULSA         )

                  The foregoing instrument was acknowledged before me on
September ______, 2001, by __________________________________, as Vice President
of WILLIAMS COMMUNICATIONS, LLC, a Delaware limited liability company.


                                                  ------------------------------
                                                  Notary Public
My Commission Expires:

- ------------------------
(SEAL)


                                      116
<PAGE>

                                    EXHIBIT H

                                    GUARANTY


TO:      WILLIAMS HEADQUARTERS BUILDING COMPANY ("Lessor")
         One Williams Center, Suite 2200
         Tulsa, Oklahoma  74172

                  Lessor is hereby requested by the undersigned (the
"Guarantor"), to extend credit to Williams Technology Center, LLC, a Delaware
limited liability company (hereinafter called the "Lessee") in the principal
amount of TWO HUNDRED FORTY-FIVE MILLION AND NO/100 DOLLARS ($245,000,000.00)
evidenced by that certain Master Lease of even date herewith, and executed among
Lessee, Lessor and Guarantor (the "Master Lease"), as further described in that
certain Agreement of Purchase and Sale of even date herewith, between Lessee and
Lessor (the "Purchase Agreement").

                  To induce Lessor to extend such credit, in consideration
thereof, and in consideration of the benefits to accrue to the undersigned
therefrom, the undersigned hereby guarantees to Lessor the prompt payment at
maturity, and at all times thereafter, of such indebtedness, including interest
thereon and all costs, reasonable attorney's fees, and expenses which may be
suffered by Lessor by reason of the Lessee's default in the payment of such
indebtedness or the default of the Guarantor hereunder. Guarantor further
guarantees to Lessor the full, punctual and faithful performance of each and
every covenant, term, condition or obligation to be performed by the Lessee in
respect to the Master Lease and/or the terms of any other instrument executed in
connection with or as security for the payment of the indebtedness, including
without limitation, the Purchase Agreement.

                  This is an absolute and continuing guarantee of payment in any
event and shall not terminate until Lessor has been paid in full the total
amount of such indebtedness and the Lessee has performed all obligations as
prescribed in the Master Lease.

                  Guarantor agrees that the liability under this Guaranty shall
not be released, diminished, impaired, reduced or affected by:

                  a. The taking or accepting of any other security or guaranty
for any or all of such indebtedness or obligation;

                  b. Any release, surrender, exchange, subordination or loss of
any security at any time existing in connection with any or all of such
indebtedness;

                  c. Any partial release of the liability of the undersigned
hereunder or under any other instrument executed in connection with or as
security for such indebtedness;

                  d. The insolvency, bankruptcy, disability or lack of entity
power of Lessee,


                                      117
<PAGE>

Guarantor, or any party at any time liable for the payment of any or all of such
indebtedness whether now existing or hereafter occurring;

                  e. Any renewal, extension and/or rearrangement of the Master
Lease or the payment of any or all of the indebtedness or the performance of any
covenants contained in any instrument executed in connection with such
indebtedness, either with or without notice to or consent of Guarantor, or any
adjustment, indulgence, forbearance or compromise that may be granted or given
by Lessor to any party;

                  f. Any neglect, delay, omission, failure or refusal of Lessor
to take or prosecute any action for the collection of any of such indebtedness
or to foreclose or take or prosecute any action in connection with the Master
Lease or as security for any of such indebtedness; or

                  g. Any failure of Lessor to notify Guarantor of any renewal,
extension or assignment of the indebtedness guaranteed hereby, or any part
thereof, or the release of any security or of any other action taken or
refrained from being taken by Lessor against Lessee or any new agreement between
Lessor and Lessee, it being understood that Lessor shall not be required to give
Guarantor any notice of any kind under any circumstances whatsoever with respect
to or in connection with the indebtedness hereby guaranteed.

                  In the event of default in payment or performance by Lessee,
Guarantor agrees that after the expiration of any applicable cure period set
forth in the Master Lease, Lessor may first proceed against this Guaranty and
against any security given by Guarantor in connection herewith to satisfy such
indebtedness, without first having (i) to proceed against the Lessee, or (ii) to
proceed against or give credit for any security which may have been given to
Lessor by the Lessee or any other party.

                  Guarantor hereby waives notice of acceptance hereof and the
presentment, demand, protest and notice of nonpayment or nonperformance, or
protest in connection with the Master Lease, and Guarantor waives all set-offs
and counterclaims. Payment and performance by Guarantor hereunder shall not
entitle Guarantor, by subrogation or otherwise, to any payment by Lessee except
after Lessor has received full payment and performance of all amounts and
obligations to be paid and performed by the Lessee contingently, absolutely or
otherwise, by reason of the instruments described herein.

                  Guarantor hereby waives and relinquishes any right of
reimbursement, subrogation, indemnification or other recourse or claim, whether
contingent or matured, which Guarantor may have against Lessee. It is the
express intent of Guarantor to eliminate any debtor/creditor relationship
between Guarantor and Lessee. Guarantor hereby expressly releases and waives any
and all present and future rights as a creditor of Lessee in all respects.
Guarantor further waives and relinquishes all rights, remedies, defenses and
claims and/or rights of counterclaim, recoupment, offset or setoff, including,
but not limited to, all offsets, setoffs, rights, remedies or defenses which may
be afforded Guarantor by any of Title 12, OKLA. STAT. Section 686 and/or Title
15, OKLA. STAT. Sections 334, 337, 338 and 344, as any of such statutes may be
amended from time to time.


                                      118
<PAGE>

                  This Guaranty shall be binding on Guarantor, its successors
and assigns, and shall inure to the benefit of Lessor and its successors and
assigns. All of Lessor's rights hereunder shall be cumulative and not
alternative.

                  This instrument is executed and delivered as an incident to a
lending transaction negotiated and consummated in Tulsa, Oklahoma, and shall be
construed according to the laws of the State of Oklahoma.

                  If any provision of this Guaranty shall be held to be void or
unenforceable for any reason, such provision shall be deemed modified so as to
constitute a provision conforming as nearly as possible to such void or
unenforceable provision while still remaining valid and enforceable, and the
remaining terms or provisions hereof shall not be affected thereby.

                  EXECUTED this 11th day of September, 2001.


                                           WILLIAMS COMMUNICATIONS, LLC,
                                           A Delaware Limited Liability Company


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


                                      119
<PAGE>

                                    EXHIBIT I

                            Interest Rate Calculation


The following definitions shall apply to this EXHIBIT I:

         "ABR", when used herein, refers to interest at a rate determined by
reference to the Alternate Base Rate.

         "Applicable Margin" means, for any day, (i) the applicable rate per
annum set forth below under the caption "Eurodollar Spread" or "ABR Spread", as
the case may be, based upon the Guarantor's Bank Facility Rating set by S&P and
Moody's, respectively, applicable on such date plus (ii) the applicable rate per
annum set forth below under the caption "Leverage Premium", unless the Total
Leverage Ratio, as determined by reference to the financial statements delivered
to the Lessor in respect of the most recently ended fiscal quarter of WCG, is
less than 6:00 to 1:00.

         "Eurodollar", when used herein, refers to interest at a rate determined
by reference to the Adjusted LIBO Rate.

         "Facilities" means the Term Facility, the Revolving Facility, the
Incremental Facility and each Additional Incremental Facility, all as defined in
the Credit Agreement.

         "LIBO Rate" means, with respect to any Eurodollar Rate, the rate
appearing on Page 3750 of the Telerate Service (or on any successor or
substitute page of such Service, or any successor to or substitute for such
Service, providing rate quotations comparable to those currently provided on
such page of such Service, as determined by the Lessor from time to time for
purposes of providing quotations of interest rates applicable to dollar deposits
in the London interbank market) at approximately 11:00 a.m., London time, two
(2) Business Days prior to the first day of each calendar month, as the rate for
dollar deposits with a maturity of thirty (30) days. In the event that such rate
is not available at such time for any reason, then the "LIBO Rate" shall be the
rate (rounded upwards, if necessary, to the next 1/16 of 1%) at which dollar
deposits of $5,000,000 and for a maturity of thirty (30) days are offered by the
principal London office of the CitiBank, N.A., in immediately available funds in
the London interbank market at approximately 11:00 a.m., London time, two (2)
Business Days prior to the first day of each calendar month. In either case, the
applicable LIBO Rate shall be effective for the calendar month next succeeding
the date of such determination.

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

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


                                      120
<PAGE>

At Lessee's option, ABR plus Applicable Margin or LIBO Rate plus Applicable
Margin (the "Rate") as determined from time to time by S&P or by Moody's based
on Guarantor's Facilities Rating in accordance with the grid below:

<Table>
<Caption>
                                   Facilities Rating of                                 EURODOLLAR       Leverage
                                        Guarantor                      ABR Spread         SPREAD          Premium
                                   --------------------                ----------       ----------       --------
<S>                          <C>                                       <C>              <C>              <C>
       Level I                   BBB- and Baa3 or higher                 0.50%            1. 50%           .25%
       Level II                        BB+ and Ba1                      0.875%            1.875%           .25%
      Level III                         BB and Ba2                       1.25%             2.25%           .25%
       Level IV                        BB- and Ba3                       1.50%             2.50%           .25%
       Level V               Lower than BB- or lower than Ba3            1.75%             2.75%           .25%
</Table>

         For purposes of the foregoing (i) if neither S&P nor Moody's or any
replacement or successor facility of similar size shall have in effect a rating
for the Facilities, then the Applicable Margin shall be the rate set forth in
Level V, (ii) if either S&P or Moody's, but not both S&P and Moody's, shall have
in effect a rating for the Facilities, then the Applicable Margin shall be based
on such rating, (iii) if the ratings established by S&P and Moody's for the
Facilities shall fall within different Levels, then the Applicable Margin shall
be based on the lower of the two ratings, (iv) if the ratings established by S&P
and Moody's for the Facilities shall fall within the same Level, then the
Applicable Margin shall be based on that Level and (v) if the ratings
established by S&P and Moody's for the Facilities shall be changed (other than
as a result of a change in the rating system of S&P or Moody's), such change
shall be effective as of the date on which it is first announced by the
applicable rating agency. Each change in the Applicable Margin shall apply
during the period commencing on the effective date of such change and ending on
the date immediately preceding the effective date of the next such change.


                                      121
<PAGE>

                                    EXHIBIT J

                          Realty Base Rent Computation


Monthly Realty Base Rent to be an amount as would be necessary to amortize
$168,892,596 (the "Realty Base Rent Principal") on a straight-line basis over a
period of four hundred and eighty (480) months plus interest (the "Realty Base
Rent Interest") calculated at the Rate for the first thirty-six (36) months
after the Commencement Date and on a straight-line basis over a period of two
hundred and four (204) months plus interest calculated at the Rate for the
remaining balance thereafter, subject however to the adjustments made with
respect to levels two (2) and three (3) of the Center as set forth in Section
3.1. On the Realty Expiration Date, a final payment of Realty Base Rent in the
amount computed by taking what would be the remaining Realty Base Rent Principal
as amortized pursuant to this EXHIBIT J, as of the Realty Expiration Date.



                                      122
<PAGE>

                                    EXHIBIT K

             Category 1 FF&E Tangible Personal Property Description

<Table>
<Caption>
                                                        AFE                             AMOUNT
                                                        ---                             ------
<S>                                               <C>                                <C>
        Furniture                                            #10001052               $17,878,000
        Design Fees & Expenses                               #10001285               $ 2,345,477
        Voice Systems                                       IT-VS-2001               $ 5,465,827
        Flooring (initial order)                  #10000723 & 10001038               $ 1,677,487
        Contingent Costs                                                             $ 1,189,689
                                                                                     -----------
        SUBTOTAL                                                                     $28,556,480
</Table>

The Lessor and Lessee agree to reconcile the exact Category 1 FF&E within
forty-five (45) days of the Substantial Completion Date as defined in the
Construction Completion Agreement.


                                      123
<PAGE>

                                    EXHIBIT L

                      Category 1 FF&E Base Rent Computation


CATEGORY 1 FF&E BASE RENT. Monthly Category 1 FF&E Base Rent to be an amount as
would be necessary to amortize $28,556,480 on a straight-line basis over a
period of sixty (60) months plus interest calculated at the Rate.


                                      124
<PAGE>

                                    EXHIBIT M

             Category 2 FF&E Tangible Personal Property Description

<Table>
<Caption>
                                                                AFE                     AMOUNT
                                                                ---                     ------
<S>                                                         <C>                      <C>
        Desktop                                             IT-DT-2001               $ 7,608,570
        Audio Visual                                         #10001221               $19,996,330
        Data Network                                        IT-DN-2001               $13,800,779
        Servers                                             IT-SA-2001               $ 5,867,282
        Contingent Costs                                                             $   277,963
                                                                                     -----------
        SUBTOTAL                                                                     $47,550,924
</Table>


   The Lessor and Lessee agree to reconcile the exact Category 2 FF&E within
   forty-five (45) days of the Substantial Completion Date as defined in the
   Construction Completion Agreement.


                                      125
<PAGE>

                                    EXHIBIT N

                      Category 2 FF&E Base Rent Computation


CATEGORY 2 FF&E BASE RENT. Monthly Category 2 FF&E Base Rent to be an amount as
would be necessary to amortize $47,550,924 on a straight-line basis over a
period of thirty-six (36) months plus interest calculated at the Rate.


                                      126
<PAGE>

                                    EXHIBIT O


         1. OPTION TO PURCHASE/ PUT OPTION TERMS

                  1.1 SALE AGREEMENT. Upon the exercise by Lessee of its option
         to purchase or by Lessor of its option to require the Lessee to
         purchase (either being described herein as an "Exercise of Option"),
         both as set forth in Article XLII, the Lessor agrees to sell to the
         Lessee and the Lessee agrees to purchase from the Lessor the Realty for
         the Repurchase Price, on the terms hereinafter stated.

                  1.2 TITLE. Lessor shall transfer title to the Realty subject
         only to outstanding mineral interests of record, if any, the Permitted
         Exceptions and such other easements, restrictions of record.

                  1.3 LESSOR'S DELIVERIES BEFORE CLOSING. Within twenty (20)
         days after the Exercise Date, Lessor will deliver to Lessee the
         following:

                           1.3.1 Leases and Contracts. Access to all leases and
                  contracts affecting the ownership, operation or maintenance of
                  the Realty.

                           1.3.2 Survey. Any existing surveys of the Realty, in
                  Lessor's possession or
                  control.

                  1.4 SELLER'S DELIVERIES AT CLOSING. At Closing, Lessor shall
         deliver to Lessee the following:

                           1.4.1 Deed. A duly-executed and acknowledged Special
                  Warranty Deed the form of which is attached hereto as Exhibit
                  I conveying to the Lessee marketable fee simple title to all
                  of the Realty free of all liens and Encumbrances and defects
                  in title except as set forth in to Paragraph 1.2 hereinabove.

                           1.4.2 Evidence of Authority. Reasonable evidence of
                  the Lessor's authority to consummate the transactions
                  contemplated hereby.

                           1.4.3 Leases and Contracts. The originals of the
                  items listed in Paragraph 1.3.1 hereinabove.

                           1.4.4 Lien Affidavit. Affidavit executed by Lessor in
                  form acceptable to the title company to the effect that the
                  Realty is free from claims for mechanics', materialmen's and
                  laborers' liens except as arising from the acts of Lessee.


                           1.4.6 Bill of Sale. If the Closing Date occurs on or
                  prior to either the Category 1 FF&E Expiration Date at the
                  Category 2 FF&E Expiration Date, a


                                      127
<PAGE>

                  Special Warranty Bill of Sale covering the Category 1 FF&E
                  and/or the Category 2 FF&E, as applicable.

                  1.5 LESSEE'S DELIVERIES AT CLOSING. At Closing, Lessee shall
         deliver to Lessor the following:

                           1.5.1 Consideration. The Repurchase Price.

                  1.6 CLOSING COSTS. All of the closing costs of or related to
         this transaction of whatever character or nature, and regardless of
         which party may have incurred the same shall be payable in full, by the
         Lessee.

                  1.7 CLOSING DATE. In the event of the Exercise Option, the
         closing (the "Closing Date") of the purchase and sale of the Realty
         shall be the earlier to occur of (i) the Realty Expiration Date, or
         (ii) ninety (90) days after the Exercise Date, with the exact date of
         Closing Date to be set by Lessor upon at least ten (10) days prior
         written notice to Lessee.

         2. PURCHASE AND SALE TERMS FOR LEASED PERSONAL PROPERTY.

         TRANSFER UPON PAYMENT. Upon the payment in full in each case of (i) the
         Category 1 FF&E Base Rent and (ii) the Category 2 FF&E Base Rent, the
         Lessor agrees to sell to Lessee and Lessee agrees to purchase from
         Lessor for no additional consideration, the Category 1 FF&E and
         Category 2 FF&E respectively. In the event of either of the foregoing,
         (i) within twenty (20) days after the Category 2 FF&E Expiration Date
         the Lessor shall provide to Lessee a Special Warranty Bill of Sale
         covering $47,550,924 of original cost of Category 2 FF&E, and (ii)
         within twenty (20) days after the Category 1 FF&E Expiration Date shall
         provide to Lessee a Special Warranty Bill of Sale covering $28,556,481
         of original cost of Category 1 FF&E.

         3. DEFAULT AND REMEDIES. In the event either party defaults in the
performance of any obligations under this EXHIBIT O, the non-defaulting party
shall give written notice of such default to the defaulting party. The
defaulting party (i) shall have thirty (30) days from receipt of such notice in
which to cure such default, or (ii) in the event such default involves
performance other than the payment of money, and cannot be reasonably cured
within such thirty (30) day period notwithstanding the diligent efforts of the
defaulting party, shall have such additional period as may be necessary to cure
such default so long as the defaulting party has commenced such cure within such
thirty (30) day period and thereafter diligently and continuously pursues a cure
of such default. In the event any such default is not cured within such period,
the non-defaulting party shall be entitled either (i) to waive such default in
writing, or (ii) to pursue any and all of its rights and remedies under
applicable law, including, without limitation, specific performance.


                                      128
<PAGE>

                                    EXHIBIT P

                                 UCC INFORMATION


                                  AS TO LESSEE:

Jurisdiction of Organization:  Delaware

Type of Organization:  Limited Liability Company

Federal Employer Identification Number:  Applied For

State Organization Number:  Delaware 3352656

Principal Place of Business and Mailing Address:  One Technology Center
                                                  Tulsa, Oklahoma 74103



                                AS TO GUARANTOR:

Jurisdiction of Organization:  Delaware

Type of Organization:  Limited Liability Company

Federal Employer Identification Number:  73-1349451

State Organization Number:  Delaware 2206783

Principal Place of Business and Mailing Address:  One Technology Center
                                                  Tulsa, Oklahoma 74103


                                      129
<PAGE>

                                  SCHEDULE 22.2

                                Sublease Parties

                                      None



                                      130

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12
<SEQUENCE>17
<FILENAME>d93687ex12.txt
<DESCRIPTION>COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED
<TEXT>
<PAGE>

                                                                      EXHIBIT 12

                 THE WILLIAMS COMPANIES, INC. AND SUBSIDIARIES
           COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
                   AND PREFERRED STOCK DIVIDEND REQUIREMENTS
                             (DOLLARS IN MILLIONS)

<Table>
<Caption>
                                                           YEARS ENDED DECEMBER 31,
                                              --------------------------------------------------
                                                2001       2000       1999      1998      1997
                                              --------   --------   --------   ------   --------
<S>                                           <C>        <C>        <C>        <C>      <C>
Earnings:
  Income from continuing operations before
     income taxes and extraordinary gain
     (loss).................................  $1,465.6   $1,595.3   $  585.7   $403.7   $  703.0
  Add:
     Interest expense -- net................     746.8      659.1      555.7    499.6      442.2
     Rental expense representative of
       interest factor......................      31.8       27.6       28.2     24.1       24.4
     Interest accrued -- 50% owned
       company..............................       9.0        8.7        7.5      6.2         --
     Preferred returns and minority interest
       in income of consolidated
       subsidiaries.........................      67.5       58.0       38.2      7.3        7.8
     Equity losses in less than 50% owned
       companies............................      27.9       16.5       13.0       --         --
     Other..................................       7.8       (8.3)      (3.6)     7.6        3.1
                                              --------   --------   --------   ------   --------
          Total earnings as adjusted plus
            fixed charges...................  $2,356.4   $2,356.9   $1,224.7   $948.5   $1,180.5
                                              ========   ========   ========   ======   ========
Combined fixed charges and preferred stock
  dividend requirements:
     Interest expense -- net................  $  746.8   $  659.1   $  555.7   $499.6   $  442.2
     Capitalized interest...................      40.0       49.4       34.6     13.8       15.5
     Rental expense representative of
       interest factor......................      31.8       27.6       28.2     24.1       24.4
     Pretax effect of dividends on preferred
       stock of the Company.................        --         --        5.1     12.4       16.1
     Pretax effect of dividends on preferred
       stock and other preferred returns of
       subsidiaries.........................      59.1       44.2       26.7       --         --
     Interest accrued -- 50% owned
       company..............................       9.0        8.7        7.5      6.2         --
                                              --------   --------   --------   ------   --------
          Combined fixed charges and
            preferred stock dividend
            requirements....................  $  886.7   $  789.0   $  657.8   $556.1   $  498.2
                                              ========   ========   ========   ======   ========
Ratio of earnings to combined fixed charges
  and preferred stock dividend
  requirements..............................      2.66       2.99       1.86     1.71       2.37
                                              ========   ========   ========   ======   ========
</Table>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>18
<FILENAME>d93687ex21.txt
<DESCRIPTION>SUBSIDIARIES OF THE REGISTRANT
<TEXT>
<PAGE>
                                                                      EXHIBIT 21

SUBSIDIARY LIST

<Table>
<S>                                                                           <C>
898389 Alberta Ltd.                                                                  Alberta
ACCROSERV SRL                                                                       Barbados
ACCROVEN SRL                                                                        Barbados
AIF Telecom Fund                                                              Cayman Islands
Alaska Blimpie Co-Op, Inc.                                                          Delaware
American Soda, L.L.P.                                                               Colorado
Apco Argentina, Inc.                                                          Cayman Islands
Apco Delaware, Inc.                                                                 Delaware
Apco Properties Ltd.                                                          Cayman Islands
Arctic Fox Assets, L.L.C.                                                           Delaware
Aspen Products Pipeline LLC                                                         Delaware
Aurex LPG Sp. z.o.o                                                                   Poland
Bargath Inc.                                                                        Colorado
Barrett Fuels Corporation                                                           Delaware
Barrett Resources (Peru) Corporation                                                Delaware
Barrett Resources International Corporation                                         Delaware
Baton Rouge Fractionators LLC                                                       Delaware
Beaver Dam Wash Energy, LLC                                                         Delaware
Beech Grove Processing Company                                                     Tennessee
Bison Royalty LLC                                                                   Delaware
Black Marlin Pipeline Company                                                          Texas
Buccaneer Gas Pipeline Company, L.L.C.                                              Delaware
Cannon Pipeline L.L.C.                                                              Oklahoma
Capstone Turbine Corporation
Carbon County UCG, Inc.                                                             Delaware
Cardinal Extension Company, LLC                                               North Carolina
Cardinal Operating Company                                                          Delaware
Castle Associates, L.P.                                                             Delaware
Chacahoula Natural Gas Storage, LLC                                                 Delaware
ChoiceSeat, L.L.C.                                                                  Delaware
Cove Point LNG Limited Partnership                                                  Delaware
Cross Bay Operating Company                                                         Delaware
Cross Bay Pipeline Company, L.L.C.                                                  Delaware
Cumberland Gas Pipeline Company
Cumberland Operating Company                                                        Delaware
</Table>



<PAGE>


<Table>
<S>                                                                           <C>
Discovery Gas Transmission LLC                                                      Delaware
Discovery Producer Services LLC                                                     Delaware
Distributed Power Solutions L.L.C.                                                  Delaware
Dogwood Ventures Company, LLC                                                       Delaware
Eagle Gas Services, Inc.                                                                Ohio
Energy International Corporation                                                Pennsylvania
Energy News Live, LLC                                                               Delaware
Energy Tech, Inc.                                                                   Delaware
Erie & Hudson Development Company                                                       Ohio
ESPAGAS USA, Inc.                                                                   Delaware
ESPAGAS, S.A. de C.V.                                                                 Mexico
F T & T, Inc.                                                                       Delaware
Fishhawk Ranch, Inc.                                                                 Florida
FleetOne Inc.                                                                       Delaware
FPT Marketing Company Limited                                                        Bermuda
Free Port Terminal Company Limited                                                   Bermuda
Fulton Energy Center, LLC                                                           Delaware
Garrison, L.L.C.                                                                    Delaware
Gas Supply, L.L.C.                                                                  Delaware
Georgia Strait Crossing Pipeline LP                                                     Utah
Goebel Gathering Company, L.L.C.                                                    Delaware
GSX Operating Company, LLC                                                          Delaware
GSX Pipeline, LLC                                                                   Delaware
GSX Western Pipeline Company                                                        Delaware
Gulf Liquids Holdings LLC                                                           Delaware
Gulf Liquids New River Project LLC                                                  Delaware
Gulf Stream Natural Gas System, L.L.C.                                              Delaware
Gulfstream Management & Operating Services, L.L.C.                                  Delaware
Halgas, Inc.                                                                        Oklahoma
Hazleton Fuel Management Company                                                    Delaware
Hazleton Pipeline Company                                                           Delaware
HI-BOL Pipeline Company                                                             Delaware
Independence Operating Company                                                      Delaware
Inland Ports, Inc.                                                                 Tennessee
Juarez Pipeline Company                                                             Delaware
Kern River Acquisition, LLC                                                         Delaware
Kern River Funding Corporation                                                      Delaware
Kern River Gas Transmission Company                                                    Texas
Kiowa Gas Storage, L.L.C.                                                           Delaware
</Table>



<PAGE>


<Table>
<S>                                                                           <C>
Langside Limited                                                                     Bermuda
Laughton, L.L.C.                                                                    Delaware
Liberty Operating Company                                                           Delaware
Lightel S. A. Tecnologia da Informacao
Littlefield Energy, LLC                                                             Delaware
Longhorn Enterprises of Texas, Inc.                                                 Delaware
Longhorn Partners GP, L.L.C.                                                        Delaware
Longhorn Partners Pipeline, L.P.                                                    Delaware
Magnolia Methane Corp.                                                              Delaware
MAPCO Alaska Inc.                                                                     Alaska
MAPCO Canada Energy Inc.                                                              Canada
MAPCO Energy Services, L.L.C.                                                       Delaware
MAPCO Impressions Inc.                                                              Oklahoma
MAPCO Inc. (DE)                                                                     Delaware
MAPCO Indonesia Inc.                                                                Delaware
MAPL Investments, Inc.                                                              Delaware
Marsh Resources, Inc.                                                               Delaware
MCNIC Black Marlin Offshore Company                                                 Michigan
Memphis Generation, L.L.C.                                                          Delaware
MESBIC Ventures Holding Company
Mid-America Pipeline Company                                                        Delaware
Millennium Energy Fund, L.L.C.                                                      Delaware
Moriche Bank Ltd.                                                                   Barbados
Nebraska Energy, L.L.C.                                                               Kansas
NESP Supply Corp.                                                                   Delaware
North Padre Island Spindown, Inc.                                                   Delaware
Northern Border Intermediate Limited Partnership                                    Delaware
Northern Border Partners, L.P.
Northwest Alaskan Pipeline Company                                                  Delaware
Northwest Argentina Corporation                                                         Utah
Northwest Border Pipeline Company                                                   Delaware
Northwest Land Company                                                              Delaware
Northwest Pipeline Corporation                                                      Delaware
NWP Enterprises, Inc.                                                               Delaware
NWP Enterprises, LLC                                                                Delaware
P.T. MAPCO Coal Indonesia
Pan-Alberta Resources Inc.                                                            Canada
Parkco, L.L.C.                                                                      Oklahoma
Piceance Production Holdings LLC                                                    Delaware
Pine Needle LNG Company, LLC                                                  North Carolina
</Table>



<PAGE>


<Table>
<S>                                                                           <C>
Pine Needle Operating Company                                                       Delaware
Piper Power Company, LLC                                                            Delaware
Plains Petroleum Gathering Company                                                  Delaware
Rainbow Resources, Inc.                                                             Colorado
Realco of Crown Center, Inc.                                                        Delaware
Realco of San Antonio, Inc.                                                         Delaware
Realco Realty Corp.                                                                 Delaware
Reserveco Inc.                                                                      Delaware
Rio Grande Pipeline Company                                                            Texas
Rio Vista Energy Marketing Company, L.L.C.                                          Delaware
Rulison Production Company LLC                                                      Delaware
Seminole Pipeline Company                                                           Delaware
Servicios de ESPAGAS. S.A. de C.V.                                                    Mexico
Servicios de TouchStar de Mexico S.A. de C.V.                                         Mexico
Snow Goose Associates, L.L.C.                                                       Delaware
Sociedad Williams Enbridge y Compania                                              Venezuela
Solutions EMT, Inc.
SPV, L.L.C.                                                                         Oklahoma
Tennessee Processing Company                                                        Delaware
Terrebonne Pipeline Company                                                         Delaware
Texas Gas Transmission Corporation                                                  Delaware
TGPL Enterprises, Inc.                                                              Delaware
TGPL Enterprises, LLC                                                               Delaware
TGT Enterprises, Inc.                                                               Delaware
TGT Enterprises, LLC                                                                Delaware
The Asian Infrastructure Fund                                                 Cayman Islands
The Tennessee Coal Company                                                          Delaware
The Williams Companies Foundation, Inc.                                             Oklahoma
Thermogas Energy, LLC                                                               Delaware
TM Cogeneration Company                                                             Delaware
TouchStar de Mexico S.A. de C.V.                                                      Mexico
Touchstar Energy Technologies, Inc.                                                    Texas
TouchStar Technologies, L.L.C.                                                      Delaware
TouchSystems (Pty) Ltd.                                                         South Africa
TransCardinal Company                                                               Delaware
TransCarolina LNG Company                                                           Delaware
Transco Coal Gas Company                                                            Delaware
Transco Cross Bay Company                                                           Delaware
Transco Energy Company                                                              Delaware
Transco Energy Investment Company                                                   Delaware
Transco Energy Marketing Company                                                    Delaware
</Table>



<PAGE>


<Table>
<S>                                                                           <C>
Transco Exploration Company                                                         Delaware
Transco Gas Company                                                                 Delaware
Transco Independence Pipeline Company                                               Delaware
Transco Liberty Pipeline Company                                                    Delaware
Transco P-S Company                                                                 Delaware
Transco Resources, Inc.                                                             Delaware
Transco Terminal Company                                                            Delaware
Transco Tower Realty, Inc.                                                          Delaware
Transcontinental Gas Pipe Line Corporation                                          Delaware
TransCumberland Pipeline Company                                                    Delaware
Transeastern Gas Pipeline Company, Inc.                                             Delaware
TransNetwork Holding Company                                                        Delaware
Transportadora de Gas Zapata, S. de R.L. de C.V.                                      Mexico
Tri-States NGL Pipeline, L.L.C.                                                     Delaware
Tulsa Williams Company                                                              Delaware
TXG Gas Marketing Company                                                           Delaware
Valley View Coal, Inc.                                                             Tennessee
Volunteer - Williams, L.L.C.                                                        Delaware
WBI Offshore Pipeline, Inc.                                                         Delaware
Webb/Duval Gatherers
WEM&T Trading GmbH                                                                   Austria
West Texas LPG Pipeline Limited Partnership                                            Texas
Western Frontier Pipeline Company, L.L.C.                                           Delaware
WFS - Liquids Company                                                               Delaware
WFS - NGL Pipeline Company, Inc.                                                    Delaware
WFS - OCS Gathering Co.                                                             Delaware
WFS - Offshore Gathering Company                                                    Delaware
WFS - Pipeline Company                                                              Delaware
WFS Enterprises, Inc.                                                               Delaware
WFS Gathering Company, L.L.C.                                                       Delaware
WGP Enterprises, Inc.                                                               Delaware
WGP Gulfstream Pipeline Company, L.L.C.                                             Delaware
WGP International Canada, Inc.                                                 New Brunswick
WHBC Holdings, LLC                                                                  Delaware
WHBC, LLC                                                                           Delaware
WHD Enterprises, Inc.                                                               Delaware
WHD Enterprises, LLC                                                                Delaware
WilJet, L.L.C.                                                                       Arizona
</Table>



<PAGE>


<Table>
<S>                                                                           <C>
WillBros Terminal Company                                                           Delaware
Williams Acquisition (DE) LLC                                                       Delaware
Williams Acquisition Holding Company, Inc. (Del)                                    Delaware
Williams Acquisition Holding Company, Inc. (NJ)                                   New Jersey
Williams Aircraft Leasing, LLC                                                      Delaware
Williams Aircraft, Inc.                                                             Delaware
Williams Alaska Air Cargo Properties, L.L.C.                                          Alaska
Williams Alaska Petroleum, Inc.                                                       Alaska
Williams Alaska Pipeline Company, L.L.C.                                            Delaware
Williams Alliance Canada Marketing, Inc.                                       New Brunswick
Williams Ammonia Pipeline, L.P.                                                     Delaware
Williams Bio-Energy, LLC                                                            Delaware
Williams Cove Point LNG Company, L.L.C.                                             Delaware
Williams Cove Point, Inc.                                                           Delaware
Williams Customer Information Solution, Inc.                                        Delaware
Williams Distributed Power Services, Inc.                                           Delaware
Williams EnergIa Espana, S.L.                                                          Spain
Williams Energia Italia SRL                                                            Italy
Williams Energias Espana SL                                                            Spain
Williams Energy (Canada), Inc.                                                 New Brunswick
Williams Energy (Canada) Pipeline, Inc.                                        New Brunswick
Williams Energy Company                                                             Delaware
Williams Energy European Services Ltd.                                        United Kingdom
Williams Energy Management, Inc.                                                    Delaware
Williams Energy Marketing & Trading Canada, Inc.                               New Brunswick
Williams Energy Marketing & Trading Company                                         Delaware
Williams Energy Marketing & Trading Europe Ltd                                       England
Williams Energy Marketing & Trading Holdings UK Ltd.                          United Kingdom
Williams Energy Network, Inc.                                                       Delaware
Williams Energy Partners L.P.                                                       Delaware
Williams Energy Services, LLC                                                       Delaware
Williams Energy, L.L.C.                                                             Delaware
Williams Environmental Services Company                                             Delaware
Williams Equities, Inc.                                                             Delaware
Williams Ethanol Services, Inc.                                                     Delaware
Williams Exploration Company                                                        Delaware
Williams Express, Inc. (AK)                                                           Alaska
Williams Express, Inc. (DE)                                                         Delaware
Williams Fertilizer, Inc.                                                           Delaware
</Table>



<PAGE>


<Table>
<S>                                                                           <C>
Williams Field Services - Gulf Coast Company, L.P.                                  Delaware
Williams Field Services - Matagorda Offshore Company, LLC                           Delaware
Williams Field Services Company                                                     Delaware
Williams Field Services Group, Inc                                                  Delaware
Williams Flexible Generation, LLC                                                   Delaware
Williams Fractionation Holdings, L.P.                                               Delaware
Williams Gas Company                                                                Delaware
Williams Gas Energy, Inc.                                                           Delaware
Williams Gas Pipeline - Alliance Canada, Inc.                                        Alberta
Williams Gas Pipeline - Alliance U.S., Inc.                                         Delaware
Williams Gas Pipeline Company, LLC                                                  Delaware
Williams Gas Pipeline Mexico, S.A. de C.V.                                            Mexico
Williams Gas Pipelines Central, Inc.                                                Delaware
Williams Gas Processing - Gulf Coast Company, L.P.                                  Delaware
Williams Gas Processing - Kansas Hugoton Company                                    Delaware
Williams Gas Processing - Mid-Continent Region Company                              Delaware
Williams Gas Processing - Wamsutter Company                                         Delaware
Williams Gas Processing Company                                                     Delaware
Williams Gas Projects Company, L.L.C.                                               Delaware
Williams Gathering & Transportation, L.L.C.                                         Oklahoma
Williams Generation Company - Hazleton                                              Delaware
Williams Global Energy (Cayman) Limited                                       Cayman Islands
Williams Global Holdings Company                                                    Delaware
Williams GmbH
Williams GP Inc.                                                                    Delaware
Williams GP LLC                                                                     Delaware
Williams GSR, L.L.C.                                                                Delaware
Williams GSX (Canada) Inc.                                                     New Brunswick
Williams Gulf Coast Gathering Company, LLC                                          Delaware
Williams Headquarters Acquisition Company                                           Delaware
Williams Headquarters Building Company                                              Delaware
Williams Headquarters Building, L.L.C.                                              Delaware
Williams Headquarters Management Company                                            Delaware
Williams Holdings GmbH                                                               Austria
Williams Hugoton Compression Services, Inc.                                         Delaware
Williams Independence Marketing Company                                             Delaware
Williams Indonesia, L.L.C.                                                          Delaware
Williams Information Services Corporation                                           Delaware
Williams Intercontinental Holdings Company                                          Delaware
</Table>



<PAGE>


<Table>
<S>                                                                           <C>
Williams International (Bermuda) Limited                                             Bermuda
Williams International (Operations) Ecuador Limited                           Cayman Islands
Williams International Communications, Inc.                                         Delaware
Williams International Company                                                      Delaware
Williams International Cusiana-Cupiagua Limited                               Cayman Islands
Williams International Ecuador (Cayman) Limited                               Cayman Islands
Williams International Ecuadorian Ventures Bermuda Limited                           Bermuda
Williams International El Furrial Limited                                     Cayman Islands
Williams International Guara Limited                                          Cayman Islands
Williams International Holdings Limited                                       Cayman Islands
Williams International Investment Ventures (Cayman) Limited                   Cayman Islands
Williams International Investments (Cayman) Limited                           Cayman Islands
Williams International Jose Limited                                           Cayman Islands
Williams International Oil & Gas (Venezuela) Limited                          Cayman Islands
Williams International Operations (Venezuela) Limited                         Cayman Islands
Williams International Pigap Limited                                          Cayman Islands
Williams International Pipeline Company                                             Delaware
Williams International Services Company                                               Nevada
Williams International Telecom Limited                                              Delaware
Williams International Telecommunications Investments (Cayman) Limited        Cayman Islands
Williams International Venezuela Limited                                      Cayman Islands
Williams International Ventures (Bermuda) Ltd.                                       Bermuda
Williams Learning Center, Inc.                                                      Delaware
Williams Lietuva
Williams Lynxs Alaska CargoPort, L.L.C.                                               Alaska
Williams Memphis Terminal, Inc.                                                     Delaware
Williams Merchant Services Company, Inc.                                            Delaware
Williams Mid-South Pipelines, LLC                                                   Delaware
Williams Midstream Natural Gas Liquids, Inc.                                        Delaware
Williams Mobile Bay Producer Services, L.L.C.                                       Delaware
Williams Natural Gas Liquids Canada, Inc.                                            Alberta
Williams Natural Gas Liquids, Inc.                                                  Delaware
Williams Natural Gas Storage, LLC                                                   Delaware
Williams NGL, LLC                                                                   Delaware
Williams Northern NGL Pipeline, L.L.C.                                              Delaware
Williams Oil Gathering, L.L.C.                                                      Delaware
Williams Olefins Feedstock Pipelines, L.L.C.                                        Delaware
Williams Olefins, L.L.C.                                                            Delaware
Williams OLP, L.P.                                                                  Delaware
</Table>



<PAGE>


<Table>
<S>                                                                           <C>
Williams One-Call Services, Inc.                                                    Delaware
Williams Petroleo Espana SL                                                            Spain
Williams Petroleum Pipeline Systems, Inc.                                           Delaware
Williams Pipe Line Company, LLC                                                     Delaware
Williams Pipeline Services Company                                                  Delaware
Williams Pipelines Holdings, L.P.                                                   Delaware
Williams Production - Gulf Coast Company, L.P.                                      Delaware
Williams Production Company, LLC                                                    Delaware
Williams Production Mid-Continent Company                                           Oklahoma
Williams Production RMT Company                                                     Delaware
Williams Production Rocky Mountain Company                                          Delaware
Williams Refining & Marketing, L.L.C.                                               Delaware
Williams Relocation Management, Inc.                                                Delaware
Williams Resource Center, L.L.C.                                                    Delaware
Williams Risk Holdings, L.L.C.                                                      Delaware
Williams Risk Management L.L.C.                                                     Delaware
Williams Sodium Products Company                                                    Delaware
Williams Strategic Sourcing Company                                                 Delaware
Williams Strategic Ventures, LLC                                                    Delaware
Williams Terminals Company                                                          Delaware
Williams Terminals Holdings, L.P.                                                   Delaware
Williams Trading (UK) Ltd.                                                    United Kingdom
Williams TravelCenters, Inc.                                                        Delaware
Williams Underground Gas Storage Company                                            Delaware
Williams Western Holding Company, Inc.                                              Delaware
Williams Western Pipeline Company, LLC                                              Delaware
Williams Wireless, Inc.                                                             Delaware
Williams WPC - I, Inc.                                                              Delaware
Williams WPC - II, Inc.                                                             Delaware
Williams WPC International Company                                                  Delaware
WilMart, Inc.                                                                       Delaware
WILPRISE Pipeline Company, L.L.C.                                                   Delaware
WilPro Energy Services (El Furrial) Limited                                   Cayman Islands
WilPro Energy Services (Pigap II) Limited                                     Cayman Islands
Wlliams Energy Canada Pipeline, Inc.                                           New Brunswick
Worldwide Services Limited                                                    Cayman Islands
Worthington Generation, L.L.C.                                                      Delaware
WPX Enterprises, Inc.                                                               Delaware
WPX Gas Resources Company                                                           Delaware
</Table>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>19
<FILENAME>d93687ex23.txt
<DESCRIPTION>CONSENT OF ERNST & YOUNG, LLP
<TEXT>
<PAGE>

                                                                      EXHIBIT 23

                         CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the following registration
statements on Form S-3 and Form S-4, and related prospectuses and in the
following registration statements on Form S-8 of The Williams Companies, Inc. of
our report dated March 6, 2002, with respect to the consolidated financial
statements and schedule of The Williams Companies, Inc. included in this Annual
Report (Form 10-K) for the year ended December 31, 2001:

     Form S-3: Registration No. 333-20929; Registration No. 333-35097;
               Registration No. 333-29185; Registration No. 333-24683;
               Registration No. 333-66141; Registration No. 333-20927;
               Registration No. 333-39800; Registration No. 333-63724;
               Registration No. 333-70394; Registration No. 333-73326;
               Registration No. 333-35101; Registration No. 333-27311;
               Registration No. 333-27359; Registration No. 333-53511;
               Registration No. 333-35099

     Form S-4: Registration No. 333-57416; Registration No. 333-63202

     Form S-8: Registration No. 33-36770; Registration No. 33-44381;
               Registration No. 33-58971; Registration No. 33-45550;
               Registration No. 33-40979; Registration No. 33-51551;
               Registration No. 33-43999; Registration No. 33-51539;
               Registration No. 33-51543; Registration No. 33-58969;
               Registration No. 33-51549; Registration No. 33-51547;
               Registration No. 33-51545; Registration No. 33-56521;
               Registration No. 33-58671; Registration No. 333-03957;
               Registration No. 333-11151; Registration No. 333-40721;
               Registration No. 333-33735; Registration No. 333-30095;
               Registration No. 333-48945; Registration No. 333-61597;
               Registration No. 333-90265; Registration No. 333-76929;
               Registration No. 333-51994; Registration No. 333-66474

                                                      ERNST & YOUNG LLP

Tulsa, Oklahoma
March 6, 2002

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-24
<SEQUENCE>20
<FILENAME>d93687ex24.txt
<DESCRIPTION>POWER OF ATTORNEY
<TEXT>
<PAGE>
                                                                      EXHIBIT 24


                          THE WILLIAMS COMPANIES, INC.


POWER OF ATTORNEY

         KNOW ALL MEN BY THESE PRESENTS that each of the undersigned
individuals, in their capacity as a director or officer, or both, as hereinafter
set forth below their signature, of THE WILLIAMS COMPANIES, INC., a Delaware
corporation ("Williams"), does hereby constitute and appoint WILLIAM G. VON
GLAHN and SUZANNE H. COSTIN their true and lawful attorneys and each of them
(with full power to act without the others) their true and lawful attorneys for
them and in their name and in their capacity as a director or officer, or both,
of Williams, as hereinafter set forth below their signature, to sign Williams'
Annual Report to the Securities and Exchange Commission on Form 10-K for the
fiscal year ended December 31, 2001, and any and all amendments thereto or all
instruments necessary or incidental in connection therewith; and

         THAT the undersigned Williams does hereby constitute and appoint
WILLIAM G. VON GLAHN and SUZANNE H. COSTIN its true and lawful attorneys and
each of them (with full power to act without the others) its true and lawful
attorney for it and in its name and on its behalf to sign said Form 10-K and any
and all amendments thereto and any and all instruments necessary or incidental
in connection therewith.

         Each of said attorneys shall have full power of substitution and
resubstitution, and said attorneys or any of them or any substitute appointed by
any of them hereunder shall have full power and authority to do and perform in
the name and on behalf of each of the undersigned, in any and all capacities,
every act whatsoever requisite or necessary to be done in the premises, as fully
to all intents and purposes as each of the undersigned might or could do in
person, the undersigned hereby ratifying and approving the acts of said
attorneys or any of them or of any such substitute pursuant hereto.

         IN WITNESS WHEREOF, the undersigned have executed this instrument, all
as of the 20th day of January, 2002.

      /s/ Steven J. Malcolm                          /s/ Jack D. McCarthy
- -------------------------------------          ---------------------------------
Steven J. Malcolm                              Jack D. McCarthy
President and Chief                            Executive Senior Vice President
Officer (Principal Executive Officer)          (Principal Financial Officer)


      /s/ Gary R. Belitz                             /s/ Keith E. Bailey
- -------------------------------------          ---------------------------------
Gary R. Belitz                                 Keith E. Bailey
Controller                                     Chairman of the Board
(Principal Accounting Officer)

      /s/ Hugh M. Chapman                            /s/ Glenn A. Cox
- -------------------------------------          ---------------------------------
Hugh M. Chapman                                Glenn A. Cox
Director                                       Director

      /s/ Thomas H. Cruikshank                       /s/ William E. Green
- -------------------------------------          ---------------------------------
Thomas H. Cruikshank                           William E. Green
Director                                       Director

      /s/ Ira D. Hall                                /s/ W. R. Howell
- -------------------------------------          ---------------------------------
Ira D. Hall                                    W.R. Howell
Director                                       Director

      /s/ James C. Lewis                             /s/ Charles M. Lillis
- -------------------------------------          ---------------------------------
James C. Lewis                                 Charles M. Lillis
Director                                       Director


      /s/ George A. Lorch                            /s/ Frank T. MacInnis
- -------------------------------------          ---------------------------------
George A. Lorch                                Frank T. MacInnis
Director                                       Director

      /s/ Steven J. Malcolm                          /s/ Gordon R. Parker
- -------------------------------------          ---------------------------------
Steven J. Malcolm                              Gordon R. Parker
Director                                       Director

      /s/ Janice D. Stoney                           /s/ Joseph H. Williams
- -------------------------------------          ---------------------------------
Janice D. Stoney                                Joseph H. Williams
Director                                        Director

          By /s/ William G. von Glahn
            -------------------------------
            William G. von Glahn


ATTEST: Senior Vice President

/s/ Suzanne H. Costin
- -----------------------------
Suzanne H. Costin
Secretary

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
